SA's credit rating: Do South Africans care?

Gwen Ngwenya says a look at Google Trends suggests citizens have other matters on their minds

Google Trends: despite media attention on credit ratings, South Africans relatively apathetic

With elections not too far in the horizon, political parties are in the unenviable position of having to identify and speak to the issues that are of concern to the public, and to adapt to potentially shifting trends in public interest.

The firing of the Finance Minister, Nhlanhla Nene, in December 2016 and the installation of two replacements in one week reverberated throughout the financial markets and raised the ire of the public. Since then the credit ratings agencies have garnered increased media attention as a barometer of international investor confidence.

It would not be ill conceived then to hope that intensified media focus on financial matters would translate to broader public interest in the topics that have financial and economic repercussions for the country. It raises the question of how interested are South Africans in financial issues relative to other issues?

The figures from Google Trends tell an unambiguous narrative; South Africans are not very interested judging by the popularity of searches related to credit ratings and auditor general reports.

Increased awareness in financial management of state funds encourages voters to think more about the execution of policy goals, and not just manifesto promises. For political parties who wish to highlight prudent financial management as a strength, it is helpful if public trends reveal an increased interest in financial issues relative to others.  A powerful but as yet under-utilized tool to begin to answer these questions is Google’s freely accessible analytics tool Google Trends. 

For those unfamiliar with it, Google Trends is a social analytics tool which displays indications of search interest. It is important to note that it does not give detail of absolute search volume. It is rather a relative indicator, showing whether a topic is gaining popularity over others or itself over a given time period. 

Its value lies in it being a real time indicator of trending themes and as a predictive tool. It has already been used in the context of financial data to spot online indicators of potential stock market moves.  It’s reliability is increased by the fact that the data is adjusted for searches made by few people allowing it to capture only popular terms; duplicate searches are also excluded meaning the data is largely free of repeated searches made by the same individual in a short period.

When analysing topics in Google Trends the search interest numbers represent an index of 0-100; 100 being equivalent to the highest peak of interest in the given period. In a search for the term ‘credit rating’ today’s interest sits at 58 (the results are indexed 0-100) of the interest of the period 2004 to date.

This suggests that this is not the highest period of interest that the topic has garnered over the last twelve years. The highest point (100) was around 2004/2005. The absolute volume of searches about credit ratings may have increased, but its relative popularity has not. And that is the point, topics do not garner attention in isolation they do so in competition with other themes that vie for the public imagination. 

Some of the most searched queries in South Africa this past week have been ‘Kaizer Chiefs’, ‘Harambe Gorilla Video’ and ‘petrol prices’. Credit rating is not one of them. But I added it to the list to see how in a week of a potential credit downgrade it fairs against other topics of interest to South Africans; not very well is the answer.

The highest peak in the last 7 days has been for ‘Kaizer Chiefs’ searches on Wednesday, 1 June 2016. Relative to this peak search interest for ‘credit ratings’ is at 1 as of 08:30 this morning, the day of the S&P ratings announcement.

Harambe is currently at 5 from its peak of 14 on Tuesday, 31st May. More enlightening is the geographic dispersion of these searches; ‘credit rating’ popularity comes from the Western Cape predominantly, followed by Gauteng then Kwa-Zulu Natal. This does not mean that the absolute numbers are higher in the Western Cape, only that there is a greater concentration of interest in that province than others. Kaizer Chiefs and Harambe, however, were popular searches across all 9 provinces. 

What are the immediate political implications of these results? It has been widely argued that credit ratings changes are likely to affect mostly foreign denominated bonds.  South African municipalities that do finance by issuing debt to the markets have those issuance in local currency. It is the ability to meet foreign currency denominated debt that is being watched as the local currency rating still sits two notches above sub investment grade.

Thus credit ratings themselves bear little direct relationship to the issues at stake for local government elections. But heightened interest in one area may have set interest in financial prudence overall on an upward trajectory; and relevant to the municipal elections and financial prudence are the results of the auditor general’s municipal audit.

Although the searches for ‘auditor general’ have peaked in the last week, relative to the period 2004 to date, this week’s interest sits at 76. This is not significant once one looks at other election periods where interest has been over 60%. A small part of the increased awareness may be due to increased financial awareness but it is not so different from other election periods to make that conclusion.

It is tempting to think of the results as reflective of a specific demographic of the South African population who have access to the internet, and who use google as the means of navigating it. However we should not be entirely dismissive of the internet’s broad reach. Yesterday Statistics South Africa released the 2015 General Household Survey which includes data on mobile and internet access across households in South Africa.

The survey reveals that 85,5% of households had access to at least one cellular phone. Importantly there are more households in South Africa with cellphones than there are with landlines. What does the penetration of mobile technology mean for internet usage? If we look at rural areas specifically only 2,1% had internet access at home, 3,7%  at work and 3,1%  from internet cafes or other facilities.

This is in stark contrast to the 33.7% of rural households who had internet access through mobile devices. Across the board, however, more than half of all South African households had at least one member who uses the Internet either at home, at work, at a place of study, or at Internet cafés.  

The potential demographic diversity of internet users is perhaps further highlighted by the fact that in the past week the trending searches on Google in South Africa included Taylor Swift, Harambe the Gorilla, petrol prices, Kaizer Chiefs and the PSL; with Kaizer Chiefs and the PSL being the most searched with over 20 000 searches each. This is not to dispel the view that internet users are mostly of a singular demographic but it should temper it. 

The results of this analysis paint a picture of relative public apathy towards issues of financial governance. This suggests that this is not yet terrain which captures the public imagination, but more detailed polling of potential voters may hopefully paint a different picture.

Gwen Ngwenya is a Policy Fellow at the IRR, a think tank that promotes economic and political liberty. Follow the IRR on Twitter @IRR_SouthAfrica.