President Jacob Zuma’s move against Finance Minister Pravin Gordhan yesterday caught both the ANC and the government by surprise – and a cabinet reshuffle now appears certain.
Zuma’s recalling of Gordhan and his deputy, Mcebisi Jonas, from roadshows in London and the US aimed at investors and ratings agencies shook the markets and the business community.
Shortly after the news broke, the rand went from being the best-performing emerging-market currency to one of the worst-performing currencies, falling more than 3% against the dollar.
Bonds tumbled and banking shares slid more than 3%.
Treasury officials are said to be preparing for the axing of their political heads.
By late last night, the president – emboldened after facing down his critics at a weekend meeting of the ANC’s national executive committee – had yet to explain his decision, taken on the eve of a courtroom showdown between Gordhan and the Gupta family over the family’s access to banking facilities.
The ANC’s top six spent yesterday in marathon talks with the leaders of the SA Communist Party, who have previously threatened to withdraw from the cabinet if Zuma moves against Gordhan.
It is understood the SACP was due to raise concerns about the lack of constraints on Zuma’s prerogative to appoint and fire ministers.
The meeting was described as tense. It was convened shortly after the SACP gave the ANC an ultimatum to deal with the Guptas, former Eskom chief executive and now ANC MP Brian Molefe, and the social grants crisis.
ANC spokesman Zizi Kodwa said last night it was not known why Zuma ordered the immediate return to South Africa of Gordhan and Jonas – echoing what ANC secretary-general Gwede Mantashe had told journalists earlier.
Mantashe said Gordhan’s recall was a government matter and the national executive committee had no part in it.
Asked to comment on the rand weakening in reaction, Mantashe said: “The real impact will be seen when there are any other steps.”
He would not say whether he had, or had not, been told of an imminent cabinet reshuffle .
The Banking Association of SA criticised Zuma’s decision to abort the roadshows.
Association managing director Cas Coovadia said it would depress investor confidence in South Africa and raise the risk of a credit downgrade by ratings agencies.
“We appeal to the president and all critical stakeholders to act in the best interests of the country by avoiding precipitate actions that have significant negative impact on economic growth and social development,” he said.
Coovadia said the removal of Gordhan would lead to uncertainty at a time when South Africa’s economy was struggling.
The SA Chamber of Commerce and Industry called on Zuma to explain his decision to recall the ministers.
“No reasons have been put forward for what appears to be an unusual decision‚ especially since the finance ministers are spearheading the roadshow for promoting South Africa as an investment destination‚” it said.
“We are concerned about the uncertainty and the instability this will cause to the financial markets and to business confidence.
“We urge the presidency to provide clear and cogent reasons to stabilise the markets‚ as this continues to fuel speculation and innuendo and drives the narrative for the rumours about the capture of the Treasury.”
The recall led to Treasury officials scrambling to find a flight home for Gordhan and Treasury director-general Lungisa Fuzile.
The officials had the embarrassment of trying to explain to prospective investors who had agreed to meet Team SA – Treasury, business and labour representatives – why the roadshow was cancelled, without themselves having a clue.
A source associated with the trip said: “It is a mess.
“Many of [the delegation] are leaving tonight and are paying for [their trips].
“The Treasury said it can’t pay for everyone.
“Most agreed to join for the good of the economy. Now all of that is wasted.”