The writer says even if the Treasury’s independence and SA’s investment-grade credit status are maintained and economic growth improves, a major historic challenge appears to have been provoked. Picture: SUPPLIED
The writer says even if the Treasury’s independence and SA’s investment-grade credit status are maintained and economic growth improves, a major historic challenge appears to have been provoked. Picture: SUPPLIED

YET another top executive has voiced concern about regulatory certainty and fiscal stability in SA, warning of the risk of a sovereign downgrade.

Bruce Cleaver, CEO of De Beers, the world’s largest diamond producer, said SA was in deep danger of losing its investment-grade credit rating and needed to assure investors of its commitment to regulatory certainty and fiscal stability.

"SA is in a slightly difficult place right now," Cleaver said in an interview with Bloomberg TV at the US-Africa Business Forum in New York on Wednesday.

"I think the threat of a ratings downgrade is serious."

SA is struggling to revitalise its economy and contain public debt in the face of possible downgrades to its credit rating, which has been assessed as one level above junk by Fitch Ratings and S&P Global Ratings.

Investor unease has been compounded by President Jacob Zuma sparring with Finance Minister Pravin Gordhan for control of the Treasury and state-owned companies.

SA’s problems should be resolved over time, according to Cleaver.

"We are investing very heavily in SA," he said. "We have a $2bn expansion programme at our biggest mine in SA, which is really only 40% of the way."

Zuma told the forum that SA remained a good place to invest and the debate about the country’s direction showed its democracy was maturing.

"Coming to invest, you know exactly where you are going to," Zuma said. "The debates are very open. You can’t say, for example, because you are a president you can do whatever you like, because people are going to say: ‘But sorry, that’s not what we voted you for, you are not following the rule of law and the Constitution.’"

About two weeks ago FirstRand CEO Johan Burger called for the protection of institutions such as the Reserve Bank and the Treasury.

"As a businessman, I can’t understand why you go and play with things that are going to have a negative impact on SA Inc’s growth," Burger said after the release of the group’s full-year financial results to June.

"It’s in nobody’s interests. I’m pleading for stability and certainty, especially when it comes to those institutions," he said.

Meanwhile, Neal Froneman, CEO of Sibanye Gold, SA’s biggest bullion producer, said this week that Zuma "has to go" because poor governance was deterring prospective investors.

"Any solid investor, any solid company, is founded on good governance, and what we have in SA at the moment is very poor governance, from a government point of view," Froneman said in an interview on Monday from the Denver Gold Forum in Colorado Springs.

Froneman joined Sipho Pityana, chairman of AngloGold Ashanti, in calling for Zuma to step down.

Bloomberg, with staff writer