{"id":225591,"date":"2018-02-18T17:00:40","date_gmt":"2018-02-18T15:00:40","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=225591"},"modified":"2018-02-18T19:12:27","modified_gmt":"2018-02-18T17:12:27","slug":"zumas-affect-on-south-africas-risk-will-be-as-hard-to-remove-as-the-man-himself-analysts","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/225591\/zumas-affect-on-south-africas-risk-will-be-as-hard-to-remove-as-the-man-himself-analysts\/","title":{"rendered":"Zuma&#8217;s effect on South Africa&#8217;s risk will be as hard to remove as the man himself: analysts"},"content":{"rendered":"<p>The damage done to the economy by nine years of Jacob Zuma\u2019s presidency was so severe that even his decision to resign with immediate effect is unlikely to reverse the decision by ratings agencies to further downgrade South Africa\u2019s credit rating.<\/p>\n<p>According to\u00a0Independent economist Dawie Roodt, there is still a strong possibility that Moody\u2019s and Fitch will announce further downgrades later in the year, opening the door to higher interest rates.<\/p>\n<p>This was echoed by the Financial Times&#8217; <strong><a href=\"http:\/\/www.afr.com\/markets\/debt-markets\/dont-count-on-jacob-zumas-removal-to-cut-south-africas-risk-premium-20180215-h0w4x8\" target=\"_blank\" rel=\"noopener\">Lex column<\/a> <\/strong>&#8211;\u00a0the oldest and arguably the most influential business and finance column of its kind &#8211;\u00a0which argued that Zuma&#8217;s slow-going removal was\u00a0only half the job facing new leader Cyril Ramaphosa.<\/p>\n<p>&#8220;South Africa&#8217;s promise as the next great turnaround story \u2014\u00a0like Brazil\u00a0\u2014 will not come true simply because the African National Congress orders Mr Zuma to go,&#8221; it said.<\/p>\n<p>&#8220;The corruption, political infighting and mismanagement that have distinguished his time in power is entrenched.&#8221;<\/p>\n<p>&#8220;The yield on benchmark 10-year bonds might have fallen 80 basis points to 8.4 per cent since Mr Ramaphosa was picked to succeed Mr Zuma. But it remains about 4 percentage points above inflation \u2014 a real yield that beats most emerging markets.&#8221;<\/p>\n<p>According to the Lex column, four things need to happen to warrant a substantive rise in South African bond prices:<\/p>\n<ul>\n<li>a stingy budget;<\/li>\n<li>reassurance that Moody&#8217;s will not cut the only remaining investment-grade rating;<\/li>\n<li>a steady domestic inflation path;<\/li>\n<li>greater stability in global bond markets.<\/li>\n<\/ul>\n<p>&#8220;All these outcomes are needed for South African bonds to become the emerging markets trade of this year,&#8221; it said.<\/p>\n<hr \/>\n<p><strong>Consumers<\/strong><\/p>\n<p>Neil Roets, CEO of debt counselling firm, Debt Rescue, said the next hammer blow to strike consumers will be finance minister Malusi Gigaba\u2019s budget speech on 21 February during which he is expected to announce radical steps to plug the government\u2019s R50-billion plus budget hole through increased taxes and possibly even a higher VAT rate.<\/p>\n<p>\u201cThere is no doubt that although there is a sense of elation that we may be seeing the beginning of the end of state capture and widespread corruption, we are nonetheless in for a very rough ride before we will start picking the fruits of Cyril Ramaphosa\u2019s presidency,\u201d Roets said.<\/p>\n<p>He added that while he fully expected the economic situation to improve over time, consumers would have to exercise patience.<\/p>\n<p>\u201cThe damage done to every aspect of the economy by Jacob Zuma and his cohorts has been so severe and so deep rooted that it is going to take years rather than months to reverse.<\/p>\n<p>\u201cIt will not be before we see the guilty put in jail and those in government and in state owned enterprise fired for misconduct that the economy will begin to recover.<\/p>\n<p>\u201cThere is no doubt that there are massive amounts of investment capital parked overseas waiting to be brought to this country to be invested in multiple sectors of the economy. This, however, is not going to happen before investors are satisfied that the situation has been turned around and that South Africa has once again become a safe investment haven,&#8221; he said.<\/p>\n<p>Roets added that there was\u00a0growing evidence of tax avoidance and even illegal tax evasion and this is something the state cannot afford.<\/p>\n<p>\u201cThere is also a likelihood of growing dissatisfaction with the government\u2019s lack of service delivery which will manifest itself through increased violence and protest action.<\/p>\n<p>\u201cThe harsh reality is that in order to get the country out of the hole in which it finds itself thanks to the massive maladministration of the Zuma government, we are all going to have to pull together and do our best to grow the economy based on sound economic principles of hard work and prudent investments,\u201d Roets said.<\/p>\n<hr \/>\n<p><strong>Read:\u00a0<a href=\"https:\/\/businesstech.co.za\/news\/finance\/225571\/rand-cheers-zuma-exit\/\" target=\"_blank\" rel=\"noopener\">Rand cheers Zuma exit<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The risks brought to the country by Zuma will prove as difficult to remove as the man himself, say analysts.<\/p>\n","protected":false},"author":10,"featured_media":24779,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[12847,26],"class_list":["post-225591","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-ceo-of-debt-rescue","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/225591","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=225591"}],"version-history":[{"count":8,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/225591\/revisions"}],"predecessor-version":[{"id":226263,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/225591\/revisions\/226263"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/24779"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=225591"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=225591"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=225591"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}