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Fri Jun 24 22:20:38 SAST 2016

South Africa's currency first casualty of Zuma's shock axing of finance minister

Jan-Jan Joubert | 10 December, 2015 09:33
South African bank notes featuring images of former South African President Nelson Mandela (R) are displayed next to the American dollar notes in this photo illustration in Johannesburg August 13 2014.
Image by: SIPHIWE SIBEKO / REUTERS

Financial markets are expected to react with shock and take a pounding today after President Jacob Zuma fired the minister of finance‚ Nhlanhla Nene‚ last night.

The local currency went into free fall last night as international investors reacted immediately and started selling off rands on foreign stock exchanges which were open.

The impact on the rand, which broke through the 15 barrier against the dollar, comes as the SA currency and other economic indicators are already reeling after leading rating agencies downgraded the country's credit rating to just one notch above junk status.

Zuma fired Nene‚ South Africa's first black African minister of finance‚ after just 18 months in the job.

He will be replaced by ANC backbencher MP Des van Rooyen‚ who is not known for making waves‚ causing any controversy or being anything but subservient to power.

Van Rooyen is a former mayor of the Merafong municipality in Carletonville in the North West‚ and is not held in the same esteem as Nene.

Nene's unceremonial firing‚ announced by the Presidency in a terse statement last night‚ was not unexpected‚ and follows after a few months when Nene and his deputy‚ Mcebisi Jonas‚ tried desperately to hold the line of fiscal discipline against rampant state spending as the country's trade and budget deficits widened and the rand plummeted.

The last straw in a long line of battles seems to have been a strongly worded letter Nene sent to controversial SAA chair Dudu Myeni‚ a very close confidante of the president‚ in which he tried to rein her in on the SAA/Airbus swop deal.

Nene was also a vocal opponent of the costs associated with the nuclear new build deal‚ which industry experts fear could cost the country a trillion rand.

He furthermore tried to curb spending by civil servants and cabinet members on parties‚ travel and other excesses‚ which made him very unpopular with many on the gravy train.

His ministerial fortunes follow those of his predecessor‚ Pravin Gordhan‚ who was also shifted from the prestigious finance portfolio after he tried to get civil service fat cats to curb spending.

In reaction‚ DA leader Mmusi Maimane said Nene tried in vain to stand in the way of Zuma's reckless and uninformed spending in order to grow the economy and save South African jobs‚ and was now paying the price for being beholden to his principal (Zuma).

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