Nene’s shock axing
Rand plummets as finance minister replaced by ANC backbencher PRESIDENT Jacob Zuma has fired Finance Minister Nhlanhla Nene only 18 months into his job, triggering a slump in the rand to a record low. Zuma’s second late-night cabinet reshuffle in three months sent shock waves through the political system and among investors. Nene will be replaced by ANC backbencher David “Des” van Rooyen, who is not held in the same esteem as his predecessor. A former mayor of Merafong in Carletonville on the West Rand, Van Rooyen is not known for being anything but subservient to the party’s leadership. Mbhazima Shilowa, a former Gauteng premier who later defected to the ANC breakaway party COPE, tweeted last night: “I know the guy who’s the new finance minister. “He was a mayor when I was premier. He was a disaster hence [his] removal 2 years ahead of 2011.” ANC insiders said Van Rooyen was not well known even to them. The party said it “noted” the decision‚ indicating it was not part of the reshuffle. BNP Paribas political analyst Nic Borain said Nene’s axing would be interpreted in financial markets as the president’s response to Nene attempting to hold the line on fiscal discipline. “The reaction will be swift and harsh,” he said. “For some time‚ financial markets have been concerned about the build-up of pressure on Mr Nene‚ who is widely considered to have done an exceptional job in difficult circumstances. “This is a shock‚ coming so close to the recent downgrades of our debt. This will be interpreted in the worst possible light by markets.” Nene’s unceremonious firing, announced by Zuma in a terse statement last night, was not unexpected and comes a few months after the finance minister and his deputy, Mcebisi Jonas, desperately tried to hold the line of fiscal discipline against rampant state spending and a widening budget deficit. The last straw in a long line of battles seems to have been a strongly worded letter Nene wrote to South African Airways’ controversial chairwoman, Dudu Myeni, a close confidante of the president, in which he tried to rein her in over a multibillionrand leasing deal with Airbus. Zuma gave no details as to why Nene was dismissed. “I have decided to remove Mr Nhlanhla Nene as Minister of Finance, ahead of his deployment to another strategic position,” the president said.
The “strategic position” was believed to be a reference to a move to the Brics bank. This is the first time that someone so junior has been given what is arguably the most important ministerial post. The rand fell sharply to R15.24 to the dollar shortly after the announcement, extending a series of losses this year. The currency was down 2.4% at R14.94 per dollar at 10.40pm. DA leader Mmusi Maimane said Nene had tried in vain to stand in the way of the Zuma administration’s reckless spending to grow the economy and save jobs, and was now paying the price. Nene’s attempts to turn around the lossmaking SAA have, in recent weeks, been undermined by the national carrier’s board, which sought to ignore his instructions over the Airbus leasing deal and implement an alternative proposal the Treasury said was unduly risky. Nene was also a vocal opponent of the costs associated with the government’s controversial proposed nuclear procurement which industry experts fear could cost the country R1-trillion. Since his appointment in the middle of last year, Nene has emphasised the need to cap government spending, rein in bailouts to state-owned firms, and limit the size of wage increases to government employees. He also tried to curb spending by public servants and cabinet members on parties, travel and other excesses, which made him extremely unpopular . Nene’s ministerial fortunes follow those of his predecessor, Pravin Gordhan, who was also shifted from the prestigious finance portfolio after he tried to get senior civil servants to curb spending. Treasury insiders said Nene was taken aback by his removal. As late as Tuesday night, he was confident his position was still secure in spite of rumours that had been doing the rounds over the past few days. His dismissal comes on the heels of a credit rating downgrade to just one notch above sub-investment grade, or junk, by Fitch last Friday. Standard & Poor’s also cut the outlook on its equivalent rating to negative. The Treasury and the Presidency were not immediately available for comment. – Additional reporting by Business Day
