When news broke yesterday that Jacob Zuma had recalled Pravin Gordhan and his deputy, Mcebisi Jonas, from overseas, the first thing that happened was the rand taking a nose dive (HERE).
As someone on Twitter put it, just when the rand is battling back JZ says ‘hold my beer’ and it all goes south.
Everyone has been digging deep trying to figure out the hows, wheres and whys of this all, but we’ll start with a cheat sheet of sorts from News24:
Analysts have predicted that Zuma would reshuffle his Cabinet in the second half of March, following the swearing in of former Eskom CEO Brian Molefe as a member of Parliament and the fact that Nkosazana Dlamini-Zuma handed over her chairpersonship of the African Union (AU) on Tuesday, March 14. This frees her up to serve in a cabinet position.
True to form, the Presidency didn’t give any explanation for Zuma summoning Gordhan and Jonas back to South Africa, leaving the space open for speculation.
After ordering Gordhan home, Zuma on Monday joined court proceedings as an interested party in the matter against Oakbay Investments in which Gordhan seeks a declaratory order to protect Treasury from having to intervene in the closure of the Guptas’ bank accounts by the country’s top four banks. Zuma’s court intervention is with regards to Standard Bank’s extended declaratory order against him and all members of the Cabinet.
I’m going with my gut here and saying no, it ain’t a coincidence.
Some say it’s a powerplay, others say Zuma is backed against a wall, but more and more political analysts have been saying that our president will be throwing caution to the wind in the coming months as he is forced to make good on agreements with those in his patronage network who are dependent on him being president. The Guptas are furthermore in a tight financial spot with the banks shutting down their accounts (as is evident by their court action) and they’ll be leveraging everything they have to get out of it, including their power over the president.
This whole reshuffling business is terrifying, but IOL are about to make it worse:
Reliable sources revealed to Business Report Online that former Eskom boss Brian Molefe will be appointed as South Africa’s Minister of Finance.
That’s the same Brian Molefe who wept like a baby after the State Capture report revealed he was in bed with the Guptas (HERE), and the same Brian Molefe who basically drove Eskom into the ground.
I’m finding sympathy hard to come by.
This is in addition to a cabinet reshuffle being definitely on the cards.
The high-placed sources cannot be named as the news is not yet public.
“As many as 9 ministers will be replaced” the source said confidentially.
A captured president, a new Finance Minister who is nothing more than a puppet, and you can bet those other ministers will play ball, too.
Fancy a look at what’s in store for the markets? Fin24 spoke to a number of respected economists:
“It is more than a rift. It almost signifies two centres of power within the same cabinet. It is highly confusing for those who would like to invest in SA bonds, especially government bonds. How do you trust what such a government tells us if the level of coordination within the cabinet is so poor?”
[Iraj] Abedian said in his view it is quite clear that the “Mexican standoff” between different factions within the Cabinet is coming to the open. “Certainly the economy continues to suffer the consequences of this bizarre political game being played,” he added.
The reaction from the markets on Gordhan’s call back was swift, with the rand tanking more than 3%.
A weakening rand represents the possibility of higher prices for consumers, economist Xhanti Payi told Fin24. “This will harm ordinary South Africans who will have to pay more for goods and services, given the inflation problems that we already have”…
Economist Dawie Roodt told Fin24 Gordhan cemented a good relationship with investors over the past few months. “This trip was to build on it. The fact that it was cancelled; and the way it was done creates many questions and uncertainty.”
Professor Jannie Rossouw, head of the school of economic and business sciences at Wits University, said Zuma needs to explain himself to the public.
“It seems to me that President Zuma really no long cares about the country. He is treating us with total disrespect and he has shown a total disregard for the effects (of cancelling the trip) on the financial markets.”
It’s the sheer brazenness of it that is most alarming. Zuma knows he rules the roost until 2019, and having escaped largely unscathed for his ill deeds up until now he is basically declaring open season.
Can anyone do anything to stop him? On the evidence of what we have seen these past 24 hours, perhaps not.
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