Global financial executives behind SA despite expected ratings downgrade

JOHANNESBURG – The much awaited and controversial ratings review from S&P Global Ratings will be announced on Friday June 3. It is widely expected that South Africa’s long-term sovereign local-currency debt rating will be downgraded by one notch‚ to “junk” status. Such a downgrade signals a riskier investment climate, brings forth dire consequences for borrowing costs, foreign direct investment and employment.

On the eve of local government elections, the Presidency and the ANC issued pre-emptive statements to shield President Jacob Zuma and the ANC led government from a possible backlash amid reports that President Zuma is at war with Finance Minister Pravin Gordhan and rumours of state capture.

Notwithstanding the current political turmoil and economic climate in South Africa, the global body for CFOs, the International Association of Financial Executives Institutes (IAFEI), representing more than 20 member countries and the world’s leading and respected CFOs announced today that South Africa will host the 46th World Congress of CFOs in November this year.

“There seems to be a ‘mismatch’ with the rating agencies’ assessment of South Africa’s growth prospects, and multinational company CFOs. Rating agencies each use their own model and assumptions to determine a country’s status, which is often not a true reflection of the situation on the ground taking our unique environment into consideration,” says SA Institute for Business Accountants’ (SAIBA) CEO Nicolaas van Wyk.

“IAFEI has thus endorsed South Africa as a key player in global financial markets and the preferred investment gateway into Africa. It is evident that global finance leaders will not be deterred whatever decision is reached by ratings agencies,” comments Van Wyk.

IAFEI Chairman and CFO of Irplast S.p.A, Fausto Cosi believes we can be optimistic about the global economy: “The rationalisation programs implemented by companies over recent years are producing positive results, just as government reforms are helping companies reduce production costs and encourage the recruitment of young people.”

The world has undergone a period of natural selection however it is now time to find a new path to growth and Africa can become the great continent of hope by unlocking its potential.

According to Van Wyk, “Africa attracted $73,5 Billion in foreign direct investment in 2015. In the next 15 years 370 million youth will enter the job market. By 2050 Africa’s population is estimated to reach 2 billion people. As CFOs of the world’s largest companies we need to ensure that development takes place at the local level and in a fair manner. The world’s global economic system is teetering on the brink due to mass migration, population growth, growing unemployment and huge debt burdens.”

Traditional means are no longer providing answers. The global CFO community needs to play a stronger role in mapping the path to recovery and can no longer just rely on politicians and governments to solve the world’s problems.

About SAIBA – www.saiba.org.za

The Southern African Institute of Business Accountants (SAIBA) is a stator recognised controlling body for accounting and finance professionals operating in Southern Africa. SAIBA is the custodian and awarding body for a number of professional designation including the official designation for finance executives, CFO(SA).  Its members enjoy statutory recognition in more than 13 statutes and regulations. SAIBAs reciprocal agreements with UNISA SBL, SAIT, CIMA, IAFEI and others ensures that we follow best international practice in setting standards and a code of conduct for our members. With more than 30 000 members and associates, its focus is on assisting members to identify opportunities for growth within a complex business and legal environment.

About IAFEI – www.iafei.org

The International Association of Financial Executives Institutes (IAFEI) is a private non-profit and non-political association of Financial Executives Institutes from all over the world. Founded in 1969, IAFEI currently has 20 member institutes in the Americas, Asia, Europe and the Middle East, with a total membership of over 17 000 financial executives.

IAFEI aims to:

• build and improve mutual understanding internationally among financial executives through the exchange of financial information, experience and ideas;
• provide a basis for international cooperation among financial executives toward making financial systems and regulations more uniform, compatible and harmonious worldwide;
• promote ethical considerations in the practice of financial management throughout the world.

For more information visit www.saiba.org.za