Fitch Ratings’ Commentary on South Africa Preferred Outcomes Coalition Negotiations is Political Manipulation


07 June 2024 -  The APRM undertakes routine analyses of rating actions and commentaries assigned by international credit ratings agencies to African Union Member States. This is in line with the African Union Assembly of Heads of State and Government Decision [Assembly/AU/Dec.631(XXVII)] and Article 6(g) of the African Peer Review Mechanism (APRM) Statute (2020) which mandates the APRM to support African countries on credit ratings.

Accordingly, the APRM notes with concern the commentary by Fitch Ratings issued on 04 June 2024 in which the rating agency states that, “from its various permutations, it believes that a coalition between the Democratic Alliance (DA) and the African National Congress (ANC) would likely result in policy continuity, the least significant changes to key credit metrics over the medium term and enhanced fiscal tightening”. According to Fitch Ratings, “South Africa’s debt trajectory would face additional risks if the former ruling party -ANC, enters into arrangements that rely on support from the uMkhonto weSizwe (MK) or the Economic Freedom Fighters (EFF)”, which Fitch characterizes as “populist parties with radical agendas, that pose challenges to macroeconomic stability leading to a broad weakening of investor confidence and eroded governance”.

Given the influence that Fitch Ratings command in the global financial markets, the APRM views the comments made by Fitch Ratings as politically motivated and tantamount to political interference in the internal political affairs of an African Union Member State, the Republic of South Africa. This is especially important considering that the commentary has been issued amidst ongoing negotiations by political parties to form a coalition government or a government of national unity following the general elections in South Africa which have produced no outright winner. As a Global Financial Institution Fitch Ratings should conduct itself as an independent and non-political institution. 

The APRM views this comment by Fitch as premature and unsubstantiated. Fitch should have waited for the outcomes of the ongoing negotiations by political parties and the resulting policy choices to make conclusions that are based on facts and informed analysis.

For inquiries please contact: 
Dr. McBride Nkhalamba - Ag. Director of Governance & Specialised Reporting 
Dr. Misheck Mutize - Lead Expert on Credit Rating Agencies;