Life after Zuma: ratings agencies see big risks

Ratings agencies have raised issues with government relating to the the ANC’s next leader, listing the succession battle among many of the political risks the country faces in the years to come.

The ANC is expected to hold an elective conference in 2017, where it will elect a new president for the party, as current president Jacob Zuma’s term comes to an end.

Due to the ANC’s dominance in local politics, the next leader of the ruling party is likely to be the next president of the country.

ANC secretary general Gwede Mantashe said in a press conference on Tuesday that, even though ratings firms raised the question of the party’s 2017 conference, government was not working to please these groups, rather working for the good of the country.

Ratings firm Standard & Poor’s is expected to announce its verdict in the state of South Africa on Friday (3 June), either pushing the country into junk status or holding its current position at one level above junk.

Fitch is also expected to deliver its assessment in June.

South Africa’s economy continues to flounder in 2016, with economic woes compounded by high levels of unemployment and a politically volatile environment ahead of the local elections to be held in August.

Much of the country’s economic stagnation can be attributed to long-standing government policies, wasteful spending, and political stumbles by the president.

Leading up to the 2016 elections, ratings firms have warned the government to avoid making populist “quick fix” decisions to fuel political favour among the population, at the expense of the economy, saying that it would ultimately push the country over the edge to junk.

Zuma’s leadership is widely seen as being a hotbed of cronyism, where connected “friends” are given preference in business with the state, or personal friends of the president are uplifted to high positions in state-owned companies.

Zuma is set to play a big part in electing the next leader of the party – though following a number of high-profile political scandals, analysts say an endorsement from Zuma may have the opposite effect.

It is for this reason that ratings firms will have their eyes on the future leader of the party – and the country – in assessing potential risks moving forward.

According to Mantashe, firms should rather focus on the work the government does, and not behind-the-scenes speculation.

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Life after Zuma: ratings agencies see big risks