Nedbank Group chief executive officer Mike Brown backed the new leader of South Africa’s ruling party, using an open letter to urge the African National Congress’ Cyril Ramaphosa to tackle the country’s economic malaise.
It’s “particularly urgent” that state-owned companies, especially power utility Eskom, are stabilised and the budget in February provides credible solutions so as to avoid further credit-rating downgrades, Brown said in the letter emailed on Monday. “Beyond these immediate priorities, it is important that we have stable and rational policies, creating an environment that encourages growth for businesses and individuals.”
Ramaphosa, 65, narrowly won the presidency of the ANC on Monday night, ousting South African President Jacob Zuma’s preferred candidate and increasing the likelihood Zuma will be removed as head of the country before the end of his term in 2019. Zuma has faced accusations of corruption amid a stagnating economy, with unemployment rising to a 14-year high. Zuma has denied wrongdoing.
“The integrity of spending decisions must be restored across the state and wasteful expenditure reduced,” Brown said. “We also urge you to address the escalating levels of corruption that have permeated South Africa. Evidence of this has become overwhelming and civil society will be looking to you for immediate solutions.”
Brown, who heads up the nation’s fourth-biggest lender, is part of the so-called CEO Initiative, which was set up last year to help the government tackle job creation, boost small-business funding and avert debt downgrades. Zuma’s firing of former finance minister Pravin Gordhan in March put paid to some of those plans and South Africa’s ratings were slashed to junk in April.
As Ramaphosa’s victory became imminent, the rand firmed to levels last seen in March, before Gordhan was fired, reaching 13.53 to the dollar. The six-member banks index rose to a record high, with Nedbank climbing 4.2% to R240 a share.
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