- SA Finance Minister, Pravin Gordhan
Back in March, I was riding in an Uber car to my Johannesburg hotel. While most of the Uber drivers I’ve met in South Africa have hailed from Congo, Malawi, and Zim, this guy was born in Soweto. We were listening to talk radio, and the show was discussing the fact that the Moody’s regulators were in town, considering a downgrade on the government bond rating to “junk” status. The announcer said,
“If you see some of these guys — they are probably wearing button down shirts and looking down — why don’t you go buy them a beer?”
My driver could hear my American accent, and looked at me and asked if I was one of those guys. I smiled at him and said no, and he said, oh, I was going to give you a free ride and go buy you a few beers as a service to my country.
He was right to be concerned. It didn’t look good for the country. (And I would have felt bad taking the beer from him because the Rand was so weak that beers were practically free for me anyway.) In turn, I was pleasantly surprised when Moody’s last week confirmed the country’s Baa2 rating (still investment grade), despite a spate of bad news. And I think it was the right call.
While it is true that the South African media and the courts have raised some very serious and disturbing accounts of bribery and corruption in government in recent weeks and months, and President Zuma even stood up and pledged he would pay back the country for the use of government funds to improve his private Nkandla homestead… the fact that the media can report on these findings, that the court can cast judgment on the president, and that the president felt compelled to respond in this manner demonstrates that democratic institutions are actually working in this country! It is difficult to imagine, for example, Zimbabwe’s President Robert Mugabe conceding even an inch in such regard.
Similarly, when Zuma appointed an unknown and seemingly incompetent individual as finance minister back in December, he immediately faced a litany of bad press and intense pressure to reverse himself. Within days, Zuma reversed himself, and appointed the highly respected and experienced Pravin Gordhan to the job. Pessimists decried the whole episode as further indication of Zuma’s poor leadership. For those of us thinking about whether democracy has taken root, it looked like a healthy example of restraint on the executive. And while Zuma has rebuffed calls for his resignation, it is unimaginable to me (famous last words), that he has any ambitions for a third term.
With its warts and blemishes, South Africa’s democratic institutions have fared pretty well so far. And I’m glad that the Moody’s folks were broad-minded enough to see that. If they hadn’t, the already fragile economy would have taken a really big hit, in turn making it tough for democracy to survive.
The next big test will be the August 3 municipal elections. And of course, the other ratings agencies might not be so enlightened in their judgments.