The DA will, in terms of rule 103 of the Parliamentary rules, call for a debate of public importance on South Africa’s economy following the downgrades of South Africa’s four major banks by Moody’s rating agency and the collapse of African Bank.
Moody’s rating agency downgraded the credit ratings for Standard Bank, ABSA, FNB and Nedbank, following last week’s rescue of African Bank by both the National Treasury and the Reserve Bank.
It is arguable whether the downgrade was justified based on the banks’ financial stability.
But what is certain, is that international sentiment is turning negative on South Africa’s economic outlook.
This is a significant problem and is rooted in our relative under-performance in economic growth and job creation.
Indeed, the Governor of the Reserve Bank previously cautioned on our deteriorating economic outlook.
We have also seen broad unemployment force its way to 35.6% – meaning 7 573 000 South Africans are at home with no income.
All of this points to the reality that South Africans are experiencing difficulty in their personal finances.
It is therefore not surprising that the first high-profile casualty was African Bank – borrowers are struggling to repay their loans and our banking supervisors’ capacity to detect and address problems with the sector is in need or urgent discussion.
The recent downgrades of all major South African banks will raise the risk profile of South Africa, branding our economy a less attractive investment destination and stifling economic growth as investors seek more lucrative opportunities elsewhere.
It is abundantly clear that urgent action is needed.