“[W]e’ve all woken up a lot poorer this morning”. This was Kantor, Investec's chief economist’s, response to the sudden dismissal of finance Minister Nhlanhla Nene on Wednesday 9 December, barely two years after he took office. David van Rooyen, a relatively unknown member of the finance committee in Parliament, was soon to replace him.
This sudden move from the presidency set forth a wave of confusion, especially in light of the fact that Nene was a largely respected finance minister, described as “thoroughly decent, smart, diligent and more than capable” by former finance minister Trevor Manuel.
So what could be the reason for the sudden dismissal of such an esteemed finance minister?
The most prominent and widely assumed cause is the tension that arose between Nene and Dudu Myeni (SAA chair and chairperson of Zuma’s education trust) after Nene turned down SAA board’s proposal to restructure a re-fleeting transaction with Airbus. This is, indeed, not the first change to take place in Cabinet after clashes with Myeni. Malusi Gigaba was moved from being Minister of Public Enterprises to being Minister of Home Affairs and SAA was moved from the current Minister of Public Enterprises Lynne Brown to the Treasury after Gigaba and Brown respectively bumped heads with Myeni.
EFF spokesperson Mbuyiseni Ndlozi comments: “Nene refused to give SAA guarantees and bailout when Zuma’s girlfriend and chairperson of the board requested it”. She adds that Nene also “refused to buy Zuma a new luxurious private jet [estimated cost R4-billion] and declined to grant Zuma’s staff exemptions from using expensive hotels and flying first class”. Above all, Nene was reluctant to rubberstamp the nuclear deal [with estimated costs well over R100 billion] “which Zuma wanted expedited so he can benefit before his term as president ends”. These claims are echoed by DA leader Mmusi Maimane.
Manuel, in a strong worded response to Zuma’s ‘finmin’ antics, further exposes a few interesting points. According to Manuel, Cabinet (who is usually informed in advance of such changes) was largely shocked at this sudden change. Yet, it was no surprise to Van Rooyen “whose soul mate, Gaddafi Rabotapi knew about this for more than a month”. Manuel questions what entitled Mr Rabotapi, as a non-member of Cabinet, to know this. Van Rooyen’s brother, in an interview by Mail & Guardian, also mentioned that he had been informed that “big things” would happen in the week. But, the ultimate shocker for Manuel remained that “Mr Van Rooyen arrived at National Treasury that Thursday morning with two advisers”. Manuel questions how these advisers were appointed and why there was no consultation with the Treasury’s accounting officer, since the advisers would have to be placed on Treasury’s payroll. And, as a final blow, Manuel questions how Van Rooyen acquired his advisers’ services “even before he had been sworn in as a minister”.
Unfortunately, the story does not end there, as the president does not only change underwear once a week.
Despite the ANC’s statement that they believe Van Rooyen “has what it takes to lead the ministry”, Van Rooyen was quickly replaced by Pravin Gordhan on 13 December after the severe response that Van Rooyens appointment had. Gordhan was the predecessor of Nene and held office as finance minister from 2009 to 2014.
So how did all this result in South Africans waking up a little poorer?
Having three finance ministers in one week does not only cause social media to go viral, but also has a huge impact on the South African economy. After Nene’s sudden dismissal:
- the JSE All-Share index plummeted by 3 per cent and lost R169.6 billion between the following Thursday and Friday;
- the bank index lost nearly 19% in the two days;
- the rand plunged by about 9.5% in the two days after the announcement (falling below R15 per US Dollar and turning at almost R23 per Pound), while the yield on South Africa’s benchmark 2026 bond has jumped from 8.75 per cent to 10.38 per cent since Wednesday.
The JSE noted that the average daily value traded in the equity market over the two days following the dismissal was R47.8 billion, more than double the year to date average for 2015.
This was a heavy blow to the economy just after Fitch international ratings agency downgraded South Africa’s credit rating to just one notch above junk status on 4 December. No wonder Maimane feels like Zuma “is playing Russian roulette with the South African economy”. After Zuma’s antics, investors can only see the South African economy and Zuma’s administration as unstable which, according to Maimane, will have huge implications for job creation.
No one in the world will trust a political leadership that changes Cabinet and finance ministers like underwear - Ndlozi