Home Tags Posts tagged with "south africa economy"

south africa economy

0

S&P Global has cut South Africa’s credit rating to junk status.

The ratings agency said that South Africa’s political upheaval, including the recent sacking of finance minister Pravin Gordhan, was endangering the economy.

S&P also expressed concern over government debt, and in particular the expense of supporting the state energy firm Eskom.

The news put more pressure on the rand, which was down 2% against the US dollar.

Pravin Gordhan’s sacking, seen as a safe pair of hands and with a reputation for financial prudence, led to a 4% fall in the rand on March 31 and prompted strong criticism.

His replacement as finance minister by Malusi Gigaba was part of a cabinet reshuffle by President Jacob Zuma.

However South Africa’s deputy president, Cyril Ramaphosa, called Pravin Gordhan’s sacking “totally, totally unacceptable” and the Gwede Mantashe, secretary-general of the ruling African National Congress (ANC), also opposed it.

The financial downgrading is likely to make it more expensive for South Africa to borrow money on the international markets, as lending to the country would be seen as riskier.

S&P explained its decision, stating that: “Internal government and party divisions could, we believe, delay fiscal and structural reforms, and potentially erode the trust that had been established between business leaders and labor representatives (including in the critical mining sector).”

“An additional risk is that businesses may now choose to withhold investment decisions that would otherwise have supported economic growth,” it added.

S&P also raised concern about the level of borrowing by state energy company Eskom.

The government guarantees 350 billion rand ($25 billion) of its debt, which is equivalent to about 7% of the nation’s economic output.

For his part, Malusi Gigaba spoke at the weekend of plans to “radically transform” South Africa’s economy.

While he has a track record of policymaking, most recently as home affairs minister, he lacks a background in economics.

That prompted criticism that Malusi Gigaba was too inexperienced for the job.

0

South Africa’s President Jacob Zuma has announced he is replacing newly appointed Finance Minister David van Rooyen with Pravin Gordhan.

On December 9, Jacob Zuma sacked Nhlanhla Nene in a move that sent the rand to record lows and sparked a sell-off in bank shares.

Nhlanhla Nene’s replacement for less than a week, David van Rooyen, is a little known lawmaker.

The latest move sent the rand up almost 5% on December 13.

A more experienced Pravin Gordhan was widely respected when he served as South Africa’s finance minister from 2009 until 2014.

However, Mohammed Nalla, head of research at Nedbank Capital, said having a finance minister serve just two days did not bode well for South Africa’s reputation.Pravin Gordhan South Africa finance minister

“International investors are probably thinking: why didn’t the president make a much more considered decision in the first place?” he said.

The leader of the opposition Democratic Alliance party, Mmusi Maimane, said: “This is reckless by President Zuma – he is playing Russian roulette with the South African economy.”

A statement from Jacob Zuma’s office said he had “received many representations” to reconsider his decision to appoint David van Rooyen.

“As a democratic government, we emphasize the importance of listening to the people and to respond to their views,” it added.

Credit agency Fitch downgraded South Africa earlier this month, leaving the country just one notch above “junk” status. It said on December 10 that Nhlanhla Nene’s sacking “raised more negative than positive questions”.

Nhlanhla Nene’s reluctance to approve a plan to build several nuclear power stations at a cost of up to $100 billion is thought to have contributed to his removal as finance minister.

David van Rooyen will take over from Pravin Gordhan as minister of co-operative governance and traditional affairs.

Marches to call for Jacob Zuma’s removal as president are being planned for five cities in South Africa on December 16 – a public holiday.

The US Federal Reserve is expected to raise interest rates on the same day in a move that could put economies in countries like South Africa under further pressure.

Former Health Minister Barbara Hogan on December 11 called on Jacob Zuma to resign. The highest-profile ANC member to oppose Nhlanhla Nene’s removal, she said that the president had crossed a line and needed to be held to account.

0

Nigeria has become Africa’s biggest economy after rebasing its GDP, leaving South Africa behind.

Nigerian GDP (Gross Domestic Product) now includes previously uncounted industries like telecoms, information technology, music, online sales, airlines, and film production.

GDP for 2013 totaled 80.3 trillion naira ($509.9 billion), the Nigerian statistics office said.

That compares with South Africa’s GDP of $370.3 billion at the end of 2013.

Nigeria has become Africa's biggest economy after rebasing its GDP

Nigeria has become Africa’s biggest economy after rebasing its GDP (photo Reuters)

However, some economists point out that Nigeria’s economic output is underperforming because at 170 million people, its population is three times larger than South Africa’s.

On a per-capita basis, South Africa’s GDP numbers are three times larger than Nigeria’s.

And Nigerian financial analyst Bismarck Rewane called the revisions “a vanity”.

He added: “The Nigerian population is not better off tomorrow because of that announcement. It doesn’t put more money in the bank, more food in their stomach. It changes nothing.”

Rebasing is carried out so that a nation’s GDP statistics give the most up-to-date picture of an economy as possible.

Most countries do it at least every three years or so, but Nigeria had not updated the components in its GDP base year since 1990.

Then, Nigeria had one telecoms operator with around 300,000 phone lines. Now it has a whole mobile phone industry with tens of millions of subscribers.

Likewise, 24 years ago there was only one airline, and now there are many.

International aid donors are keen for more African countries to undertake this process regularly because it enables them to make better decisions when it comes to aid.

[youtube lz7NU4mxd9I 650]

© © 2011 - 2023 BelleNews.com