28 May 2018

BUSA welcomes S&P’s ratings decision and bid to turnaround state-owned entities

Business Unity South Africa (BUSA) notes S&P Global Ratings’ decision to retain South Africa’s sovereign rating at sub-investment grade and to maintain the country’s outlook as stable.

BUSA believes S&P’s decision indicates that the country will be closely watched to ensure it gives effect to the changes committed to in the president’s state of the nation address in February 2018. It is BUSA’s considered view that a sound policy framework, implemented in a coherent manner by the state, is now required to reinforce those commitments.

Despite the damage to the economy and the profile of South Africa due to the condition of many SoEs, S&P – as well as Fitch Ratings and Moody’s Investors Service – regarded the recent changes at SoEs as positive, and a sign that the country is restoring competence and integrity.

The new board appointments at Transnet, Denel and South African Express (SAX), as well as the appointment of Phakamani Hadebe as Eskom CEO, are positive steps and underpin the executive’s promise to strengthen governance and effect the required changes to turnaround SoEs. Hadebe’s appointment as permanent Eskom CEO is an important step towards establishing stability and accountability at the power utility, stated BUSA. BUSA indicated that concrete and sustainable steps are now required by these SoEs to turnaround their fortunes.

“The recent board appointments at Transnet, Denel and SAX, as well as Hadebe’s appointment as Eskom CEO, are a continuation of a series of steps taken in recent months to restore sound governance, ethical leadership and address the mismanagement that has plagued many of South Africa’s SoEs,” said Tanya Cohen, CEO of BUSA.

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