Practice Leader for FrontierView’s Sub-Saharan Africa research practice, William Attwell, was recently quoted in a Bloomberg feature. He correctly predicted that the weak state of public finances would lead to Moody’s downgrading South Africa’s sovereign credit rating outlook from “stable” to “negative”.

The downgrade was preceded by notable market developments:Screenshots of the Bloomberg article, South Africa May Lose Moody's Stable Outlook. But It's a Close Call

  • Due to low growth, South Africa experienced a US$ 3.5 billion tax revenue shortfall for 2019/2020, as revealed in the finance minister’s medium-term budget statement.
  • The public debt profile presents a growing risk; debt will likely reach 71.3% of GDP by 2023 and increasingly force the government to make spending cuts elsewhere, resulting in lower demand from some public-sector customers.
  • Recent power outages imposed by beleaguered state power utility Eskom are exacerbating the low-growth environment.

Company executives should expect increased FX volatility as markets react to the downgrade, and subdued customer demand through 2020.

For practical tips on achieving sales despite the economic slowdown, purchase FrontierView’s report on How to Win in Slow-Growth South Africa from our online store. Looking for more tailored insights on how you can win in Sub-Saharan Africa in 2020? Contact our team today.

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