The business community has welcomed ratings agency Standard & Poor’s (S&P’s) decision to retain South Africa’s sovereign credit rating at its current level, which meant that the country’s long-term foreign currency debt was rated as investment grade by all three major rating agencies.

“This is a vindication of the efforts by government, labour and business over the past year to negotiate and undertake structural reforms to drive faster, more sustainable and more inclusive economic growth for the benefit of all South Africans,” the CEO Initiative, Business Leadership South Africa and Business Unity South Africa said in a combined statement at the weekend.

The entities noted that the ratings actions and opinions published recently were testament to the fact that the responsible management of the country’s budget and diligent commitment to fiscal consolidation would benefit its growth significantly in the long term.

Further, they stated that the announcements affirmed investors’ conviction in the South African economy, “but we see it as a beginning rather than an end of a process. We recognise that a lot of work is still necessary to reach higher levels of growth and we remain firmly committed to the structural reform programme, including initiatives undertaken by the CEO Initiative”.

Meanwhile, the entities lauded cooperation between government, labour and business, noting that this has led to a number of successes, including the development of an initiative to reduce youth unemployment, aimed at providing employment to one-million unemployed people over a period of three years. This is due to start by mid-2017.

Further, a R1.5-billion fund to invest in small- and medium-sized enterprises (SMEs), with the aim of stimulating growth and encouraging much-needed job creation in the SME sector is also set to start in the first half of 2017.

The entities said progress had also been made with regard to labour market reforms, with discussions on a national minimum wage and management of workplace conflict and strikes at an advanced stage, while the development of an agricultural growth fund would bring together the agricultural sector, the commercial banking sector, the Land Bank and government in an endeavour to support existing and new enterprises in the sector, and that would support farmers to continue producing through the current difficult drought conditions.

In the manufacturing sector, an initiative to revitalise the Vaal Triangle was also being undertaken. The intention of the intervention is for industry in the area to work with government to revitalise the area’s economy, including by reviving existing industry and seeking new opportunities for the area.

Government and business will also engage further in the tourism sector.  This partnership seeks to find ways that industry resources and capacity can be mobilised to support government in critical areas related to tourism information, tourism safety and security and tourism marketing.  

“The ratings agencies have recognised the measures already implemented to reduce inefficiencies in the economy and we will continue working on additional structural reforms to unlock the country’s full growth potential,” the entities stated.

All the agencies recognised the importance of strong, independent institutions – including the South African Reserve Bank, the courts and the Public Protector – in a robust democracy such as South Africa’s.

“It is essential that we value and build on these strengths and jealously guard the independence and capacity of our institutions in our hard-won constitutional democracy.

“We will continue working with all South Africans towards a society that is fair, inclusive and prosperous for all who live in it. Our country may experience pain in the short term, but we will emerge stronger over the long term,” they stated.