JOHANNESBURG/LONDON: Moody’s left South Africa on the brink of “junk” status on Friday after it revised the outlook on the country’s last investment-grade credit rating to “negative,” piling pressure on President Cyril Ramaphosa to quicken the pace of reform.
Moody’s said the outlook revision on its ‘Baa3’ rating, the lowest rung of investment grade, was motivated by a deterioration in the economic growth outlook and rising debt.
Analysts had expected the move after a bleak mid-term budget statement this week that slashed this year’s growth forecast to 0.5 percent and showed government debt racing to more than 70 percent of gross domestic product by 2023.
The rand tumbled more than 2.5 percent over the past week against the dollar, its sharpest weekly drop since early August. Yields on local 10-year government bond issues traded on Monday at just over 8 percent but climbed as high as 8.6 percent following the dire budget predictions.
The negative outlook means there is a window of 12-18 months in which a downgrade could be delivered, but it could come sooner if Moody’s isn’t impressed by the fiscal picture presented at the next budget statement in February.
“The development of a credible fiscal strategy to contain the rise in debt, including in the 2020 budget process and statement, will be crucial to sustain the rating at its current level,” Moody’s said in a statement after South African financial markets had closed.
It added that its new outlook reflected rising concern that the government would not find “the political capital to implement the range of measures it intends, and that its plans will be largely ineffective in lifting growth.”
The finance ministry responded by saying the country had “a narrow window to demonstrate faster and concrete implementation of reforms.”
Ramaphosa has struggled to revive Africa’s most advanced economy since taking over from scandal-plagued Jacob Zuma in February 2018.
The wave of optimism among foreign and local investors that accompanied his rise to power has fizzled out as the economic challenges have grown more acute, with unemployment reaching an 11-year high above 29 percent and state power company Eskom struggling to keep the lights on.
One of the greatest worries is rising government debt, which shows no signs of stabilizing soon amid repeated bailouts for state-owned companies.
Fund managers said they were not expecting a steep sell-off in government bonds and the rand when financial markets re-open on Monday, because the outlook revision was expected by so many and South African assets had fallen sharply over the past week.
The spread of South African dollar debt over US Treasuries is already wider than on some junk-rated sovereigns, reflecting longstanding concerns over the country’s fiscal health.
“Valuations are already reflecting this outcome. So, on any sell-offs, we would see it as a buying opportunity,” said Jean-Charles Sambor, deputy head of emerging market fixed income at BNP Paribas Asset Management.
S&P Global and Fitch already moved South Africa’s debt to sub-investment level in 2017, when the country was embroiled in corruption scandals under Zuma.
A move to “junk status” from all three agencies typically increases a government’s cost of borrowing by raising the premium that investors demand to hold its debt. It could also see South Africa evicted from the benchmark World Government Bond Index of local-currency debt, which could trigger billions of dollars of passive outflows.
Phoenix Kalen, director of emerging markets strategy at Societe Generale, said South Africa was now in the “last-chance saloon” and that it had to stabilize its debt.
“This will be a Herculean task,” Kalen said, citing financial pressures at state companies among causes for concern.
Ramaphosa’s government has promised Eskom 230 billion rand ($15.3 billion) of bailouts over the next decade, on top of a 59 billion rand “special appropriation” over the next two fiscal years. But analysts say it will need more state money than that.
Kevin Lings, chief economist at asset manager Stanlib, said a downgrade in 2020 was now his “base case” and that some investors would be reluctant to buy South African debt until the downgrade had happened.
“Next year is going to be marked by consistent uncertainty around the currency and bond markets, it’s going to put South Africa under a lot of strain,” he said.
Moody’s leaves South Africa teetering on brink of ‘junk’
Moody’s leaves South Africa teetering on brink of ‘junk’
- Moody’s said the outlook revision on its ‘Baa3’ rating, the lowest rung of investment grade, was motivated by a deterioration in the economic growth outlook and rising debt
UNICEF deputy director urges innovative partnerships to protect the world’s children
- By collaborating with private sector, UNICEF is better able to combat challenges of conflict and climate change, says Kitty van der Heijden
- Aid agency executive says partnerships with insurers and logistics firms facilitates the rapid deployment of resources to crisis zones
DUBAI: Kitty van der Heijden, deputy executive director of the UN children’s fund, has praised the collaboration between UNICEF and the private sector to address the many urgent challenges facing the world’s children.
In an interview with Arab News on the fringes of the World Economic Forum in Davos, van der Heijden explained how UNICEF’s partnerships are aiding its response to conflicts, mass displacements, climate change, and natural disasters.
“We are here in Davos to meet with the private and corporate entities who are present,” van der Heijden said. “We are already in partnership with some across a range of sectors like humanitarian aid, education, AI, and non-communicable diseases, among others.
“We see that a lot of companies are willing to work with UNICEF as we are able to reach where they can’t necessarily go.
“We have more conflicts than ever around the world that are destroying humanity’s ability to survive and thrive. We need to deliver prosperity and keep environmental triggers and human misery under control.”
To confront crises, van der Heijden says UNICEF has now partnered with insurance companies, as well as logistics and shipping firms that prioritize humanitarian aid over their commercial goods in times of need.
“We developed the first ever parametric climate insurance with a focus on children. For example, hurricanes are routine problems in some countries and small islands. Whenever a hurricane takes place, not only are the communities there extremely affected but so is the GDP of the country.
“The moment wind speeds go up to a certain level, the parametric tool detects the change and automatically submits a cash deposit to UNICEF.”
Van der Heijden says this rapid response ensures that financial support reaches those in need without bureaucratic delays and complications.
“We are able to offer cash directly to affected communities, ensuring that aid arrives right when it’s needed. This builds resilience in the face of recurring disasters, while also providing an early warning system to help communities prepare for future events.”
Another cross sector collaboration between UNICEF and private companies focuses on mental health.
“Prevention is the mother of all cures,” said van der Heijden. “UNICEF is joining forces with lots of health companies such as AstraZeneca and Zurich Foundation to address obesity and mental health issues.
“These problems are prevalent across all societies and all ages. The reasons might be different, but it is there.
“Seventy percent of preventable deaths stem from risk exposure and unhealthy behaviors as a child. If you approach this issue holistically, you can prevent so many negative cycles between mental health, anxiety, and obesity.”
Van der Heijden also said children are uniquely vulnerable to the effects of climate change. From heatwaves that affect maternal health to pollution that exacerbates respiratory problems, the risks children face are not only immediate but long term.
Children, particularly in disadvantaged communities, lack access to cooling systems or safe environments, leaving them at higher risk of heat related illnesses.
“Children breathe twice as fast as adults, and their exposure to pollution can be devastating,” said van der Heijden. “They don’t have the physical ability to cool down through sweating, which makes them vulnerable during extreme heat events.
“The effects of climate change are already being felt by the world’s most vulnerable populations, and children are bearing the brunt.”
The repercussions of climate change extend beyond health, as related economic shocks often lead to unintended social consequences, such as an increase in child marriages.
In regions impacted by heatwaves, families may marry off young girls to reduce financial burdens. The economic strain caused by extreme weather events can push parents to take drastic steps “to have one less mouth to feed.”
Van der Heijden stressed the urgency of integrating children’s needs into global climate policies. While countries around the world are set to submit their new climate plans this year, UNICEF is leading a global campaign to ensure that these plans are child-centric.
“The year 2025 is a pivotal year,” she said. “We will have a number of opportunities to act and set the record straight. Unless we understand the unique vulnerabilities of children, we cannot craft effective policies.
“We need to make sure that every country’s climate plan reflects the impacts on children and ensures that their needs are front and center.”
AI no longer an experiment, but a necessity for business, says Publicis Sapient chief
- Nigel Vaz calls for end to ‘wait-and-see’ approach, saying businesses need to ‘act now or risk being left behind’
- Middle East laying the groundwork for ‘truly transformational moment’ in global digital future, says CEO
DAVOS: Technological innovation and its potential to reshape economies is inspiring growing optimism among business leaders despite a global backdrop of geopolitical tension, economic uncertainty, and the urgent challenges of climate change, the CEO of Publicis Sapient told Arab News.
Nigel Vaz, speaking at the annual meeting of the World Economic Forum in Davos, said he sees a moment of both caution and opportunity for businesses worldwide.
“In many ways, businesses thrive on certainty,” Vaz said. “After years of unpredictability, there’s now a sense of optimism about what lies ahead. Investments in technology, particularly in AI, are helping unlock new economic opportunities, from reducing costs to driving transformational growth.”
While acknowledging lingering concerns over inflation and the impact of macroeconomic policies such as tariffs, Vaz believes the focus is shifting toward pro-growth initiatives, including government-led reforms to alleviate pressure on businesses.
“Governments are increasingly exploring tax reforms and other measures to create a more favorable environment for growth,” he said. “And alongside that, investments in AI and digital innovation are starting to deliver real results, moving from proof-of-concept to large-scale implementation.”
With artificial intelligence the hot topic of the day, Vaz said enthusiasm around AI is no longer solely about its potential but also its measurable impact on businesses.
“Last year, AI was something everyone was interested in. This year, they’re seeing the economic benefits of it,” he said.
Vaz pointed to several ways Publicis Sapient is leveraging AI to accelerate transformation, with one significant area in marketing, where AI-driven platforms are enabling businesses to personalize their messages and reach audiences more efficiently.
Publicis Sapient has partnered with its parent company, Publicis Groupe, to invest $300 million in advanced marketing technologies.
“It’s not just about content generation anymore,” Vaz said. “AI is helping with everything from content audits to ensuring the right message gets to the right person at the right time. The ability to connect identity and tailor communication is driving incredible acceleration.”
AI’s influence is also being felt in operational areas traditionally weighed down by inefficiencies.
Publicis Sapient’s work includes modernizing mainframe systems — once seen as expensive and slow — through AI-driven solutions.
“We’ve taken what used to be 10-year migration projects involving millions of lines of code and compressed them into just three years,” Vaz said. “This is digital red-tape removal in action, and it’s allowing businesses to innovate far more quickly than they ever thought possible.”
Vaz also highlighted the Middle East as a critical player in the future of AI and digital transformation. He pointed to countries such as Saudi Arabia and the UAE, where governments are making significant infrastructure investments to foster innovation.
“The Middle East is laying the groundwork for a truly transformational moment,” Vaz said. “If you think of AI as the electricity of the 21st century, the investments being made here are akin to building the power grids of the industrial revolution. It’s about creating an environment where businesses can innovate and thrive.”
He also praised the region’s commitment to developing local talent to drive these initiatives.
“I was speaking with a minister (this week), and he stressed that while they’re putting the infrastructure in place, it’s Saudi talent that’s building and leading these projects. That’s a powerful message about the long-term vision here.”
Looking ahead, Vaz urged business leaders to abandon a “wait-and-see” approach to AI and instead embrace the transformative potential of the technology.
He said that 2025 will be a pivotal year, adding that “the gap between those who adopt AI and those who don’t is going to widen dramatically. Businesses need to act now to ensure they don’t get left behind.”
Vaz added that leaders should move beyond treating AI as a technical tool and instead reimagine their entire business models. “This is not just about technology — it’s about fundamentally rethinking how your business operates and delivers value.”
As Publicis Sapient continues to expand its footprint in key regions such as the Middle East, Vaz is clear about his priorities for the future. “Our focus is on enabling businesses to learn and iterate in real-world applications,” he said. “Whether it’s in travel, financial services, or retail, we’re seeing tremendous benefits from these transformations. The key now is to keep moving forward.”
In a world still grappling with uncertainty, leaders such as Vaz see the promise of AI and digital transformation as a beacon of opportunity. “The future is here — it’s just a matter of who seizes it first,” he said.
Team Brady lead the way in Jeddah’s UIM E1 World Championship
- Tom Brady-backed outfit top breathless qualifying session
- Team AlUla provide fierce competition on the water
JEDDAH: Team Brady on Friday secured pole position in the 2025 UIM E1 World Championship presented by PIF, the world’s first all-electric race boat series, which is taking place in Jeddah.
The 2024 Champions of the Water reigned supreme on the Red Sea, as the Tom Brady-backed team topped a breathless qualifying session.
The team’s Emma Kimilainen proved the fastest pilot in qualifying following a day of intense competition to put her team in the driving seat at the E1 Jeddah GP.
Her side overcame fierce competition from Team AlUla, championed by LeBron James, in second place and Aoki Racing Team in third.
Kimilainen said: “As reigning champions the pressure was always going to be on us. But as Tom (Brady) tells us, we should embrace it, and that’s exactly what we did today.”
E1 newcomers Team AlUla, competing for the first time after entering the championship this week, proved to be the surprise package thanks to a blistering qualifying time trial by their Canadian pilot Rusty Wyatt.
The result paved the way for a gripping race day on Saturday with the championship’s nine teams looking to establish an early lead to take the fight to Team Brady.
Friday marked the championship’s return to Jeddah, the location for E1’s first-ever race.
Kingdom’s digital ‘leapfrog’: Intel executive VP highlights 20-year Saudi partnership
- Speaking on the sidelines of the WEF, Christoph Schell emphasized the Kingdom’s commitment to growth and its importance as a key market for Intel
- Says technology plays a crucial role in the Kingdom’s societal development, with a key focus on fostering innovation and bridging the digital divide
DAVOS: Saudi Arabia’s Vision 2030 has enabled the Kingdom to “leapfrog other countries,” creating a robust ecosystem that aligns with Intel’s digital transformation strategy, the company’s executive vice president and chief commercial officer told Arab News.
Speaking on the sidelines of the World Economic Forum in Davos, Christoph Schell emphasized the Kingdom’s commitment to growth and its importance as a key market for Intel, building on a 20-year legacy of collaboration.
“Having lived for eight years in the Middle East, I know that once you define a plan, and you work that plan, that plan will also work out,” Schell said. “So there’s a lot of trust that this vision will become reality.”
Schell, who previously served as HP’s general manager for the Middle East, described the region — and Saudi Arabia specifically — as being at an “exciting historical moment” in terms of technology, innovation and business, positioning the Kingdom as a “crucial market in size and influence.”
Intel has maintained a strong presence in Saudi Arabia for more than two decades, with its innovation and priorities evolving in response to the Kingdom’s changing needs.
“There’s a very long legacy that the Kingdom has of engaging with Intel and for the population of Saudi Arabia to actually use Intel in their daily lives. That’s true on the consumer side, but that’s also true for the large corporations,” Schell said.
“What I see happening for the first time is that the Saudi customers have been, over these 20 years of engagement, buying monolithic products that Intel had to offer. I think this industry is changing as such that we are talking more and more about custom solutions, custom chips, and these are the first (type of) engagements that we have with Saudi customers now, cross-customization.”
He attributed this shift to significant investments in digital infrastructure and the growing tech sophistication of Saudi consumers and businesses.
“I see Saudi not just consuming technology that is off the shelf, but to demand technology that is best in the very specific requirements that you have,” he said.
Highlighting examples, Schell said that Saudi Arabia’s extreme temperatures had led to customized design requests for products operating in harsh conditions, such as on oil platforms and in peak summer heat.
“That requires different design principles across different products. And that’s the opportunity for us,” he said.
In January 2024, Intel announced a partnership with Aramco Digital to establish Saudi Arabia’s first Open RAN (radio access network) development center. Open RAN technology, which allows multiple service providers to deliver services over the same network infrastructure, is expected to accelerate innovation and drive the Kingdom’s digital transformation in line with Vision 2030.
“If you want to scale a data center, if you want to grow a data center, if you want to grow a cloud operation, getting access to power is super important,” he said.
“Obviously the Kingdom has a lot of power, but on the other hand, it is also demanding for that power to be delivered in the most efficient way, and for the computer to be cognizant of power not being there in abundance, but to be managed in a way that is responsible.”
Schell argued that this evolution is a consequence of the cultural and societal shifts in Saudi Arabia, emphasizing the country’s focus on innovation and bridging the digital divide.
“Technologies (are) at the heart of societal development. And I think a lot of the goals that you have as a society is to innovate, is to make sure that there’s no digital divide within the country,” he said.
As part of its vision for the future, Saudi Arabia is prioritizing the development of a robust tech ecosystem by attracting manufacturers, creating jobs and nurturing local talent — a strategy that Schell described as “sustainable.”
“It has a lot to do with education, but I think beyond educating, the ability to design products together, to engineer products together, is something that needs to start, in particular, working together with select universities,” he said.
Schell emphasized the role of AI in shaping the Kingdom’s future, particularly in practical applications such as education and daily life.
“The output that an AI engine delivers is based on the model it uses. And I think what is very important for Saudi Arabia in this context is to have models that have cultural awareness, that have cultural content.”
Drawing on his own experience, Schell highlighted the importance of localization.
“I live in the US right now. I’m German. If I use a US model, a US-centric model, I will get US-centric answers. (While) If I use a Saudi-centric model, I will get Saudi-centric answers.
“This is very important from a culture and from a historic point of view,” he added, stressing the “government’s responsibilities” in fostering an ecosystem that supports culturally relevant AI.
Hamas buries 2 leaders slain in Israel strike in Gaza months ago
- Hundreds of people attended the funerals of Rauhi Mushtaha and Sami Mohammad Odeh during Friday prayers
- The bodies, draped in the green flag of Hamas, were carried on stretchers from the mosque
GAZA CITY: Two senior Hamas members, whom Israel said it had killed months ago, were buried in Gaza on Friday after their remains were discovered under rubble during the truce, AFP journalists reported.
Hundreds of people attended the funerals of Rauhi Mushtaha and Sami Mohammad Odeh during Friday prayers in the courtyard of the Omari mosque, a historic landmark in the heart of Gaza City that has been heavily damaged by Israeli bombing.
The bodies, draped in the green flag of Hamas, were carried on stretchers from the mosque to their burial site, accompanied by around 16 masked members of the Ezzedine Al-Qassam Brigades, the armed wing of the Palestinian Islamist group.
The Israeli army announced in early October that it had “eliminated” Mushtaha and Odeh along with another Hamas leader “about three months earlier” during an air strike in the Gaza Strip.
Mushtaha, designated an “international terrorist” by the United States in 2015, was a member of Hamas’s political bureau in Gaza, responsible for finances.
Odeh was the head of Hamas’s internal security agency.
Hamas officially acknowledged their deaths in a statement on Sunday, saying that they had fallen as “martyrs.”
