Credit rating downgrade is ‘bad news’ for SA‚ Ebrahim Patel says

Economic Development Minister Ebrahim Patel has distanced himself from his Cabinet colleagues who pooh-poohed the credit ratings downgrade of SA to junk status‚ saying on Monday that it was "bad news".

Water and Sanitation Minister Nomvula Mokonyane was among Cabinet ministers who joked about the ratings downgrade‚ saying it provided the ANC and the government with the opportunity to do things their own way.

But in a written reply to a parliamentary question by DA spokesperson on economic development Michael Cardo‚ Patel said the "ratings downgrade was bad news for our efforts to grow the economy at a faster and more inclusive level". He added: "Thus we need to take steps to ensure that we regain investment-grade status from lenders and pursue a credible‚ bold inclusive growth strategy in the interest our people."

• IDC backs black industrialists to the tune of R2.3bnThe Industrial Development Corporation (IDC) has granted a total of R2.3bn in the form of loans and R562m as equity financing to black industrialists‚ Economic Development Minister Ebrahim Patel said Monday. 

Cardo also asked Patel to elaborate on his understanding of the term radical economic transformation.

The minister said the ratings downgrade meant that in the medium-to-long term‚ the levels of domestic savings would have to be increased so that SA could finance more of its growth efforts from its internal resources.

"Foreign investment will remain an important source of innovation‚ new technology and market access and must be encouraged‚ particularly in sectors where domestic capabilities are limited‚" he added.

• Ratings downgrade has to be taken very, very seriouslySouth Africa’s lack of appeal to investors is no laughing matter, especially to the poor, writes Sango Ntsaluba. 

Patel emphasised that radical economic transformation should not be "used as a smokescreen to pursue narrow agendas including the empowerment of a favourite few. If we want to ensure real transformation‚ then the resources of the state and commitments by private capital must be applied with integrity and be free of corruption".

Corruption‚ maladministration by public institutions and "state capture by narrow vested interests" would undermine economic transformation "profoundly".

To be radical‚ economic transformation had to be "bold‚ extensive and implemented expeditiously"‚ he said. This would require a new‚ bolder approach by the business community‚ working in partnership with the state and labour.

TMG Digital/BusinessLIVE