JOHANNESBURG (Reuters) &#8211; South Africa&#8217;s central bank is wary of cutting interest rates to support economic growth until it is convinced an improved inflation outlook can be sustained, monetary policy committee member Brian Kahn said on Thursday.
&#8220;We would not want to reduce rates and then be forced into a premature reversal of policy,&#8221; Kahn said in a speech at an investor conference.
&#8220;We see price stability as the main contribution we can make to long term growth. The current stance of monetary policy is not tight and is not a constrain to growth.&#8221;
Kahn said the central bank would likely cut its economic growth forecasts in July after data showed this week that South Africa had slipped into technical recession.
(Reporting by Mfuneko Toyana; Writing by Joe Brock; Editing by TJ Strydom)
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South Africa’s central bank wary of cutting rates: Kahn

Olivia Kumwenda-Mtambo | JOHANNESBURG
Business confidence in South Africa fell to a seven-month low in May, hit by political tension, doubts over the course of economic policy and credit ratings downgrades, a survey showed on Wednesday.
The South African Chamber of Commerce and Industry&#8217;s (SACCI) monthly business confidence index (BCI) fell to 93.2 in May &#8211; the lowest since October &#8211; from 94.9 in April.
(Reporting by Olivia Kumwenda-Mtambo; Editing by Hugh Lawson)
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South Africa’s business confidence at seven-months low in May: survey

Mfuneko Toyana | JOHANNESBURG
South Africa&#8217;s rand extended losses on Wednesday as investors worried that news of the first recession in eight years could prompt further credit rating downgrades.
At 0640 GMT, the rand traded at 12.8700 per dollar, 0.4 percent weaker than its close of 12.8225 overnight in New York.
South Africa entered recession for the first time in eight years as manufacturing and trade sectors saw sharp downturns, with growth contracting 0.7 percent in Q1 2017 after shrinking 0.3 percent in Q4 2016.
<blockquote>&#8220;The sharply negative GDP print will catalyse further credit ratings downgrades, probably sooner than we had previously anticipated,&#8221; said analyst at Nedbank Capital Reezwana Sumad.</blockquote>
Moody&#8217;s expected to release ratings decision on Friday.
Net foreign reserves rose to $42 billion in May, due in part to depreciation of the dollar vs most major currencies, the Reserve Bank said on Wednesday.
Government bonds were weaker, with the yield on benchmark paper due in 2026 up 4 basis points to 8.525 percent.
Stocks were set to open flat at 0700 GMT, with the JSE securities exchange&#8217;s Top-40 futures index down 0.1 percent.
(Reporting by Mfuneko Toyana; Editing by Joe Brock)
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South Africa’s rand dips as recession stokes downgrade fears

Nqobile Dludla | JOHANNESBURG
South African cement maker PPC reported a 93 percent decline in full-year earnings on Wednesday due to a liquidity crisis precipitated by the cut in its credit rating to junk status.
PPC, which is still negotiating a possible merger with rival Afrisam, said headline earnings per share fell to 7 cents from 107 cents in the comparable period last year.
S&amp;P Global Ratings (S&amp;P) downgraded the company&#8217;s long- and short-term South African national scale corporate credit ratings to zaBB- and zaB respectively in May 2016.
(Reporting by Nqobile Dludla; Editing by Sunil Nair)
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South Africa’s PPC’s FY profit slumps on S&P downgrade

Olivia Kumwenda-Mtambo | JOHANNESBURG
South Africa&#8217;s negative economic growth is a risk to fiscal targets and puts pressure on the government to intensify growth programmes as a matter of urgency, the Treasury said on Tuesday.
South Africa entered recession for the first time in eight years, led by weak manufacturing and trade, data from Statistics South Africa showed.
<blockquote>&#8220;This worse-than-expected GDP outcome introduces significant downward bias to the GDP growth estimates communicated in the 2017 budget review, which projected 2017 GDP growth at 1.3 percent,&#8221; the Treasury said in a statement.</blockquote>
&#8220;The current growth rate, if sustained, will lead to a further decline in GDP per capita and revenue, risking the sustainability of our fiscal framework and more importantly undermining the delivery of social services.&#8221;
(Reporting by Olivia Kumwenda-Mtambo; Editing by Robin Pomeroy)
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South African recession puts fiscal targets at risk: Treasury

PRETORIA
South Africa slipped into technical recession for the first time since 2009 after the economy contracted in the first quarter, led by weak manufacturing and trade sectors, Statistics South Africa said on Tuesday.
Africa&#8217;s most developed economy contracted by 0.7 percent in the first quarter after shrinking by 0.3 percent in the fourth quarter of last year, the statistics agency said.
Economists polled by Reuters had expected a quarter-on-quarter GDP expansion of 0.9 percent.
Gross domestic product rose 1.0 percent on an unadjusted year-on-year basis in the first quarter, compared with 0.7 percent contraction in the previous three months, the agency said.

South Africa slips into recession as economy shrinks in Q1

<ul>
<li>S&amp;P Global Ratings (S&amp;P) affirms South Africa’s long term foreign and local currency debt ratings, negative outlook is unchanged</li>
</ul>
Government welcomes S&amp;P’s decision of maintaining South Africa’s long term local currency debt ratings of ‘BBB-‘; an investment grade rating. The affirmation of the long-term foreign currency rating of ‘BB+’ and the negative outlook on the ratings are also noted. 
While government agrees with S&amp;P that the pace of economic growth is slow and as such poses risks to fiscal consolidation and rising contingent liabilities, the fiscal policy stance continues to be guided by chapter 13 of the Constitution. It states that while there is promotion of efforts aimed at economic development, good governance, social progress and rising standard of living for all South Africans, there must also be transparency, accountability and sound financial controls in the management of public finances. 
Key focus is to safeguard confidence and reclaim the investment grade ratings. Intensive engagements with broader stakeholders will continue. Sustainable fiscal policy and efforts to tackle sources of low growth are critical. Improvement in policy design, finalisation of key policies and coordination remain critical for boosting confidence and economic growth. Government is currently re-engaging with the private sector to make sure that the joint work of government, business, labour and the civil society continues and that the pledges made thus far are fulfilled. 
The work to improve governance and financial challenges in the state owned companies (SOCs) is also on track. In November 2016, Cabinet: 
 Endorsed a private-sector participation framework to guide collaboration between SOCs and the private sector on infrastructure projects; 
 Adopted a guideline for the remuneration and incentive standards for directors of SOCs; 
 Approved the broad thrust of a guide for the appointment of boards and executive officers; 
 Recommended further consultation on the first draft of a new government 
shareholder policy, which will culminate in overarching legislation for SOCs; 
and 
 Noted the proposal to determine and cost the developmental mandates of 
SOCs. 
Government is committed to work with its social partners in improving business 
and consumer confidence. The National Development Plan continues to be the 
anchor policy of government providing greater policy certainty. The Constitution 
remains explicit in realising the fundamental rights of all who live in South Africa 
and that the public funds are spent for a common good.

S&P Affirms SA’s foreign & domestic debt, Outlook remains negative

Mfuneko Toyana | PRETORIA
South Africa&#8217;s unemployment rose to its highest in 14 years in the first quarter as agriculture and informal sectors shed jobs and more people stopped looking for work, data showed on Thursday, in a sign the economy may be headed for recession.
The unemployment rate climbed to 27.7 percent of the labour force in the first quarter, the highest since September 2003, from 26.5 percent in the last quarter of 2016.
The expanded definition of unemployment, which includes people who have stopped looking for work, rose to 36.4 percent, or 9.3 million people out of a total workforce of 22.4 million.
Statistics South Africa warned that recent credit downgrades to sub-investment grade and the threat of further cuts were taking its toll on the economy as the currency depreciated and made imports more expensive.
<blockquote>&#8220;Certainly you are better off without a downgrade than you are with one,&#8221; said Statistician General Pali Lehohla. &#8220;The depreciation of the currency works for you when it is deliberate.&#8221;</blockquote>
South Africa lost its coveted investment grade status in April when S&amp;P Global Ratings and Fitch downgraded the country following the sudden firing of the finance in a midnight cabinet purge by President Jacob Zuma.
The rand lost about 10 percent in the wake of the cabinet shake up and subsequent downgrades, making it one of the worst performing emerging market currencies this year.
The two ratings firms, which cited political and economic instability as reasons for the downgrades, are due to announce follow-up ratings decisions this week.
The statistics department said half a million jobs were lost in the quarter, with agriculture sector shedding 44,000 jobs and 14,000 lost in the informal sector.
South Africa&#8217;s economy shrank 0.3 percent in the last quarter of 2016 and if it shows a contraction when domestic product results are released on Tuesday the continent&#8217;s most industrialised economy will be in technical recession.
(Reporting by Mfuneko Toyana; Writing by Olivia Kumwenda-Mtambo; Editing by Joe Brock)

South Africa’s unemployment hits 14-year high as recession looms

Fitch Ratings-Hong Kong-01 June 2017: Fitch Ratings has affirmed South Africa&#8217;s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at &#8216;BB+&#8217; with a Stable Outlook. The issue ratings on South Africa&#8217;s senior unsecured foreign- and local-currency bonds and on the sukuk trust certificates issued by RSA Sukuk No. 1 Trust have also been affirmed at &#8216;BB+&#8217;. The Short-Term Foreign- and Local-Currency IDRs and the rating on the short-term local-currency securities have been affirmed at &#8216;B&#8217;. The Country Ceiling has been affirmed at &#8216;BBB-&#8216;.
KEY RATING DRIVERS 
South Africa&#8217;s ratings are weighed down by low trend GDP growth, sizeable contingent liabilities and deteriorating governance. Positively, they are supported by deep local capital markets, a favourable government debt structure and a track record of fairly prudent fiscal and monetary policy.
A cabinet reshuffle at the end of March, which triggered an earlier downgrade of South Africa&#8217;s ratings, is likely to undermine governance of state-owned enterprises (SOEs), weaken fiscal consolidation and reduce private sector investment as a result of weaker business confidence. While efforts to improve the SOE governance framework will continue, implementation decisions, for example on appointments of senior SOE management, will hamper these efforts and could lead to weaker financial positions of SOEs and higher contingent liabilities for the government.
As the new Finance Minister has emphasised, the government&#8217;s commitment to existing fiscal targets still stands. As a result, it is unlikely that the government will raise its expenditure ceilings which have served as a key anchor for fiscal policy. The government is also likely to implement some tightening if, as is expected, revenue underperforms but the adjustment will be insufficient to keep deficit targets on track.
Senior ANC and government leaders have emphasised that the government&#8217;s recent rhetoric of &#8220;radical socioeconomic transformation&#8221; signals no fundamental change and that the government remains focused on the long-standing goal of inclusive growth. Documents released ahead of the ANC policy conference in June also indicate policy continuity, including on the sensitive issue of land expropriation. Severe tensions within the ANC also limit the ability to make radical policy changes but they also undermine policy predictability as it is unclear which factions will prevail on individual policy issues.
In-fighting within the ANC will remain particularly strong ahead of the electoral conference in December 2017, when the ANC will select a new party president. The new party leader will likely become the country&#8217;s president after national elections in 2019 or earlier. Even after the electoral conference, policy will still be influenced by competing factions in the ANC and the government will juggle multiple complex policy objectives, in particular improving business confidence and addressing the high degree of inequality.
South African GDP growth remains a key rating weakness, with a five-year average of just 1.6% compared with a &#8216;BB&#8217; category median of 3.5%. Growth fell to just 0.3% in 2016 and is expected to rise only moderately to just 1% in 2017 and 1.8% in 2018, as political uncertainty will continue to weigh on private investment. The recovery reflects lower inflation combined with stable wage growth, which will boost real consumer income. In addition, a record harvest in 2017 will boost growth after a severe drought had weighed on GDP growth in 2016.
The government&#8217;s February budget projected the consolidated national government deficit to narrow to 3.1% of GDP in FY17/18 (year end March) and 2.8% in FY18/19 from 3.4% in FY16/17. However, this relied on optimistic GDP growth forecasts of 1.3% for 2017 and 2% for 2018 and benign assumptions for tax multipliers. Particularly the gains from tax measures of 0.6% of GDP are uncertain. We expect the government to announce some expenditure cuts in its medium-term budget policy statement in October, but this will not fully offset the tax shortfall. As a result, we foresee a consolidated national government deficit of 3.3% in FY17/18 and 3.1% FY18/19.
South Africa&#8217;s general government debt, at 52.6% of GDP (including local government debt) in March 2017, is above the &#8216;BB&#8217; and &#8216;BBB&#8217; category medians of 51% and 41%, respectively. We expect debt to continue rising over the next two years, to 55.1% of GDP in FYE19. However, the low share of foreign currency debt in total debt, at 11.5% compared with a &#8216;BB&#8217; median of 51%, and the long average maturity of its bonds of 14.7 years reduce the risk of financing difficulties.
The government has guarantees for SOEs, independent power producer contracts and public-private partnerships of ZAR445 billion (10.1% of GDP). In addition, at FYE16 SOEs&#8217; debt without an explicit government guarantee totalled ZAR463 billion (10.5% of GDP). Given the weak state of SOE finances, the problems in SOE governance and the importance of SOEs for the country&#8217;s economy and politics, the risk that some of this debt will land on the sovereign balance sheet is substantial.
The risks are illustrated by the problems of South African Airways, which the Ministry of Finance deems technically insolvent, although its liabilities are small. Eskom, as the biggest recipient of government guarantees, received significant capital injections from the government in 2015 but is not expected to require further support in the near term. South Africa&#8217;s plan to build 9.6GW of nuclear electricity capacity, to be implemented by Eskom, could raise government exposures significantly. However, a court decision in April has significantly delayed progress towards signing procurement contracts, as the government will need to relaunch consultations.
South Africa&#8217;s current-account deficit has narrowed to 3.2% of GDP in 2016 from a peak of 5.9% in 2013 and is likely to remain around 3% in 2017 and 2018. Weak growth of domestic demand, particularly import-intensive private investment, has led to import compression. A weak rand has also improved the competitiveness of domestic goods and services. Recent strengthening of prices for some of South Africa&#8217;s key export commodities will also support export receipts and the strong harvest will reduce the need for food imports. Reserves are low relative to financing requirements and the high commodity share in exports adds to volatility in export receipts, but the fully flexible exchange rate will act as a buffer for external financing shocks.
Most indicators of economic development are in line with &#8216;BB&#8217; category medians. GDP per capita at market prices is estimated at USD5,246 for 2016, compared with a median of USD5,058. The World Bank&#8217;s governance indicator, at the 59th percentile, is well above the &#8216;BB&#8217; median but this may not adequately reflect governance issues that were highlighted in the recent state of capture report by the public prosecutor and governance may deteriorate as a result of the government reshuffle. The rating is supported by a sound banking sector, which has a Fitch Bank Systemic Risk Indicator of &#8216;bbb&#8217;.
SOVEREIGN RATING MODEL (SRM) and QUALITATIVE OVERLAY (QO) 
Fitch&#8217;s proprietary SRM assigns South Africa a score equivalent to a rating of &#8216;BBB&#8217; on the Long-Term Foreign-Currency IDR scale.
Fitch&#8217;s sovereign rating committee adjusted the output from the SRM to arrive at the final Long-Term Foreign-Currency IDR by applying its QO, relative to rated peers, as follows:
Macroeconomic Performance, Policies and Prospect: -1 notch, to reflect South Africa&#8217;s weak growth prospects relative to the &#8216;BB&#8217; and &#8216;BBB&#8217; category medians, with important repercussions for public finances.
Structural Features: -1 notch, to reflect the expected deterioration in governance standards, particularly related to SOEs.
Fitch&#8217;s SRM is the agency&#8217;s proprietary multiple regression rating model that employs 18 variables based on three year-centred averages, including one year of forecasts, to produce a score equivalent to a Long-Term Foreign-Currency IDR. Fitch&#8217;s QO is a forward-looking qualitative framework designed to allow for adjustment to the SRM output to assign the final rating, reflecting factors within our criteria that are not fully quantifiable and/or not fully reflected in the SRM.
RATING SENSITIVITIES 
The following risk factors could, individually or collectively, result in negative rating action:
&#8211; A marked increase in the government debt/GDP ratio or in contingent liabilities;
&#8211; A further deterioration in South Africa&#8217;s trend GDP growth, for example, due to sustained uncertainty about economic policy;
&#8211; Rising net external debt to levels that raise the potential for serious financing strains.
The following risk factors could, individually or collectively, result in positive rating action:
&#8211; A substantial strengthening in trend GDP growth;
&#8211; An improvement in governance that is supportive of public finances and the business climate;
&#8211; A marked narrowing in the budget deficit and a reduction in the government debt/GDP ratio.
KEY ASSUMPTIONS 
Fitch expects global economic trends and commodity prices to develop as outlined in Fitch&#8217;s Global Economic Outlook.

Fitch Affirms South Africa at junk; Outlook Stable

Olivia Kumwenda-Mtambo | JOHANNESBURG
South Africa&#8217;s rand weakened early on Monday after media reports that President Jacob Zuma had survived a no-confidence motion against him at a meeting of senior officials of the ruling African National Congress (ANC) on Sunday
At 0645 GMT, the rand traded at 12.9150 per dollar, 0.35 percent weaker from its New York close on Friday.
&#8220;The local markets were keenly awaiting the outcome of the ANC NEC, some optimistic views in the market that the President would not survive a motion of no confidence, but once again that is not the case, and Mr Zuma remains in his seat,&#8221; Nedbank analysts said in a note.
Zuma is facing mounting pressure against him from ANC members, opposition parties and civil society since he axed respected finance minister Pravin Gordhan in March, triggering credit rating downgrades.
Stocks were set to open flat at 0700 GMT, with the JSE securities exchange&#8217;s Top-40 futures index largely unchanged.
(Reporting by Olivia Kumwenda-Mtambo; Editing by Andrew Heavens)
&nbsp;

South Africa’s rand weakens on reports Zuma survived exit push

Mfuneko Toyana | JOHANNESBURG
Fitch is very concerned that South Africa&#8217;s economic and political situation is not improving, the country&#8217;s second largest federation of trade unions said on Tuesday after it held talks with the ratings agency.
In April, Fitch cut South Africa&#8217;s debt to subinvestment, citing the recent cabinet reshuffle, when President Zuma fired his third finance minister in two years and which it feared would weaken standards of governance and public finances.
Firing Pravin Gordhan while he was abroad on an investor roadshow and the subsequent sovereign downgrade rattled local markets and investors worldwide.
The Federation of Unions of South Africa&#8217;s (FEDUSA) General Secretary Dennis George told Reuters that Fitch said it was also worried about the lack of progress in reforming state firms.
<blockquote>&#8220;They wanted to know how we see the future and what we see happening at the (ruling African National Congress) ANC elective conference in December,&#8221; said George, who was meant to be part of the contingent accompanying Gordhan overseas on the roadshow.</blockquote>
The ruling ANC elects its next leader, who will contest national polls in 2019. The cabinet purge that saw Gordhan removed is seen by analysts as part of a wider power-struggle between factions in the party jostling for top positions and control of state-owned entities (SOE).
&#8220;Fitch are very concerned about what is happening in the country and the fact that things are not getting better, they&#8217;re getting worse,&#8217; George said.
&#8220;They also agreed with us that we can&#8217;t keep bailing out the state-owned companies,&#8221; he said.
Government guarantees to state firms are set to increase to nearly 500 billion rand ($38 billion) in 2017, about a quarter of the total debt, according to the treasury, which says the firms represent a significant risk to already stretched finances.
When Fitch downgraded the rating, it said the reshuffle was likely to &#8220;undermine progress in SOE governance&#8221;, raising the risk that the firms&#8217; debt could migrate onto the government&#8217;s balance sheet.
Fitch was not immediately available for comment.
(Editing by Louise Ireland)
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Fitch “very concerned” situation in South Africa not improving: union

Tiisetso Motsoeneng and Tanisha Heiberg | JOHANNESBURG
Police fired stun grenades and rubber bullets at protesters in southern townships of Johannesburg on Tuesday to quell the latest violence over lack of housing and jobs, piling pressure on President Jacob Zuma&#8217;s government.
Residents in the Eldorado Park and Ennerdale townships in South Africa&#8217;s economic hub pelted police cars with stones and blocked a highway with burning tyres and rocks, prompting riot police in protective gear to fire back at them.
Police said at least 15 people were arrested during the unrest, which started as a protest against the lack of housing and jobs there, and several shops were also damaged and looted.
Poor South Africans in black townships and shanty-towns complain they have not seen any benefits since white minority rule ended more than two decades ago.
But the government is limited by South Africa&#8217;s weak economy and is wary of polices that might further tarnish its image as an investor-friendly emerging market.
Protester Marlene Loggenberg told Talk Radio 702 she has been on a waiting list for a subsidised house for over 30 years.
<blockquote>&#8220;They told me that my salary is too little for a (mortgage) bond and too much for an RDP house,&#8221; she said, referring to government-funded low-cost housing units.</blockquote>
&#8220;We are fed up with what&#8217;s happening here,&#8221; community leader Martha Pitt said, saying unemployment and poor local services were also fraying residents&#8217; nerves.
Another protester, who would not give her name, said she joined the demonstration to demand the government build her a subsidised house or give her a piece of land to build a shack.
Gauteng police spokesman Lungelo Dlamini said police would remain in the area until the situation is under control.
(Reporting by Tiisetso Motsoeneng and Tanisha Heiberg; Editing by Tom Heneghan)

Protesters over lack of jobs, houses clash with South African police

South Africa&#8217;s High Court on Thursday ordered President Jacob Zuma to provide reasons for his decision last month to fire finance minister Pravin Gordhan in a cabinet reshuffle that led to sovereign debt downgrades, eNCA television said.
The opposition Democratic Alliance (DA) had filed the court application to compel Zuma to give his reasons for the reshuffle, which triggered large street protests against the president and led to more calls for his resignation.
The DA has also called for a no-confidence motion against Zuma in parliament.
&#8220;We got the order that we wanted with some very minor adaptations and it allows us now to go ahead with the main review application into the rationality of dropping Mr Gordhan from the cabinet,&#8221; James Selfe, DA lawmaker and head of its executive, said.
The opposition and even some members within Zuma&#8217;s cabinet, including Deputy President Cyril Ramaphosa, said at the time that Zuma removed Gordhan on the basis of a &#8220;spurious&#8221; intelligence report.
That report accused the former finance minister and his deputy Mcebisi Jonas of plotting with banks in London to undermine the South African economy. Jonas was also fired by Zuma.
&#8220;We expect that document to be part of the record,&#8221; said Selfe, referring to the intelligence report.
Ramaphosa usually publicly backs Zuma and his criticism of Gordhan&#8217;s sacking was a sign of deepening divisions in the ruling African National Congress that are likely to worsen until the party elects a new leader in December.
It was not immediately clear if Zuma would appeal Thursday&#8217;s ruling.
In a bid to reassure markets, Zuma has said that he expected the addition of several younger ministers would add energy to his cabinet.
He has so far not given any specific reasons for removing Gordhan and replacing him with new Finance Minister Malusi Gigaba.
(Reporting by Tanisha Heiberg; Writing by James Macharia)

S.A court orders Zuma to provide reasons for firing Gordhan

When the <a href="http://ewn.co.za/2017/03/31/president-jacob-zuma-s-cabinet-reshuffle">axe</a> finally fell on the embattled South Africa’s finance minister, Pravin Gordhan, and his deputy, Mcebisi Jonas, the reactions played out as many people had predicted. The country was hit by an immediate drop in the value of the <a href="http://www.fin24.com/Economy/cabinet-reshuffle-downgrade-knock-rands-emerging-markets-crown-20170406">rand</a> and a sovereign credit rating downgrade from rating agencies<a href="http://www.ujuh.co.za/sp-official-statement-downgrading-south-africas-credit-rating/">S&amp;P </a> and <a href="http://www.ujuh.co.za/and-now-fitch-downgrades-south-africa-to-real-junk-status/">Fitch</a>. Widespread <a href="http://www.timeslive.co.za/sundaytimes/stnews/2017/04/07/IN-PICTURES-South-Africans-come-out-in-droves-to-join-anti-Zuma-countrywide-marches">protest</a> against President Jacob Zuma has since followed.
The ensuing protests and debates are dominated by a focus on the role of individuals: Zuma is the centre of focus as the wrecking ball; Gordhan and to some extent Jonas, were seen as the saviours. The view is that all hell will break loose once these good men are gone.
Given the current state of the economy and the sensitivities of the markets, it is inevitable that South Africans are likely to fixate on the financial outcomes of Zuma’s moves. But focusing too heavily on individuals’ actions and the outcomes from them is dangerous.
This is not because the role of these individuals and the outcomes are unimportant. But it must be the systems and processes that should matter more for an approach that goes beyond the 24-hour news cycle and into rebuilding a better future. The underlying systems of government and party politics that generate and support leaders need to change if the country is not to repeat the recent calamities.
While people may be justified to protest, shout and tweet slogans like “Zuma Must Fall”, it’s a mistake to assume that change in one leadership position will bring about a shift in underlying systems. Likewise, the positioning of Gordhan (and to a lesser extent Jonas) as the saviours speaks to this same problem. Both perspectives are based on an extremely limited conception of how institutions and societies work, hearkening back to the outdated, and ironically colonial, “<a href="https://www.villanovau.com/resources/leadership/great-man-theory/#.WO813aIlHDc">Great Man Theory</a>”.
<h2>It’s the systems that matter</h2>
The Great Man Theory says that leaders are born with a special gift and their unique skills make them indispensable. Worthy successors are thought to be few and far between. Great things can only happen with these chosen people at the helm of institutions or societies.
The prevalence of this view in South Africa is deeply worrying. It shows a shockingly unrealistic understanding of the scope of issues facing the country. It also shifts people’s focus to leaders in certain positions as opposed to systems and institutions.
Good leaders can obviously make a difference, but environments can also exert a profound impact on leaders. Take the American experience: the running joke in the US is that President Donald Trump said he was going to “<a href="http://www.newsweek.com/2017/02/17/donald-trump-drain-swamp-lobbyists-553809.html">drain the swamp</a>” (change the political system), but his recent failings in many initiatives show that “the swamp is draining him”.
It’s certainly possible that a change in leadership at the top may lead to better outcomes and shift the direction of a country. But keeping all of the underlying systems and processes intact will likely guarantee that the future will remain the same.
<h2>Some indicators of underlying change</h2>
To get a better sense of the true impacts of the Zuma <a href="http://www.ujuh.co.za/zumas-cabinet-reshuffle-points-to-the-rise-of-malusi-gigaba/">cabinet reshuffle</a>, South Africans need to assess how it relates to crucial systems, rather than just immediately quantifiable outcomes. For those who are fearing or hoping this most recent political move is a watershed event, the proof of their case will not come in shorter-term outputs, but in real changes to underlying systems, which speak to the strength – or weakness – of institutions.
There have been reports that other cabinet members would <a href="https://businesstech.co.za/news/government/160435/anti-zuma-ministers-threaten-mass-resignation-following-possible-cabinet-reshuffle-report/">resign in protest</a> after Gordhan was removed. Significant resignations by internal senior leaders will be indicative that the current processes for leadership selection and support are no longer holding. If that fails to happen in a meaningful way, it will be a strong indication that the underlying system will not be shaken.
Short of resignation, who will speak out from inside the ANC. There are indications of internal factions in the ANC, exacerbated by the organisation’s 2017 ANC <a href="http://ewn.co.za/2017/01/08/the-debate-over-who-should-succeed-zuma-as-anc-president-heating-up">elective conference</a>. Opening the leadership debates around ANC’s contestations for power will be beneficial. Made public, the rationale and underpinning logic for differences of opinion give insight to both ANC members and the public as to what the real issues are facing the party, its leaders, and the country. If these factional territories are kept hidden rather than staked out in public, it will be a strong indication that the underlying system will not be shaken.
Much of the ANC’s leadership selection and succession processes are highly opaque, making it hard for the public to see just how leaders arrive at their positions. This doesn’t mean there’s anything wrong with that person or those processes, but the lack of transparency allows for every shortcoming to be magnified with suspicions of shady dealings in the background. If the process for the elevation of leaders in the ANC is not made more transparent, it will be a strong indication that the underlying system will not be shaken.
<h2>The bottom line</h2>
The loss of Gordhan and Jonas is no doubt <a href="https://theconversation.com/firing-of-south-africas-finance-minister-puts-the-public-purse-in-zumas-hands-75525">a blow</a> to the National Treasury. Good leadership is always a benefit to institutions. South Africa, like any country, should try to make the most of any good leadership it can find. But this should not blind South Africans to the fact that the finance ministry, and the economy as a whole, can never be wholly dependent on one or two people.
If the country wants real “<a href="http://www.ujuh.co.za/zuma-what-do-we-mean-by-radical-socio-economic-transformation/">radical economic transformation</a>”, it can only come from institutions that are strong throughout and buoyed by the work of many people dedicated to the task of improving the country.
Gordhan himself appears to understand this. Commenting after his dismissal, he said Treasury is in <a href="http://m.ewn.co.za/2017/03/31/gordhan-treasury-is-being-left-in-good-hands">safe hands</a> because its professionals remain committed to ensuring macro-economic stability.
The bottom line is that if South African politics is its own “swamp”, it would be foolish to think that skimming the top (whether that’s in the form of Zuma or cabinet ministers) will be sufficient on its own to improve the situation and keep the country safe from future harm. Anyone who has been in a swamp knows that the most dangerous things lie below the surface, ready to emerge at the right moment for an attack.

South Africa must look beyond individuals to solve the current crisis

Mfuneko Toyana | JOHANNESBURG
South Africa&#8217;s credit rating could get downgraded deeper into junk status if political uncertainty triggered by the recent firing of the finance minister stalls reforms needed to grow the economy, an executive from S&amp;P Global Ratings said on Wednesday.
<blockquote>&#8220;There are risks that potential growth outcomes could be weakened, especially with uncertainty that&#8217;s been brought along in a year where you may not get strong decisions for strong reform programs,&#8221; said Gardner Rusike, the associate director and lead analyst for South Africa at S&amp;P.</blockquote>
S&amp;P downgraded South Africa&#8217;s sovereign credit rating to BB+ with a negative outlook from BBB- grade on April 3, saying the firing of its internationally respected finance minister Pravin Gordhan posed a major risk to fiscal policy.
The new Finance Minister Malusi Gigaba has said Treasury is committed to fiscal consolidation plans outlined in the 2017 budget after S&amp;P and Fitch downgraded the country to sub-investment grade.
Rusike said political jostling ahead of the ruling African National Congress&#8217;s conference at year-end, where the party will elect leaders to contest general elections in 2019, was likely to distract government from implementing economic reforms.
<blockquote>&#8220;You are probably looking at a much longer time line when you are talking about the path of economic growth that can help to stabilise debt,&#8221; Rusike said.</blockquote>
&#8220;We&#8217;ve had three downgrades over the last four or five years which means that the credit story for South Africa has been deteriorating.&#8221;
The country&#8217;s net debt currently sits just below 50 percent of gross domestic product, at around 2.2 trillion rand ($165 billion), and in recent budgets the treasury has said the cost of servicing that debt has been one of the fastest growing items.
($1 = 13.3209 rand)
(Reporting by Mfuneko Toyana; Editing by James Macharia and Toby Chopra)

S.Africa could suffer further downgrades if political uncertainty stalls growth: S&P

JOHANNESBURG (Reuters) &#8211; South African Deputy President Cyril Ramaphosa has said that leaders should listen to <a href="http://cnbc.africa/videos/2017/04/10/thousands-march-in-s-a-calling-for-zuma-to-step-down/">protesters who have taken to the streets demanding that President Jacob Zuma resign </a>or be removed after a cabinet reshuffle triggered damaging credit downgrades. 
Zuma is to step down as head of the ruling African National Congress (ANC) in December but his second term as president only expires after a general election in 2019. Ramaphosa and Zuma&#8217;s ex-wife Nkosazana Dlamini-Zuma are the leading candidates vying to replace him. 
Zuma is widely believed to support his ex-wife&#8217;s candidacy, while Ramaphosa, a wealthy businessman and former trade unionist, has the backing of the ANC&#8217;s labour allies. 
&#8220;People of our country are taking to the streets. They&#8217;re raising their concerns, and I think what we should be doing as leaders is to listen to some of the concerns that are being raised,&#8221; Ramaphosa told the eNCA news network on Sunday after attending an Easter church service in northern Limpopo province. 
Ramaphosa&#8217;s remarks are a marked contrast to Zuma&#8217;s. He has accused the marchers of having racist motives. The protests have had mixed racial profiles, and drew tens of thousands to Pretoria on Wednesday and nationwide on April 7. 
Zuma, who turned 75 on Wednesday, has survived previous protests. But the main opposition party Democratic Alliance (DA) and other parties believe they can drum up support to force Zuma from office following his dismissal of respected Finance Minister Pravin Gordhan in a cabinet reshuffle. 
<a href="http://cnbc.africa/trending/sa-downgrade/2017/04/07/fitch-downgrades-sa/">Fitch and S&amp;P Global Ratings have downgraded South Africa&#8217;s debt to &#8220;junk&#8221;</a>, citing Gordhan&#8217;s dismissal as one reason. 
South Africa&#8217;s top court is considering whether a parliamentary motion of no confidence against Zuma should be taken by secret ballot. Opposition parties have said the motion would be more likely to succeed if held by secret ballot. 
(Reporting by Ed Stoddard; Editing by Alison Williams)

South Africa’s VP, Ramaphosa says leaders must listen to protesters

South Africa&#8217;s new finance minister pledged on Thursday to do what he can to keep the country from a third credit downgrade to junk status, saying he would meet ratings firm Moody&#8217;s to persuade it he will stay on the path of fiscal discipline.
Malusi Gigaba, who replaced the respected Pravin Gordhan in a cabinet reshuffle that triggered credit downgrades to sub-investment by S&#038;P Global Ratings and Fitch, told local investors he would clarify the Treasury&#8217;s policy positions to Moody&#8217;s during an upcoming roadshow overseas.
&#8220;We will do all we can to avoid another downgrade and one of the ways to do that is to engage with Moody’s directly, to demonstrate our willingness to stay the course in terms of fiscal discipline and fiscal consolidation,&#8221; Gigaba told reporters after meeting investors in parliament.
But he added: &#8220;There is no silver bullet in this regard. Nothing is taken for granted and nothing is taken as a guarantee.&#8221;
Gigaba later told the national broadcaster he would tell investors attending an International Monetary Fund meeting in the United States next week that the economy was showing signs of recovery and the government would not spend money it did not have &#8220;whatever the social pressures may be&#8221;.
The cabinet reshuffle by President Jacob Zuma, who is mid-way through his second five-year term ending in 2019, has roiled domestic financial markets and battered the rand.
The opposition has called on Zuma to resign and held protests to force him out of office.
Gigaba, formerly minister of home affairs, said he had briefed Zuma on the implications of the downgrades which could hit the poor hard, as higher debt costs could lead to less money for services such as sanitation and housing. 
Inflation was also likely to rise and consumer spending decrease as essentials such as transport and food cost more, analysts said.
Gigaba said state firms such as power utility Eskom, national airline SAA, have relied on costly government bailouts.
&#8220;In our engagement with the president, we indicated that commitment to stick to the budget as presented in the national assembly in February and to ensure that we pay attention to the governance of state-owned companies,&#8221; said Gigaba.
&#8220;It is a difficult space for everybody given the fiscal constraints, the slow growth in the economy, even though our economy is expected to grow more than it has done last, but its still very slow growth not creating sufficient volumes of jobs required.&#8221;
Gigaba said a new director general for the Treasury would be appointed in May, to replace Lungisa Fuzile who resigned after the cabinet reshuffle.
(Editing by James Macharia/Jeremy Gaunt)

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South Africa must look beyond individuals to solve the current crisis

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downgrade

South Africa’s central bank wary of cutting rates: Kahn

South Africa’s business confidence at seven-months low in May: survey

South Africa’s rand dips as recession stokes downgrade fears

South Africa’s PPC’s FY profit slumps on S&P downgrade

South African recession puts fiscal targets at risk: Treasury

South Africa slips into recession as economy shrinks in Q1

S&P Affirms SA’s foreign & domestic debt, Outlook remains negative

South Africa’s unemployment hits 14-year high as recession looms

Fitch Affirms South Africa at junk; Outlook Stable

South Africa’s rand weakens on reports Zuma survived exit push

Fitch “very concerned” situation in South Africa not improving: union

Protesters over lack of jobs, houses clash with South African police

S.A court orders Zuma to provide reasons for firing Gordhan

South Africa must look beyond individuals to solve the current crisis

S.Africa could suffer further downgrades if political uncertainty stalls growth: S&P

South Africa’s VP, Ramaphosa says leaders must listen to protesters

We will do all we can to avoid another downgrade – SA’s Gigaba

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