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Fitch’s decision recognition of efforts aimed at more inclusive economic growth

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The decision by Fitch to retain South Africa’s sovereign credit rating at its current level – albeit with a rating outlook change – is a vindication of the efforts by government‚ labour and business over the past year to negotiate and undertake structural reforms to drive faster‚ more sustainable and more inclusive economic growth for the benefit of all South Africans.

That’s the view of the CEO Initiative‚ Business Leadership South Africa and Business Unity South Africa in response to sovereign credit rating announcements by Fitch and Moody’s for the country.

“Fitch and Moody’s – in the latter’s credit opinion based on its unchanged investment grade rating of South Africa – highlighted the responsible management of the country’s budget and diligent commitment to fiscal consolidation as positive factors in their assessments of the country.

“Moody’s also recognised the progress made in implementing key structural reforms to improve growth over the medium to long term‚” the business organisations said in a joint statement.

They added that while these announcements were certainly welcomed‚ they saw it as a beginning rather than an end of a process.

“We recognise that a lot of work is still necessary to reach higher levels of growth and we remain firmly committed to the structural reform programme‚ including initiatives undertaken by the CEO Initiative.”

Working together in an unprecedented spirit of cooperation‚ government‚ labour and business had made a great deal of positive progress in a number of key areas‚ they added.

“Representatives from each social partner have worked tirelessly to promote the reforms necessary to stimulate growth and to avert a ratings downgrade and we can be proud of the success achieved on a number of fronts‚” thy stated.

These included:

- An initiative to reduce youth unemployment‚ with the aim of providing employment to 1 million unemployed people (aged 18-29) over a period of three years. This is due to start by mid-2017.

- A R1.5bn fund to invest in small- and medium enterprises‚ with the aim of stimulating growth and encouraging much needed job-creation in the SME sector. Disbursements are due to start in the first half of 2017.

- Positive progress with regard to labour market reforms‚ with discussions on a national minimum wage and management of workplace conflict and strikes at an advanced stage.

- The development of an Agricultural Growth Fund that would bring together the agricultural sector‚ the commercial banking sector‚ the Land Bank and Government in an endeavour to support both existing and new enterprises in the sector‚ and that would support farmers to continue producing through the current difficult drought conditions.

- In the manufacturing sector‚ an initiative to revitalise the Vaal Triangle. The intention of the intervention is for industry in the area to work with Government to revitalise the area’s economy‚ including by reviving existing industry and seeking new opportunities for the area.

- A partnership between business and Government in the tourism sector. This partnership seeks to find ways that industry resources and capacity can be mobilised to support Government in critical areas related to tourism information‚ tourism safety and security and tourism marketing.

“We believe this progress is sustainable and will contribute meaningfully to stronger growth and job creation over the medium to long term.

“Fitch and Moody’s both recognised the importance of strong‚ independent institutions – including the South African Reserve Bank‚ the courts and the Public Protector – in a robust democracy such as South Africa’s‚” the business organisations said.

 

 

 

 

 

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