Christo Wiese, South Africa’s richest man, says the government needs to cut the cost of the civil service, boost jobs and address loss-making state-owned companies to avoid a credit-rating downgrade.
“We hear that cost cutting is on the cards, I’m just not sure that government is looking at the right areas in which to do cost cutting,” Wiese, the 74-year-old billionaire chairman of Shoprite Holdings Ltd., said. “We have to look at the cost of government.”
Standard & Poor’s in December put South Africa’s BBB- rating on a negative outlook, indicating it may downgrade the nation’s debt to below investment grade. Fitch Ratings has an equivalent rating of BBB-, while Moody’s Investors Service rates South Africa one level higher.
Wiese said the civil service needs to appoint more people with experience and skills. President Jacob Zuma fired his finance minister Nhlanhla Nene in December, replacing him with little known David van Rooyen, a move that sparked a sell-off in the rand and the nation’s bonds. Zuma did an about- turn four days later and reappointed Pravin Gordhan to the post which he had held from 2009 until 2014.
“We should be very grateful for those public servants that are delivering excellent service, but why should we be constantly embarrassed by people appointed to positions for which they are clearly not qualified and then in instances they turn out to be dishonest and or totally incompetent,” said Wiese, who’s worth about $6.3 billion, according to the Bloomberg Billionaires Index.
In his first budget speech on Wednesday since being reinstalled to the job, Gordhan, 66, must contend with dwindling revenue as commodity prices plunge, the worst drought in more than a century and slowing economic growth. Gordhan will also aim to restore confidence in economic policy, keep the nation from losing its investment-grade credit rating and stave off recession.
The government also needs to address state-owned companies that “bleed money in huge quantities,” and the state needs to ensure that “every policy decision” considers whether the outcome will create jobs, Wiese said. The country’s unemployment rate of 25% is the highest of almost 40 emerging-market nations tracked by Bloomberg.
“Why should South Africa have 74 people in the executive branch of government?” he said. “There is no country of comparable size, in fact there is no country I am told, that has that many people in executive government. Those things cost billions.”
This is not the first time Wiese has berated government. Last year he criticized new visa rules that deterred tourism and bureaucratic procedures that made it costly and time-consuming for people to access title deeds to properties where they had lived for decades.
Wiese, who concluded South Africa’s biggest deal in a decade in March when he sold his discount retailer Pepkor Holdings Ltd. to Steinhoff International Holdings Ltd. for R62.8 billion, said he is “not despondent at all, it’s just that sometimes one gets very frustrated.”