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South Africa has now had three Finance Ministers in one week

Posted On Tuesday, 15 December 2015 13:03 Published by
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A country renowned for breaking world records, this is one we do not want.


President Zuma announced on Sunday evening that former Minister, Pravin Gordhan was to be re-appointed as South Africa’s (old) new Minister of Finance, doing a straight swap with Minister van Rooyen, who is now the Minister of Cooperative Governance and Traditional Affairs.  In case you missed it, Nene was fired last Wednesday, for reasons still unknown.
In his statement on Sunday the President said that “he had received many representations to reconsider his decision and emphasised the importance of listening to the people”. The decision to change the Minister in such a short space of time is unprecedented and reflects the immense pressure the President is under from these “representations and the people”. Social media, of all colours, has been dominated with the #Zumamustfall. The market reaction to the decision was certainly unexpected. South Africa matters.
We know that the decision caught much of the Cabinet off-guard. Members found out the same way we all did, through a press statement of a couple of sentences. The disregard for the impact the decision would have was plain to see.

With no substantial reasoning provided the market drew its own conclusions and simply obliterated the Rand, our stocks and our banks. 

Backing the right horse

The decisions made by the President have impacted on every single South African. It is clear that the enormity of the economic fallout was not considered. The South African economy experienced in the space of 72 hours: R225 billion wiped out off the stock exchange, R30 billion of which was from Government pension funds.

Our banks downgraded (more hastily than expected as a result) making lending, even more, expensive, which will certainly lead to an interest rate hike making growth more difficult, especially with the Rand reaching its lowest level in history.

The ongoing drought has meant that maize will have to be imported, the collapsed Rand will make  even the most basic foodstuff unbearably expensive, impacted most significantly on  the poor and this time round there is only one place to lay the blame

That the President has chosen the familiar and internationally likeable Gordhan is also significant. It is a clever move that he hopes will calm fears; it is working but South Africa is angry and the #Zumamuststillfall is the new representation of this anger. Lets also not forget the role of business here.

Without business and investment from the private sector, the economy will simply grind to a halt and so will the taxes, rendering the government incapable of delivering on anything. Everyone will lose. Remember the role that business played in bringing down apartheid…never count out business.
There are positives that have emerged from these developments. The about-turn made by the President has never been done before, adding to his embarrassment and is a (positive) sign that he cannot rule without fear and that South Africa in all its shapes and sizes will hold him accountable.

The President is now compromised, not only in the eyes of the global community but from within the ANC. Plans and discussions within Luthuli House are surely focused on an exit strategy for the President?  

Where to from here?

Many will – and do - say that the recalling of Zuma is the responsible action to take and will provide the ANC with the opportunity to position itself as being a truly democratic organisation that has the best intentions of its members and followers at heart. Some of the positioning around Gordhan’s appointment already echo this sentiment. 

For South Africa, potentially appointing Cyril Ramaphosa as the country’s President, someone who straddles business and public sector agendas with poise, could certainly add more confidence to the domestic and international markets. Ramaphosa would have three years to fix the damage done in three days.

It might not be enough. Ramaphosa, with Gordhan in the wings, will make for a formidable team for a forward-facing nation.
President Zuma, like his predecessor is seen to have overstepped the mark and there is a potential that the outcome could certainly be the same. There is an old saying within the ANC: “No-one is bigger than the party”.  Time will tell if this is still true.  

Last modified on Tuesday, 15 December 2015 14:41
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