Zuma warned feuding must end

ECONOMISTS warned President Jacob Zuma yesterday that if he did not send out a strong signal of support for Finance Minister Pravin Gordhan immediately, the rand would weaken further and the country would obtain junk status.

The result would be that ordinary citizens would soon be struggling to buy enough food to survive on.

The rand slumped the most in more than four years on Friday, falling to 16.233 to the US dollar on concerns that a dispute between Gordhan and South African Revenue Service commissioner Tom Moyane would worsen.

Markets fear the increasing storm could lead to either the sacking or resignation of the finance minister.

Alternatively, it could affect his ability to implement the budget he presented last week, analysts say.

There were fears yesterday that the rand would be battered further.

The run on the rand is reminiscent of two months ago when Zuma appointed little-known David van Rooyen as finance minister.

Wits University School of Economics and Business Sciences senior lecturer Lumkile Mondi was one of several experts who voiced concerns.

“We need a really strong signal from the president on whether he is in full support of the minister of finance so we can try and quell any volatility in financial markets, given what we already know and see as a risk,” Mondi said .

Overall, he said, “we need to show the world that South Africa is open for business”.

Economist Dawie Roodt said the rand and bond market had weakened after the “so-so budget”, but the rift between Zuma and Gordhan could lead to “all sorts of bad things”.

“There is only one variable now that stands between us and a possible downgrade and that is economic growth,” Roodt said.

He described the situation as “a proxy war” which would affect potential economic growth via political uncertainty and possible policy uncertainty.

“Perhaps the latter is more important, because clearly this tension between Zuma and Gordhan will eventually come to some sort of conclusion,” Roodt said.

“But in the meantime there is a policy vacuum and I think that is part of the reason why the rand is taking a knock.”

Roodt said if a solution was not reached within a week or two, that would lead to weaker economic growth and an automatic downgrade.

Despite a statement on Friday from the Presidency stating that Zuma had confidence in the minister, the situation worsened over the weekend.

This was when prominence was given to a letter from the Hawks to Gordhan on a so-called rogue unit when he headed the SA Revenue Service.

Gordhan has until Wednesday to answer 27 questions from Hawks boss Major-General Berning Ntlemeza on the unit which allegedly spied on people.

The Sunday Times reported that after receiving the letter from Ntlemeza more than a week ago, Gordhan complained to Zuma about the probe.

Later in the week, Gordhan had met Zuma and the rest of the ANC’s “top six” leaders and further expressed his frustrations with SARS chief Tom Moyane, who initially laid the complaint with the Hawks, the newspaper said.

“One version of the events at the meeting, given mostly by sources sympathetic to Zuma and Moyane, is that Gordhan threatened to resign from the ministry if the president did not fire Moyane and did not order the Hawks to stop harassing him,” the Sunday Times said in its report.

“But those close to Gordhan deny that the minister put a gun to Zuma’s head, saying all he pointed out at the meeting was that he had told party leaders when he was appointed to the post in December that he did not want to work with Moyane.”

Political analyst Shadrack Gutto said the ANC would not impeach Zuma as there were too many career politicians who feared losing their positions.

“The ANC doesn’t know what to do about Zuma because of the various crises facing him, so weakening the party,” Gutto said.

“Therefore, as the party goes to elections with a president who does not really have full support or substantial support within the party, it is going to be difficult because each politician really looks at what is in it for them.

“There are a lot of career politicians and I think they don’t have the courage and ability to come forward and say, ‘enough is enough’,” Gutto said.

“And that really says at the moment the ANC doesn’t have a clear leader.”