There was, understandably, a collective sigh of relief following the Moody’s assessment – but also concern that South Africa must still survive the imminent verdicts of the other two ratings agencies, Standard & Poor’s and Fitch – who are generally sterner in their judgments than Moody’s.

There is also a general perception that the downgrade threat has resulted in a new-found unity between government, labour and business. Avoidance of the downgrade was, according to Deputy President Ramaphosa, “a great success for us because that shows what we can achieve when we work together.”

According to Finance Minister, Pravin Gordhan “We developed a common intent among labour, business and government that we don’t want to be downgraded and that we have many positives to say about ourselves.” On Monday, 9 May he added that he was “very optimistic that the Team SA approach is one that we can extend to the next two ratings agencies … and in particular, the interaction between labour, government, and business.”

Also on Monday night President Zuma promised that business and government would “work to reduce policy uncertainty and shore up the confidence in government’s ability to deliver on its promises of boosting growth.”

The President’s assurances are most welcome because much of the present downgrade threat has been created precisely by deep “uncertainty” in several key areas of government policy. These include

All this is taking place against the backdrop of a gargantuan struggle for control of the ANC following perceptions that President Zuma has succeeded in capturing the commanding heights of the state. These include key state organisations – such as the National Prosecuting Authority, the intelligence services, the Hawks and the SABC – that were once regarded as components of the “institutional strength” that had so impressed Moody’s.

A key aspect of this struggle is the continuing battle between the President and the Minister of Finance for control of financial policy. Minister Gordhan is fighting valiantly to hold the line of fiscal responsibility – so essential for future ratings – in the financial policies of the state and within the boards of key state corporations. The President reportedly wants to prevent Minister Gordhan from thwarting his plans for the SAA and for the building of nuclear power stations.

It is considerations such as these – and, in particular, the outcome of the struggle between the President and the Minister of Finance – that will determine future ratings.

Deputy President Ramaphosa and Minister Gordhan are quite right to emphasise the importance of national unity in addressing South Africa’s enormous economic challenges.  This is also one of the main requirements in the National Development Plan (NDP).  But how will we be able to maintain national unity when, in terms of its National Democratic Revolution (NDR), the ANC government is committed to progressively limiting the economic roles and position of minorities on the basis of their race?

The government must choose either the genuine cooperation between all role players and communities that is implicit in the NDP and in the approach now advocated by Minister Gordhan and Deputy President Ramaphosa – or the division and economic collapse that will inevitably follow the further implementation of the NDR.

By Dave Steward, Executive Director of the FW de Klerk Foundation

Photo credit: