The first question that everyone is asking regarding junk status is what exactly is it? Junk status refers to the credit worthiness and how investable a country is. As will be shown later in this article, being declared junk status is highly problematic.
Criteria such as unemployment, projected growth, government stability (LOL – even the earth knows how that’s going), the bank system and the state of the economy are taken into close consideration. But how are we meant to grow when our money is diverted to Nkandla and the pockets of our fellow ministers?
S&P has downgraded the South African economy to a BB+, one rating below Junk Status (i.e. The highest/best possible rating of Junk Status).
“At 5:20PM the rand was trading at R13.52, before dropping sharply to trade at R13.56 just 10 minutes later.”
The S&P claims that they are not extremely concerned about who exactly is in position of Finance Minister but rather their main concern for the economy is the continuity of strategies. The radical transformation plan intended to be set in place by Malusi Gigaba threatens this continuity. It allegedly takes the economy on a different route from Pravin Gordhan’s.
Being downgraded makes it harder for South Africa to borrow money from foreign investors because we have to pay more. Foreign countries dislike investing in “Junk Status” economies because they are seen as more likely to not get a good return on their investments.
Once again, the group of people that are affected the most by this calamity are the lowest income group. The people who will lose jobs, money and basic needs due to foreign investors retracting their investments are the people that we must keep in mind as we think forward; the gap between the privileged and underprivileged will increase dramatically.
We are now fervently awaiting the rating that Moody’s decides to give us. They will hopefully communicate this by Friday. Fitch is not bound by deadlines so they can act whenever they feel necessary. RMB currency strategist John Cairns said that the big three ratings agencies will most likely share the same negative outlook.
South Africa has been nearing Junk status for a very long time, merely missing the mark each time we were rated. However hitting the target of junk status shouldn’t have been and still shouldn’t be our goal. There have always been ways to avoid junk status and thus, there will always be ways to recover from junk status.
The well awaited things we need to do, include:
- Ridding the country of political statements and policies that diminish the trust of those in South Africa as well as the trust of future, foreign investors.
- Political rivalry that gives off a negative image of the state of our country.
- And essentially, electing a president that is capable of instilling foreign confidence.
These aren’t exactly things that we can conjure up now to bring South Africa back up again, but there is hope. In numbers, our goals can be reached.
Luckily, Anti-Zuma protests are quickly gaining momentum. Thanks to social media platforms, especially broadcast-ridden WhatsApp, the message of marches taking place on the 7th of April are spreading fast. Today, many South Africans united wearing the color black in honor of Black Monday.
South Africa, we must keep up the momentum and bear in mind what all of these protests and symbolic pieces of clothing mean. Keep the message in mind and together, we work towards a common goal. Regardless of skin colour, gender or any other identity, we all want a better South Africa.
There is a beautiful sameness in our diversity.
Let’s make our country reflect it.