MOODY’S account of why it held back, for now, on downgrading SA’s credit rating is worth a close read, if for no other reason than that it has some important things to say about why politics matters for business — and, more importantly, what it is that matters.

Anyone who’s continuing to fixate on the “Zuma must go” narrative would do well to read what Moody’s had to say at the weekend. So too would anyone who is inclined to put too much store on this year’s cosying up of business and the government (and labour) — even though their joint efforts, which President Jacob Zuma hailed on Monday evening, have clearly helped to keep Moody’s onside, if only for the moment.

But if the first driver Moody’s listed for its decision was interesting, the third was even more so. The first was that Moody’s sees economic growth recovering from next year for a variety of reasons, one of which is the promise of the “recent rapprochement” between the government, business and labour, which could boost business confidence, investment, and job creation — if the measures they have agreed on are actually implemented.

That includes rationalising state-owned enterprises and reforming labour markets, both of which remain highly contested. Moody’s and Finance Minister Pravin Gordhan have warned that if we don’t implement, we face a downgrade.

It’s Moody’s third driver, however, that should serve to advise business people and investors that the politics they need to worry about is to do with the health of institutions, rather than with individuals — and that they need to think about the environment in a more nuanced manner.

“Recent political developments testify to the strength of SA’s institutions,” is the third driver on Moody’s list. And the agency cites not only Gordhan’s reappointment, but also the Constitutional Court’s Nkandla judgment and the recent high court ruling to reinstate corruption-related charges against Zuma.

There’s extensive literature on the role of institutions in economic growth. Investors and rating agencies have long looked at countries’ institutional strength, not just their fiscal or economic metrics, when they assess their economic prospects.

That’s certainly been the case in SA. But investors, and business people, have tended to focus mainly on SA’s “big three” macroeconomic institutions the Treasury, the Reserve Bank and the SA Revenue Service. But Moody’s has reminded us that SA’s economic outlook rests on a much wider set of institutions that provide checks and balances on corruption and lawlessness, as well as on fiscal prudence or property rights, which shape the environment in which economic activity happens.

The Public Protector’s Office has emerged as a key institution. But there are many others including, crucially, the various law-enforcement agencies and the courts, which are the ultimate guarantors of the legal basis on which business does business.

Protecting and defending the integrity of all such institutions, after years of efforts to chip away at their independence is vital to SA’s economic health. And in looking to defend institutions, it needs to be recognised that the erosion often isn’t as blatant as December’s finance minister machinations. More often, it happens silently and over time, and in different ways — sometimes institutions have their independence eroded by legislation to curb their powers, but more often it is about how whistle-blowers are treated, or, very often, which appointments are made and how they are made.

The past few months have seen a constant stream of disclosures about the abuse, or attempted abuse, of the appointments process. But it’s not just about cronyism in appointments of leadership, major as that problem is. It is also about the calibre of the leadership that is appointed — putting mediocre judges on the bench, however honest they might be, also has the effect of eroding the judiciary over time, for example.

Rating institutional health is a much harder task than rating fiscal or economic metrics, and economists are still struggling, as no doubt are rating agencies. They are increasingly recognising, though, that a wide set of institutions, from the courts to the media and beyond, matter for those metrics. They matter for business too.

• Joffe is editor at large