SOUTH AFRICA :THE NEW JUNKYARD DOG ON THE BLOCK?

The finance minister, Pravin Gordhan, and his delegation recently returned from an overseas road trip in an attempt to prevent a downgrading in South Africa's credit rating to junk status. At a report back press briefing by the finance minister, it was apparent that his meeting with investors and rating agencies did not produce a positive outcome. South Africa will in all likelihood be downgraded to junk status. The market is troubled with South Africa's economic indicators which portend poor growth leading to further deterioration in the ratio between government debt and GDP. Besides the economic indicators there are unavoidable political, labour and social issues that affect the decision to downgrade South Africa's credit rating. Government compelled by economic necessity has only recently begun to pay attention to the myriad of problems facing the country. A first step was co-opting the business sector for advice and counsel. It must do considerably more, including zero tolerance to chronic theft of the country's resources through graft, corruption, neglect and crony capitalism. For years investors and rating agencies paid scant attention to the diversion of public funds towards private interests. As long as world demand for South Africa's commodities remained high, the ruling party's predilection for feeding at the trough was tolerated by investors and rating agencies. No more - with the country's commodities no longer supporting the economy, international investors are running scared, and have no interest in waiting to learn if South Africa can pay its debts. Investors are driven by return on investment. Investing in South Africa is no longer considered prudent. Simply ask Barclays Bank and others who will likely follow Barclays decision to disinvest. The country can expect trying economic times if it's credit rating is downgraded. On the bright side it will give the country the opportunity to correct it mistakes, and reinvent itself with new, competent and charismatic leadership.