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ECONOMY: Credit Bureau Compuscan Shares Expertise on Having Avoided Junk Status: the Way Forward for SA

 



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The road that lies ahead for South Africa after narrowly escaping a downgrade to junk status
Having been a talking point amongst economists and consumers alike for months, South Africa’s credit rating was on Friday released by S and P Global Ratings. While it comes as a relief that the country avoided a downgrade to ‘junk status’, the situation remains one that has negative ramifications such as continued food and fuel price hikes, job losses and a weakening rand. Despite this economic strain, there are solutions to South Africa’s challenges according to credit expert, Jack Brownrigg who has 50 years’ experience in the credit industry.

Comments Jack Brownrigg, B2B Executive at one of South Africa’s leading credit bureaus, Compuscan: “While we didn’t receive the bad news that many had anticipated, it remains a critical time for South Africa – time to put our best foot forward and to step away from the threat of future downgrades. I believe that we’re able to do so, but in order to turn South Africa’s economic situation around, we need to focus on a few important factors, we need to put words into action and we need to be sure that these are positively recognised by the three international rating agencies.”

South Africa is at the point where it needs to show that it has an appetite to change. One of the most crucial areas in which this needs to occur, according to Brownrigg, is the creation of employment, particularly through entrepreneurship and small and medium enterprises (SMEs). Brownrigg adds: “The challenge that a number of hopeful entrepreneurs and start-up companies face in this regard, is that they struggle to obtain access to credit.”

He explains that when a person becomes financially viable, he or she has the ability to employ others and that is the point at which a positive growth starts. In some lower-income communities, the average employed person is responsible for feeding, clothing and educating 10 people. Therefore, by granting one person the means to start-up a business and to employ five others, an additional 50 people’s lives would be changed for the better.

Brownrigg comments further: “For this very reason, I would encourage responsible business-to-business lending, based on reliable information such as Compuscan’s microlending database. Compuscan itself stems from entrepreneurial roots, having started out by sharing credit information between microlenders. While it has since grown to be one of Africa’s leading credit bureaus, it maintains this microlending database as a unique offering that facilitates informed decisions amongst credit providers. Credit is ultimately a resource that, when managed well, not only enables the start-up and growth of businesses, but aids the proper functioning of an economy.”

That which goes hand-in-hand with job creation in bettering South Africa’s economy is of course, education. Not only does education provide additional skills that support entrepreneurship, running a business or managing finances, but in a sense it gives people more to lose.

Brownrigg explains: “When the value of education is realised, the damaging of state property, such as the burning down of schools is avoided. Those who don’t have much to lose, aren’t necessarily concerned with additional loss – and needless to say certain actions that stem from this logic place a further strain on the economy.”

He further highlights that it is essential for the country’s ruling group to implement a vision that steers it in the right direction. Further to this, and as importantly, there needs to be a thorough understanding of spending and the implications thereof. Ultimately, a country’s stability, its economic wellbeing and thus its ability to access credit all rest, to a large extent, on its political atmosphere.

Brownrigg concludes: “Although these solutions might not immediately bring about an upgrade, I am confident that they will steer us away from future downgrades. I believe that when we, as South Africans, have brought these matters into action, we’ll start reaping the rewards – and could even experience an upgrade.”


 
 
 
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