South Africa’s rand yesterday leapt after President Jacob Zuma named Pravin Gordhan as finance minister, seeking to draw a line under days of market turmoil that have triggered calls for him to stand down as leader.
Zuma appointed the widely respected Gordhan late on Sunday, his second stint in the job, in a dramatic U-turn that gave Africa’s most industrialized economy its third finance minister in less than a week.
Fallout from the sacking on Wednesday last week of Nhlanhla Nene has cast fresh doubt on the political future and eminence of 73-year-old Zuma within the ruling African National Congress (ANC) party.
Photo: Reuters
The president’s initial appointment of David van Rooyen, a relatively unknown lawmaker and Zuma loyalist, to replace Nene, triggered a wave of criticism and a market sell-off that saw the rand plunge to a new all-time low on Friday.
Gordhan, who last held the post from 2009 to last year, yesterday held a news conference in Pretoria, pledging to stay the course of “sound fiscal management,” adding “our expenditure ceiling is sacrosanct.”
He also said the government would take into account the concerns of ratings agencies and investors, adding that the nation needs “faster and more inclusive growth and job creation.”
South Africa is gearing up for local elections next year in which the ANC is expected to face stiff competition from the opposition Democratic Alliance in urban areas, including Johannesburg. The countryside remains an ANC stronghold.
Even some supporters of the ANC, which has ruled since the end of apartheid in 1994, expressed dismay about last week’s appointment of a Zuma loyalist to the crucial post. They also described his latest appointment as a sign Zuma was losing control.
“It may not be his death knell, but it’s certainly the turning of the tide,” former senior ANC legislator and former anti-apartheid activist Ben Turok said.
The currency fell nearly 9 percent last week following the removal of Nene, a civil service veteran who was keen to rein in government spending.
“The markets will welcome back Gordhan to National Treasury,” Rand Merchant Bank’s currency strategist John Cairns said. “He is a known entity, is his own man and did well when in the post previously. But it is certainly unreasonable to expect all of last week’s losses to be reversed — a huge amount of uncertainty has been created in the past few days.”
“Markets should rally back very strongly but I would not expect a total retracement with a permanent loss of trust in leadership even if we are in a better place,” said Peter Attard Montalto of Nomura in London.
South Africa’s Beeld newspaper, citing an informed person, said Gordhan’s appointment was preceded by a crisis meeting between Zuma, politicians and representatives of the private sector on Sunday afternoon.
Social media has been abuzz with calls for anti-Zuma marches, under the hashtag #ZumaMustFall.
Kokkie Kooyman, a fund manager at Sanlam Investment Management Global, said the president made it seem as though fiscal prudence was not a concern for him.
“Members of the Cabinet may have managed to convince him to change his mind,” Kooyman said. “However a leopard doesn’t change its spots. We still have the same president. We will still have high unemployment and high debt. Rating agencies will not re-rate us upwards.”
The ANC said Zuma had not been pushed into appointing Gordhan.
“Clearly the president has listened,” ANC spokesman Zizi Kodwa told 702 Radio. “Given the sensitivity of the portfolio, he needed a much more experienced leadership.”
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