President Cyril Ramaphosa speaks to supporters during an ANC campaign event in Bloemfontein. Picture: WALDO SWIEGERS/BLOOMBERG
President Cyril Ramaphosa speaks to supporters during an ANC campaign event in Bloemfontein. Picture: WALDO SWIEGERS/BLOOMBERG

With just over a week before what could be the most competitive general election in SA’s democratic era, big business has challenged President Cyril Ramaphosa to fight the rising tide of populism in the ANC for the country to avert a damaging ratings downgrade.

Business Leadership SA (BLSA) — which represents more than 70 of the country’s biggest companies — bemoaned policy "paralysis" ahead of the May 8 vote.

While there has been little movement on key challenges such as the restructuring of Eskom, which received an emergency bail-out in April, elements within the governing party have been making potentially damaging statements about the ownership of the Reserve Bank.

The country got a reprieve in March when Moody’s Investors Service, the only major agency with an investment rating on the country’s debt, skipped a scheduled review.

A downgrade would have had a harmful effect on local financial markets as it would have meant SA falling out of key bond indices, leading to an outflow of as much as $8bn.

That could have translated into more rand volatility and higher borrowing costs through increased bond yields.

"Leading up to elections, government is in a period of paralysis," BLSA COO Busisiwe Mavuso told Business Day on Monday.

"There will not be too much leniency after the elections. Government needs to stop playing in a sea of mediocrity and take a stance on non-populist policies," Mavuso said.

Last week, The Economist, one of the most influential business publications, endorsed Ramaphosa, saying that a strong showing by the ANC would weaken populists within its ranks and enable him to pursue reforms.

The BLSA, which falls under umbrella group Business Unity SA and was a vocal critic of graft during Jacob Zuma’s presidency, said the government needed to be decisive in its defence of the central bank’s independence, the protection of property rights and the unbundling of Eskom, which credit agencies have identified as the single largest risk to the economy.

"The current economic trajectory needs foreign direct investment, but that won’t come if there isn’t certainty and a guarantee that property rights will be protected and that there is basic infrastructure intact," Mavuso said.

"Investors could set up in other rising African countries if SA cannot guarantee a sustainable energy source for production," she said.

Debates about the expropriation of land without compensation and the nationalisation of the Bank have been politically tricky for Ramaphosa to navigate after the party, allegedly at the behest of his rivals aligned with Zuma, adopted resolutions calling for both.

While Ramaphosa has said that taking the central bank into public ownership would ensure the country’s sovereignty, one of his predecessors, Thabo Mbeki, said such a move would be a pointless and costly exercise.

Bank governor Lesetja Kganyago said last week thatthe ANC’s resolution on the central bank was based on ideology and a misunderstanding of what it did.

"I can’t see any benefits and frankly it’s a zombie debate," Kganyago said about the ownership argument in an interview with radio station Power FM.

While private shareholders have no say on the Bank’s monetary policy, critics of the governing party have argued that the obsession in its ranks with the ownership issue was a mask and possibly a step to ultimately attack its policy autonomy.

Ratings agencies have cited the Bank’s credibility and independence as among the country’s key strengths.

In April, Moody’s said SA would be probably see a surge in confidence after the general election as Ramaphosa implements his reform agenda.

Moody’s has said it is looking at institutional and fiscal strength, Mavuso said, and had been encouraged by Ramaphosa’s readiness to follow recommendations from inquiries investigating the rot that beset public institutions over the past decade.

"Ramaphosa’s decisive actions at the National Prosecuting Authority and the SA Revenue Service have been a huge vote of confidence.

"This is what appeases ratings agencies," Mavuso said. With Bloomberg

menons@businesslive.co.za