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Some South Africans Argue It's Not Just Their Country's Credit Rating That's Junk Status

A shanty town in Cape Town. Some South Africans argue that investment benefits selected blacks and privileged whites. Creative Photo via Wikipedia by Chell Hill. Creative Commons Attribution ShareAlike 3.0

South Africa's sovereign credit rating has been downgraded to junk status by two rating agencies, S&P Global Ratings and Fitch. The agencies have cited the sacking of respected Finance Minister Pravin Gordhan by President Jacob Zuma as one of the reasons for the downgrade.

The rating is likely to impact the country's ability to borrow as well as discourage investors. According to Chris Malikane, an associate professor of economics at Wits University, the rating will not affect the average South African in the short-term. However, it will lead to higher interest rates in the longer-term.

Malikane pointed out that the main thing the downgrade would bring is:

[…] an increase in the risk premium‚ meaning lenders increase interest rates because of a perceived greater risk in default. The result is households with capital in investments and assets are going to be mostly affected.

South Africans have responded to the news, blaming President Zuma for the downgrade, questioning the credibility of the rating agencies and pointing out the inequality that exists in the country.

Twitter user Dabesa summarised the potential effects of the downgrade:

Another user, chloé, mocked President Zuma for the rating:

Former editor at South Africa's Financial Mail, Barney Mthombothi, remarked:

Nandi joked:

Zimbabwe is currently experiencing severe financial crisis.

“African Snake Doctor” shared a graph showing credit ratings under different post-Apartheid South Africa's presidents:

Moses Mothebe directed his tweet to Zuma supporters:

Zuma and the ruling African National Congress supporters are mostly black South Africans. Zuma has on several occasions blamed white South Africans for poverty and inequality in the country.

However, Duncan Wa Muvenda noted:

1652 is the year the first European settlement was established by the Dutch in South Africa.

Another user shared a photo of a shanty town with the following observation:

AAA is the highest possible rating to be assigned to a country by credit rating agencies.

While Phelelani Mpanza doubted the rating agencies:

Another user wondered:

Mpumelelo Mbatha speculated that the downgrade is an attack on emerging BRICS economies:

BRICS is an association of five major emerging national economies (Brazil, Russia, India, China and South Africa).

Vuyo Ro echoed Mbatha's sentiments:

Last year, BRICS announced that it would set up credit rating agency to rival Fitch and others.

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