Late last night Standard & Poore Global ratings agency announced its decision to downgrade South Africa’s long term local currency rating to junk status with a stable outlook. Not to be undone, Moody’s placed the country on review to be downgraded.
This on the one hand came despite more stable inflation figures and on the other hand perhaps in salience with former minister of finance Pravin Gordhan’s utterances at the Daily Maverick’s ‘The Gathering’ event of the previous day. ‘Vote for Ramaphosa and you will not see any downgrades’. Gordhan the most visible former finance minister remains in the South African limelight despite being fired end of March for the second time.
Gordhan’s personal history makes him no stranger to activism. He has in his new position of ordinary Member of Parliament revived this activist role for which we may salute him. He has become in his own right a crusader against what is called state capture. Yet we equally must ask questions of this crusader as to what this means.
No former finance minister in the history of the ANC in government appears this unsettled, publicly vocal and politically active in a new form of activism as Gordhan. He is invited to every known and unknown gathering, it is Gordhan that links the dots for a claim of a state capture, Gupta Leaks, interrogates Eskom officials, former colleagues. Yesterday in that same vein he told a largely white audience, vote for Ramaphosa downgrades would be a thing of the past.
It then becomes important to ask why Gordhan came to assume the messianic role of an SA economy. Was it a natural progression or a choreographed display? Gordhan was never so adored in his first tenure as finance minister. It is in his second coming as finance minister that we saw him crafted and reconfigured as the singular reason for SA saved form a prophesied junk status.
Gordhan buoyed by the commentary of media based economists found his relevance in what was seen as an apocalyptic end of SA. We therefore must appreciate the scripted role of fear mongering of a doomed SA, once junk status is exacted. Well SA no different to Brazil and Argentina finally was doomed to junk status and South Africans discovered the exacted junk status did not spell the end of SA.
Gordhan’s enlarged relevance is therefore intrinsically linked to the economic prophecies of doomed junk status. When we hear a bold Gordhan categorically say to SA, vote for Ramaphosa and this thing of junk status is history is to appreciate the symbiotic relationship shared between rating agencies and Gordhan, where one feeds of the other in what appears an agreed transaction.
Jogging our collective memory back to the last firing of Gordhan at the end of March, we saw how rating agencies inserted themselves into our domestic politics. It is not far-fetched to conclude the downgrading of SA to junk status was nothing but the moral support rating agencies showed towards Gordhan at the time of his firing. It goes without saying if a country is downgraded as an investment destiny, its currency usually suffer with many ramifications. Gordhan, the communist politician therefore becomes the scripted messiah for our collective escape from doom, need I remind you a crafted doom fuelled by a media that creates enough consternation in SA minds. On the other hand Gordhan equally becomes the automatic means for us to be a safe investment destination.
Gordhan’s loyalty to these rating agencies is unparalleled and in turn they are loyal to him and will not relent for they still hope he will be returned as minister of finance. One therefore must not consider the words of Gordhan as ludicrous; he certainly knows that SA’s junk status is an orchestrated political game in a contest of political and economic interest. We know economics is and remains a political argument.
Gordhan with his certainty of claim as to what a Ramaphosa presidency will mean, unequivocally tells us he and the rating agencies are and remain in control of SA’S economic future. He tells us unless their candidate is endorsed, South Africans must get used to its junk status. It is clear Gordhan is hoping for a Ramaphosa ascendancy, nothing wrong with that its his right since we all have our preferred candidates.
Gordhan’s activism however is not as innocent as in the interest of SA as accepted in some circles; it registers the shrewd tactics of an ambitious politician, meticulously at work for his personal self interest regardless to what it costs SA. Don’t forget it is Gordhan who at one stage believed his position as finance minister in power equalled that of the elected president. Will it mean Ramaphosa will be directed by Gordhan making him the de facto prime minister of SA should his candidate become SA president? Is he guaranteed the finance portfolio, if so why?
The activism of Gordhan is also questionable for its now confirmed uncritical singular focus on Gupta led companies as the culprit. The current parliament enquiry in claim of state capture evidence in Eskom confirms the chameleon nature of this crusader’s activism. Gordhan is loud and captures any platform on the state capture claim, yet Gordhan finds no challenge that 93% of Eskom’s annual procurement is spent on white owned interest companies. It strangely does not matter to Gordhan and many others in our discourse that the same is true of most state owned enterprises, SAA, Transnet, and Denel etc. The questions remains, why would this pharmacist and known activist from communist ideology find it comfortable and correct to perpetuate the apartheid gross economic access disparities immanent in black and white identities?
Why is there no urgency to condemn companies like Glencore, BHP Billiton etc.? Where is this activism when Eskom is forced by its white suppliers to buy coal at three times a higher price per tonnage?
It then appears not strange that soon after his Daily Maverick address Standard & Poore despite a better outlook on inflation decided to downgrade SA to junk status. It then appears Gordhan’s utterances and the subsequent rating agencies (Standard & Poore and Moody’s) announcements is not mutually exclusive. Is it possible that SA’s economic reality is choreographed to favour a particular set of political and economic interest not excluding personal interest?
Gordhan intends to use this junk status bogeyman for as long as he can, after all he derives his political relevance and identity from it. He intends using it to scare SA into his political thinking. He ultimately has this as his meal ticket to the apparent reserved finance minister position under an envisaged Ramaphosa leadership. Gordhan therefore by implication tells us when Nkosazana Dlamini Zuma is elected to lead; we must expect the junk status to continue. With this he appears to direct ANC branches into who to choose. Gordhan’s activism in this season remains questionable and he must know we see through it.
The ANC must engage the actions of the rating agencies and that of Gordhan for what it means for South Africa.
By Clyde Ramalaine