According to Royal Institution of Chartered Surveyors’ (RICS) South Africa country manager TC Chetty, the recent credit rating downgrades by global ratings agencies will negatively affect Africa’s two biggest economies – South Africa and Nigeria, and hit Africa’s overall economic growth. TC Chetty, South Africa country manager for the Royal Institution of Chartered Surveyors (RICS). Chetty also expressed concern that the downgrades will have a ripple effect on the built environment sector and the cost of infrastructure development.
“South Africa’s downgrade to sub-investment or ‘junk’ status is a setback the economy can ill-afford, especially in this already low growth environment. SA joins the majority of African countries currently rated below investment grade, including Nigeria, which in September 2016 was downgraded by S&P further into junk status, with a B rating, five levels below investment grade. Fitch also revised its outlook for Nigeria to negative in January this year,” he said. Debt servicing costs set to increase
Both S&P and Fitch downgraded South Africa’s sovereign credit rating to below investment grade last week, while Moody’s put the country on review for downgrade, with a decision expected between 30-90 days. Besides capital outflows from South Africa as a result of the downgrade, the country’s debt servicing costs are set to increase.