The mining industry could be an enormous asset in stabilising and growing the economy post the corona crisis – but the right economic and regulatory circumstances would have to prevail, Minerals Council South Africa stated in a weekend media release, Mining Weekly reported.
Minerals Council South Africa was reacting to the decision of the last of the three main ratings agencies, Moody’s, to cut South Africa’s credit rating to a level below investor grade.
South Africa had been placed in the downgrade situation as a result of its failure to implement a comprehensive package of economic structural reforms, such as quickly enabling private sector investment in power generation, not cutting the expensive and wasteful umbilical cord of State ownership and support to non-strategic, disastrously run state-owned organisations like South African Airways. The country also finds itself in this situation because of a fiscal crisis caused by nine years of corruption and state capture. The fact that not even one of the protagonists involved in the disastrous state capture project had been prosecuted was concerning.
Post coronavirus, South Africa would need to adopt and implement a set of comprehensive structural reforms to materially improve the country’s competitiveness rankings, grow productivity, generate much higher levels of fixed investment – greater than 25% of gross domestic product (GDP) compared with the current 19% of GDP – raise economic growth, and start reducing unemployment and poverty, the Minerals Council emphasised.