S&P is set to deliver its decision on South Africa’s credit rating later today (22 November).
Osidon CEO Hennie Ferreira reflects on how to turn a ratings downgrade around.
How can South Africa overcome negative credit ratings?
The biggest obstacle to turning around our negative credit rating is debt. And most of the country’s debt is caused by our struggling state-owned enterprises.
The only way to turn the negative credit rating around is to turn around the state-owned enterprises, by drastically cutting costs and revamping productivity levels. Eskom has a new CEO from the private sector, which looks promising.
Unfortunately, job and salary cuts will probably be part of the plan to turn the struggling power utility around.
The biggest factor to consider in that regard will be labour unions – as we can see with the current situation at South African Airways (SAA).
What role does technology play in addressing negative ratings and creating opportunities?
We no longer have an option to use technology, it has become an integral part of all industries in South Africa.
Just as small businesses must embrace change and technology, state-owned enterprises must use technology to increase productivity and efficiency.
That is the only way to create new industries and new types of jobs.
Job losses are always a concern when we talk about automation. How can we ensure we use technology optimally while creating jobs?
Technology should not be equated to job losses. Because of technology, new industries are created and new skillsets required.
If you look at cyber security and artificial intelligence, those are new industries requiring new skillsets.
The important thing is to make sure the workforce adapts to the technology of the day. That way, technology will always make a positive contribution to job creation.
How do we ensure our workforce keeps up with the fourth industrial revolution and receives the needed training?
This is the most important question of them all.
Training is fundamental to success in any field. The private sector and businesses are just as responsible for training their employees as government is.
What we also need to consider is how training offerings are also changing. Traditional education models are no longer adequate to meet the needs of ever-changing industries.
People need to learn skills, not earn credentials. They need flexible short courses that are responsive to the changing market needs.
Where do we get the money to implement technologies and turn the ratings downgrade around?
Through investors, there is enough money in the world. However, in an uncertain economic climate, investors are hesitant.
We need to position South Africa as a favourable investment destination by cutting red tape and deregulating the business environment.
Investors are looking towards Africa and we have the potential to become an “investment paradise”.
No other country in Africa can offer what we do as an investment destination.