Investment in South Africa

South Africa’s investment grade is stable… what now?

Wikus Olivier

As we heard the news of Fitch ratings agency leaving the country’s economy outlook status as stable for now, a feeling of relief was felt all round. Moody’s and Standard & Poor also affirmed its level with a negative outlook; but all these agencies are concerned about the country’s low growth rate.

Wikus Olivier, Debt Management Expert at DebtSafe, a well-trusted South African debt review company, says the unchanged status is a good sign because overseas investors still believe in our economy and in South Africa to invest their money.

“Our finance minister’s reputation and commitment to convince overseas investors of the country’s future has finally paid off. The Rand is weak but stable, which was also a factor when the rating agencies reviewed the down-grading process. This is a huge advantage to the country when borrowing money from the World Bank, because interest rates are better and it has a trickle-down effect to the man in the street,” Olivier continues.

He adds that the world will look at our growth and investment climate over the next few months with a magnifying glass. “Government will have to do some serious housekeeping such as keep up sufficient electricity supply and increase employment opportunities,” he says.

Because of the extreme drought in most of the parts of South Africa, we are forced to import huge amounts of food and now, with the stable economic grade, prices are not affected. “This means that prices for things such as food and other imported products will not be increased,” Olivier adds.

“I don’t predict an increase of fuel prices in the next month or two, which will give everyone a breather,” he comments. He cautions however that people should continue to live within their budgets as these are not necessarily indications of an improving economy.

“Cut items from your budget such as DStv or refrain from getting take-aways every week. A family of four spends approximately R250 a week on fried chicken or pizzas – rather deposit that money into a separate savings account so that you have money available for an emergency.

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This edition

Issue 72