Shock announcement restoring Pravin Gordhan to post sends the rand surging after a selling frenzy in markets
President Jacob Zuma appointed Pravin Gordhan as finance minister on Sunday, in a dramatic U-turn that gave South Africa its third finance chief in a week after a selling frenzy in the markets.
The shock announcement restoring Gordhan to the post sent the rand surging nearly 5% on Sunday evening, but failed to quell a tide of criticism of the president. This is reckless by President Zuma, he is playing Russian roulette with the South African economy, opposition Democratic Alliance leader Mmusi Maimane said.
Zuma sacked Nhlanhla Nene from the ministry late on Wednesday, sparking a wave of criticism and financial turmoil, and replaced him with the relatively unknown lawmaker David van Rooyen.
The removal of Nene, who was keen to rein in government spending in Africas most industrialised economy, sent the rand currency to record lows, sparked a sell-off in bank stocks and sent yields in local and dollar-denominated debt soaring.
The JSE All-share index lost 169.6bn rand (7.285bn) between Thursday and Friday.
Critics would say having a finance minister serving only two days doesnt bode well for the reputation of South Africa, said Mohammed Nalla, head of research at Nedbank Capital. International investors are probably thinking: why didnt the president make a much more considered decision in the first place?
Many economists had questioned Van Rooyens ability to steady an economy hammered by falling prices for commodity exports that range from coal to gold.
Nenes reluctance to approve an ambitious plan to build a number of nuclear power stations to ease severe electricity shortages, a project that might cost as much as $100bn (66bn), is also seen as contributing to his downfall.
On the 9 December 2015, I announced the appointment of a new minister of finance, Mr David van Rooyen, Sundays statement from the presidency said. I have received many representations to reconsider my decision. As a democratic government, we emphasise the importance of listening to the people and to respond to their views. Van Rooyen will now become the minister of cooperative governance and traditional affairs.
Credit agency Fitch downgraded South Africa on 4 December, leaving the continents most sophisticated economy just one notch above junk status and said on Thursday that Nenes firing raised more negative than positive questions.
A Reuters poll on Wednesday showed analysts expect the economy to grow just 1.4% this year and 1.6% next, 0.1 percentage point lower than last months forecasts.
The presidencys statement said Gordhans role would include promoting and strengthening the fiscal discipline and prudence and working with the financial sector so that its stability is preserved. It called for adherence to the set expenditure ceiling while maintaining a stable trajectory of our debt portfolio, as set out in the February 2015 budget.
The statement called for more inclusive growth and accelerated job creation while continuing the work of ensuring that our debt is stabilised over the medium term.
Gordhan held the post of finance minister from 2009 to 2014, when he was replaced with Nene and moved to the post of minister for cooperative governance and traditional affairs.
Social media was abuzz on Sunday with calls for anti-Zuma marches. Under the hashtag ZumaMustFall, individuals on Twitter said they would march in key cities on Wednesday, a public holiday in South Africa and the same day when the Federal Reserve, the US central bank, is expected to raise interest rates a move set to put emerging markets like South Africa under strain.
Even some supporters of the African National Congress (ANC), Nelson Mandelas erstwhile liberation movement that has ruled since the end of apartheid in 1994, expressed dismay about Wednesdays appointment of a Zuma loyalist to the crucial post.
Former South African health minister and leading anti-apartheid activist Barbara Hogan on Friday called on Zuma to quit.
Hogan, the highest-profile member of the ANC to come out against the sacking of Nene, said Zuma had crossed a line and needed to be held to account.
South Africa is gearing up for important local elections next year where the ANC is expected to face stiff competition from the Democratic Alliance in urban areas, including the economic hub of Johannesburg. The countryside remains an ANC stronghold.
Significant erosion of ANC control in metropolitan powerbases could strengthen Zumas opponents, especially if South Africans blame him for the floundering economy.
Analyst Razia Khan of Standard Chartered Bank said the weeks turmoil was perhaps the first instance since 2007 that Zuma has come under severe pressure within the party.
Originally found athttp://www.theguardian.com/us