Pravin Gordhan back as finance minister in dramatic turnaround
IN a dramatic and unprecedented turnaround, President Jacob Zuma announced late last night that he had appointed Pravin Gordhan as finance minister. The appointment – said by Zuma to be the result of “many representations” in recent days – handed the country its third finance chief in a week and was seen as the president having given way to a wave of criticism of his last choice. Zuma sacked Nhlanhla Nene late on Wednesday, sparking turmoil on financial markets, and replaced him with the relatively unknown ANC MP David van Rooyen. Within an hour of last night’s announcement at about 10pm, the rand surged nearly 5%. The announcement from the Presidency said: “On December 9 2015, I announced the appointment of a new minister of finance, Mr David van Rooyen. “I [Zuma] have received many representations to reconsider my decision. “As a democratic government, we emphasise the importance of listening to the people and to respond to their views.” The removal of Nene, who was keen to rein in government spending, sent the rand to record lows, sparked a sell-off in bank stocks and sent yields in both local and dollar-denominated debt soaring. The JSE all-share index lost R169.6-billion between Thursday and Friday. Confirming his appointment, Gordhan said late last night he would be sworn in this morning. Gordhan was previously finance minister from May 2009 until May last year, when he was replaced by Nene.
Since Wednesday’s announcement, overtaken by last night’s sudden decision, Zuma had received unprecedented criticism from all sectors, including from within the ANC. One of the latest developments yesterday was that more than 100 academics from nine leading universities wrote an open letter expressing shock at Zuma’s move to dismiss Nene. The letter says the timing of Nene’s removal is “unfortunate”‚ as “current threats to the effective functioning of key institutions undermined the national interest”. “The country [is] on the verge of a further credit rating downgrade by rating agencies. Mr Nene was widely respected and brought stability . . . “Economic institutions such as . . . the Treasury‚ the South African Reserve Bank‚ Statistics SA and the South African Revenue Service have been indispensable and essential bulwarks during the continuing global economic crisis‚” the letter reads. The academics also expressed their misgivings about the decision to replace Nene with Van Rooyen‚ who was not a deputy to Nene. “We would expect . . . that any replacement minister ... would have the stature‚ calibre‚ record and experience to continue to carry out the policy mandate of government‚ and command the respect of all South Africans,” the letter read. “In our judgment none of these considerations were taken into account.” University of Cape Town’s School of Economics director Edwin Muchapondwa released a statement in which he said Zuma’s decision would be severely negative for the economy and its citizens. “We call on the president to urgently articulate a credible plan to effectively address the economic ramification of his action‚” Muchapondwa said. “We believe this is necessary to stem the instability that we see playing out in the economy at present.” Another open letter‚ signed by 25 prominent figures‚ including Professor Barney Pityana and former Cosatu general secretary Zwelinzima Vavi‚ says the damage to the country’s reputation will take years to reverse. “Treasury is widely seen as a prudent manager of national resources and has . . . developed a reputation for being largely insulated from political expedience. Your actions have shown the world that this is not the case‚” the letter reads.