The firing of Finance Minister Nhlanhla Nene has shocked markets to such an extent that South Africa could be pushed into economic crisis sooner rather than later. After the rand plummeted 5% against the dollar and bond yields were rocked, economists started predicting that the country faced the prospect of a hefty increase in its borrowing rate next month, which would in turn probably lead to the country being given a junk credit rating.President Jacob Zuma's axing of the internationally respected Nene is widely thought to have been politically motivated, which further erodes confidence in the president's ability to effectively steer the economy.Zuma appointed ANC parliamentary backbencher David "Des" van Rooyen to replace Nene. Most economists and analysts said they were oblivious of his capabilities.The Reserve Bank's monetary policy committee's first meeting of the new year is scheduled for January 28 and already some analysts are predicting a hike of 100 basis points. "If South Africa heads further towards a sub-investment grade sovereign rating [because of] wrong fiscal and structural policies, it may well fall to the Reserve Bank to tighten monetary policy, perhaps significantly, to shore up the rand and head off inflation, and ease balance of payments pressures," said Arnab Das, head of EM Macro at Invesco in London."We can no longer view the Reserve Bank as sacrosanct either but one should not underestimate the tenacity and drive of its governor, Lesetja Kganyago, to protect the independence of the institution."We must watch for mandate changes," said Das.The SA Chamber of Commerce expressed its "concern" yesterday, saying the consistency of macroeconomic policy was of paramount importance for trade and investment. It said any major decisions that might have an effect on confidence must be weighed carefully.Steven Friedman, director of the Centre for the Study of Democracy, said Zuma had crossed a line not breached in the past 20 years."This is really, effectively, the first finance minister to be fired since 1994. The accurate perception is that the reason he was fired is that he was doing his job, insisting on fiscal discipline."Zuma announced in February that the government had decided to build nuclear power stations, but Nene stood in the way and insisted that the government would have to show that it could pay for them.Nene also clashed with the chairman of SA Airways, Dudu Myeni.She is a former schoolteacher who also heads Zuma's charitable foundation.He refused the national carrier permission to restructure a plane-leasing deal.Zuma has not given his reasons for firing Nene.Van Rooyen left a mess behind him at Merafong municipality after being removed as mayor by the ANC in 2009.The auditor-general's report on the finances of the municipality revealed gross mismanagement of funds and incompetence.In the financial year ended June 30 2009, the AG found that there was irregular expenditure of R141-million related to sick-leave.The AG also highlighted that:Unauthorised expenditure amounted to R54-million;Material losses of R9.7-million and R6.6-million were incurred as a result of electricity and water losses respectively;Invoices were not settled within the prescribed 30 days;The municipality did not prepare financial statements for submission to the AG in accordance with the requirements of the Municipal Finance Management Act;24 councillors did not declare their interests for the reporting year;The executive mayor, Van Rooyen, was among those who did not declare their interests;UIF contributions were not deducted from allowance paid to councillors.The AG said that the municipality's accounting officer did not exercise his oversight responsibility with regard to compliance with laws and regulations, and to internal control.He said there were no systems in place at the municipality to facilitate the preparation of the financial statements and performance reports.At a political level Zuma faces a storm.Political analyst Somadoda Fikeni said Zuma sometimes made crucial appointments without wide consultation within the ANC and the broader tripartite alliance.He therefore created for himself a political storm similar to that which ultimately resulted in the fall of Thabo Mbeki."When the ANC says it notes [the decision to remove Nene and replace him with Van Rooyen], it suggests [that it was] some distance from the decision. It suggests that the ANC might be distancing itself from the fallout," said Fikeni."This also raises the old question: Where is the locus of power? Is it in the ANC or the government? This is precisely what got Mbeki into trouble with the ANC-led alliance."Mbeki was recalled in 2008 after being defeated by Zuma for the ANC presidency in Polokwane the year before.He had been widely criticised for unilateral decisions - political and macroeconomic - often outside the ambit of the party's alliance with labour federation Cosatu and the SA Communist Party.Opposition parties have slammed Zuma's appointment of Van Rooyen, but DA councillor in Merafong Blackie Swart, who worked with Van Rooyen on the council, was full of praise for the former mayor."I worked with him for about two years and he came across as a solid character, a very strong leader."I think it was his strength as a leader that made his party take him to parliament. He remains one of the best mayors of Merafong," said Swart...