By Nsikan Ikpe, with agency reports
The tension that has for some time now gripped the business climate in South Africa over whispers of deepening frosty relations between President Jacob Zuma and Finance Minister, Pravin Gordhan, may presently be easing.
This is coming on the heels of fresh revelations that that the two key players in South African national life, and notably its economy, have met for an extended discussion.
Reportedly topping the agenda, newshounds say are the conflicts over SA Revenue Services and South African Airways, the Treasury, Eskom, the proposed nuclear programme, Zuma’s jet and State procurement.
Recently, state-owned companies, SOEs, in which the Treasury has significantly invested 467 billion rand ($31 billion) in state guarantees, have been singled out by ratings agencies as a major risk to the credit rating of Africa’s most industrialized economy.
Equally, the former apartheid enclave and Africa’s second biggest economy has also managed to escape the hitherto looming downgrades from S&P Global Ratings and Moody’s.
This analysts say, has significantly taken some pressure off Zuma ahead of elections in August and giving policymakers more time to implement reforms to boost GDP growth.
Following the narrow escape, presidency spokesman, Bongani Ngqulunga, said the government will act decisively to rehabilitate loss-making state firms as it had lately done with the power utility Eskom.
The power supplier was struggling to keep the lights burning early last year and was forced to implement controlled power cuts that hurt economic activities but has now said it has turned the corner, going without power cuts for about a year.
“I think you will see the same thing also with other state-owned enterprises, so that is what the minister and the president discussed today,” Ngqulunga said, confirming that the meeting between the two gadiators had lasted four hours.
An analyst said reviving struggling state firms will pose a challenge for Gordhan in his bid to revive their performance.
“This kind of lengthy meeting is probably reflective of the clashes within government on how to deal with state-owned enterprises,” said Daniel Silke, a director at Political Futures Consultancy.
Fitch is likely to affirm South Africa’s investment grade rating but may lower its outlook to negative, analysts said.