Will Gordhan’s Roadshows In UK And US Save South Africa From Junk Status?
South Africa’s Finance Minister, Pravin Gordhan, was last week travelling across the UK and the US trying to sell the country’s progressive story and to convince investors that the Africa’s second largest economy was still good for business.
Gordhan’s roadshows, which aimed to rebuild investor confidence in the country, comes at a time when South Africa’s debt is facing an imminent rating downgrade to junk by major global credit agencies.
“All we can say is that we are going to do our best at least to convince the rating agencies to give us at least six to 12 months to be able to demonstrate that what we have and our intent about what we have can in fact be implemented,” Gordhan told eNCA.
The country has been facing challenges mainly due to falling commodity prices on the global market that has hurt the country’s metal export revenue and a slowdown in the Chinese economy, its top trade partner.
Other challenges facing the most industrialized economy on the continent include a deteriorating political situation back at home, a weakening local currency, power outages and a ravaging drought that has seen food prices rise in recent months.
While Gordhan won applauses at an impromptu London roadshow last week, BizNews.com reported that investors were still skeptical he would managed to defend the country against a rating downgrade.
A junk rating will mean higher borrowing cost for the South African government and firms alike. It will also scare investors form the country’s vibrant stocks and debt markets.
Some investors are even wondering if Gordhan would still be in office when the rating agencies come calling by mid this year.
In what is now referred as “9-12”, South Africa’s President Jacob Zuma switched finance ministers in December last year, sacking Nhlanhla Nene to bringing in David van Rooyen before replacing him with Gordhan in less than a week after investors showed disapproval of the sudden changes in the key docket.
eNCA will be live streaming Gordhan’s briefing about the investor roadshows to London and the US later today at 3.00 PM South Africa Time (1:00 PM GMT).