Junk Status: What Does It Mean For South Africans?

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12th April 2017
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On the evening of the 3rd of April 2017, Standard and Poor’s (S&P) revealed their verdict that South Africa had been downgraded to Junk Status. The country of South Africa has been left reeling, with many unsure of what this means for the state of our country and our future.


Who is Standard & Poor’s?

And why do they have a say in the status of our country? S&P have been providing international financial market intelligence for the past 150 years. As the leading index provider and independent credit rating providers, it is one of the top three rating agencies in the world. Its verdict is usually met with little opposition.


What Caused the Downgrade?

S&P attributed the downgrade to a lack of confidence in the South African government following the cabinet reshuffle. The removal of Pravin Gordhan as finance minister left many of the country’s citizens and its major investors with little faith in the country’s future. Calls for President Jacob Zuma to step down have only increased since the news.


What Does It Mean for South Africa?

The news of the downgrade is not only bad for the economy, but for South African citizens as well. Small, Medium and Micro Enterprises (SMMEs) will face the brunt of the blow for now. Other citizens will most likely only focus on the decreased strength of the Rand.


Junk status will eventually push lenders and financial institutions alike to up their interest rates. This means that repayments on your home loan, credit cards, etc. will increase.


Should prices of goods increase, we will need to ensure that the amount you are insured for is kept in line with the replacement value.


Simply put, lack of confidence in the South African government means a severely devalued economy and an uncertain, yet potentially expensive future for its residents.


Contact CC&A Insurance Brokers to find out more about covering your personal and commercial assets during this time of unrest.


“The article should not be considered legal or financial advice and is for information purposes only. You should consult with a professional financial advisor to determine what may be best for your individual needs.”