By Kopano Gumbi, CNBC Africa reporter
South Africa has a plan to deal with the slow pace of economic reforms many South Africans complain about and Moody’s cited as one of the reasons it recently put the county on a negative outlook.
This was revealed by South Africa’s President Cyril Ramaphosa in an exclusive interview with CNBC Africa, watch the full interview below.
“On the reforms side we are making tremendous progress,” the President told CNBC Africa.
The country was put on negative outlook by Moody’s on Friday listing the slow pace of reforms as one of the main reasons it changed its outlook.
“Moody’s decision to change the outlook to negative from stable reflects the material risk that the government will not succeed in arresting the deterioration of its finances through a revival in economic growth and fiscal consolidation measures.” Ramaphosa differed, telling CNBC Africa that he would be announcing enormous reforms during his investment conference. The second instalment of the South Africa Investment conference starts on Wednesday, 6 November and the goal is to raise another R300 billion.
He acknowledged the impatience among South Africans at the pace of reforms but said he is also very impatient and feels the heat and that is why he is setting up structures that will get the country up to the speed that people want.
It is going to be a tough sell, given the slew of bad news of late.
Nearly two years into the job with a pledge to reform and create growth, Ramaphosa is struggling to do both. South Africa’s GDP is expected to be a paltry 0.5 percent this year, while the country’s debt to GDP grows and state owned entities are in shambles.
The President has an uphill battle to convince investors that his cabinet is doing enough, and fast enough, to put their money behind team South Africa. Security of energy supply is vital to the economic development of the country and is often brought up as a worry for international investors. Eskom remains a recurring pain point for the government.
The Minister of Public Enterprises, Pravin Gordhan, recently released the roadmap for Eskom, a working document that aims to address many of the challenges the power utility faces. It has also received billions in bailouts in order to remain a going concern. Despite the utility being “too big to fail,” systemic destruction of the institution has left it with problems that may be harder to fix than a poor balance sheet.
And although reforms for the entity have been tabled, the negotiations to see them through are ongoing. Particularly with the labour unions that are adamant that a revised Eskom cannot come at the expense of its members. In a country with an unemployment rate at 29.1 percent and very low likelihood that those looking will find work, it is expected that the unions would be concerned.
Investors hold a different concern about labour in South Africa– they’re worried about what they see as the country’s stringent labour laws. President Ramaphosa says he is willing to listen to those who present obvious issues that impede the employment of people.
“I have often asked what are those labour laws that people would highlight as preventing more employment to be created,” said President Ramaphosa when asked if he would consider revising the laws as a way of increasing employment. “No-one has really been able to tell me definitely—the one they have raised of late is the national minimum wage,” Ramaphosa continued.
There is no shortage of plans, the president and his cabinet have gone to great pains to outline plans, but execution is where the nation’s leaders currently fall short. Whether they can demonstrate greater action is yet to be seen. The country has just over three months until the next Moody’s review happens.