FirstRand Group chairman, Laurie Dippenaar says that corruption, state capture and public in-fighting in the ANC have all combined to reduce South Africa to junk status and worsen the already parlous state of the country’s economy.
Writing to shareholders as part of the group’s annual report, Dippenaar said: “That almost unimaginable amounts of money have been stolen from the fiscus by a few connected individuals, in the most cynical and malevolent manner, is hard to accept. What is even harder to accept is that ultimately it is the poor and the vulnerable members of our society who will be hurt the most.”
He said: “Despite the efforts of the media, the judiciary and civic society, many of the practical mechanisms of state capture remain in place and until these are properly dealt with and the individuals who stole the assets of this country are brought to account, the country’s wounds will not heal.”
Dippenaar said that South Africa’s banks came under significant threat during the financial year, with the worst assaults “emanating from a certain group of individuals and companies whose bank accounts were closed, and those in government who supported them,” he said.
He indicated that a decision to close the Gupta’s bank accounts was not a capricious one, but was instead in line with the requirements of the Financial Intelligence Centre Act (FICA), a piece of global regulation introduced to fight financial crime, such as money laundering and terrorist financing activities.
“However, the actions of the banks unleashed a tsunami of fury from certain quarters of government, in addition and even more worryingly, it precipitated an attack on the South African Reserve Bank (SARB) and the Minister of Finance, and hinted of intended further attacks on the country’s constitution,” said Dippenaar.
“It also gained further momentum through the white monopoly capital campaign with the banks often singled out as the worst examples. This then morphed into attacks on the oligopolistic nature of the sector and its unwillingness to transform,” he said.
Not good news
Unfortunately South Africa’s growth prospects remain weak and uncertain, particularly given persistent political and policy uncertainty, said Dippenaar .
These pressures will continue to weigh on business and consumer confidence which in turn constrains private sector investment, he said.
“I therefore foresee ongoing weakening employment and sluggish GDP growth. The combination of these macro trends, combined with lack of fundamental change at the large, financially stressed and the erosion of institutional strength forebodes the high probability of a local currency downgrade next year.
“In fact some of the comments made by the rating agencies suggest to me that the downgrade is a foregone conclusion.”
You can read the full statement here.