27 March 2017

BUSA expresses grave concern over recall of finance team from the UK

Business Unity South Africa (BUSA) has expressed grave concern about the decision to recall the Minister of Finance, Pravin Gordhan, and his deputy, Mcebisi Jonas from an investment roadshow currently underway in the UK and scheduled to continue in the US.

The Presidency announced this morning that it had instructed the Finance team to “cancel the international investment promotion roadshow to the United Kingdom and the United States and return to South Africa immediately.” The rand immediately weakened against the dollar in the wake of the news, with economists commenting that the move escalates concerns in the investment community that Gordhan’s tenure may again be in jeopardy.

Business, which was invited, together with Labour to join Gordhan and Mcebisi on the roadshow, has expressed trepidation about the broader impact of this sudden, unexplained decision. “ These roadshows provide a valuable opportunity to promote investment confidence in South Africa – it is most ill-timed and ill advised to cancel these roadshows at this point in time.” Stated Jabu Mabuza, BUSA President.

“The roadshow is a regular annual post budget process, intended to promote confidence in the South African economy and thereby also contribute to stable and improved sovereign debt ratings” said Jabu Mabuza from London today where they had commenced meeting with investors when the announcement of the recall was made. “The role of the Minister of Finance, Pravin Gordhan, in maintaining investor confidence in South Africa cannot be underestimated. “ stated Mabuza.

South Africa was in danger of being downgraded to ‘junk’ status by the international credit agencies at the end of last year, and could again face this possibility again when Moody’s releases its latest ratings on Friday. Gordhan has been instrumental, together with Business and Labour, in keeping a potential ratings downgrade at bay by reassuring investors that there is a steady hand on the country’s economic tiller. The cancellation of the roadshow and the recall of the Finance team brings into question whether this will continue to be the case.

“We are already seeing a negative reaction to the unexplained recall,” says Mabuza, who points out that the country’s business reputation is as much at stake as the value of its currency. “The markets value and reward stability and, when something like this happens, we damage not only business, but our inclusive economic growth and social development prospects as a country.  It undermines attempts by Government, Business and Labour to project a team SA approach.”  stated Mabuza.