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OPINION: Zuma's 'grotesquely irresponsible' gamble with SA economy
Bruce Whitfield says the move to replace Finance Minister Nhlanhla Nene is grotesquely irresponsible.
South Africa is teetering on the brink of financial crisis and the decision on Wednesday by President Jacob Zuma to replace respected Finance Minister Nhlanhla Nene with an outsider with zero experience within the national treasury is grotesquely irresponsible.
There can be no other inference to draw just a week after the now former finance minister instructed Dudu Myeni, the chair of SAA and the Jacob Zuma Foundation, to reinstate a carefully negotiated contract with French airliner maker Airbus over a madcap scheme to introduce a middle-man ostensibly to absorb the currency risk of a big transaction, that the president is blatantly guarding the personal interests of a few over those of the country.
It has to stop.
Currency markets responded swiftly to the news. Already unsettled by speculation quoting unnamed sources on Monday that there would be Cabinet changes - the sixth on Zuma’s watch - the rand hit its worst levels ever against the euro, pound and US dollar within minutes of the news of Nene’s sacking.
The news of the move follows Friday’s expected announcement by ratings agency Fitch that it was cutting its rating for South Africa to align its view with those of Standard and Poor’s and Moody’s. Standard and Poor’s, however, cut its outlook from stable to negative, prompting former Reserve Bank governor Tito Mboweni to publicly chide policy makers and caution of the crippling consequences of a downgrade. Ratings agencies had been at pains to point out that Nene was fiscally prudent and having him at the treasury was positive.
The sacking of the finance minister can only hasten the downgrade process.
Rubbing salt into the wound, President Jacob Zuma in a statement released around 8pm on Wednesday paid tribute to Nene for a job well done under trying circumstances: “He has done well since his appointment in a difficult economic climate.”
So why replace a finance minister performing well in his duties? And if you were going to replace him, surely the market-calming protocol would be with his deputy.
That’s what Zuma did a little over a year ago when he moved the bolshie ex-pharmacist Pravin Gordhan to the poisoned chalice of local government. Then he handed control of the nation’s purse strings to the man who had been deputy to not only Gordhan but Trevor Manuel - he was known to markets and was regarded as a safe pair of hands.
In elevating David van Rooyen, an ANC whip on the standing committee on finance to arguably the most important job in the land, Zuma skipped Nene’s deputy, the pragmatic and respected Mcebisi Jonas as well as the next logical appointment, the chair of the standing committee on Finance Yunus Carrim - the former minister of communications - himself fired for doing too good a job in a dysfunctional ministry.
This is Zuma’s biggest gamble to date. It’s a warning to the national treasury, until now left to do the crucial work of balancing the country’s books, that their refusal to fund nuclear builds, buy presidential aircraft or support the chair of SAA will get you fired.
There can be no other interpretation.
Bruce Whitfield is the host of The Money Show on 702 and Cape Talk. Follow him on Twitter here.
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