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Support Pravin and save South Africa

Nivashni Nair | 2016-02-29 06:16:14.0
Finance Minister Pravin Gordhan and President Jacob Zuma ahead of the 2016 budget speech in parliament.

President Zuma, the time to speak up is now.

Economists yesterday warned that if Jacob Zuma did not send out a strong signal showing his support for Finance Minister Pravin Gordhan, the rand would weaken further, the country's sovereign debt rating would collapse to junk status and ordinary South Africans would struggle to buy food.

On Friday, the rand slumped to 16.233 to the dollar, the biggest fall in four years.

The decline was triggered by fears that the fallout between Gordhan and SA Revenue Service commissioner Tom Moyane could worsen, resulting in either the sacking or resignation of Gordhan or the undermining of critical aspects of the Budget he presented last week.

Moyane, a Zuma loyalist, had ignored the minister's instructions to halt the restructuring of SARS. He also reportedly initiated an investigation by the Hawks into Gordhan's conduct when he headed the revenue service in 2009.

Another source of tension between Zuma and Gordhan is the minister's determination to rein in Dudu Myeni, chairman of SAA and a close friend of the president.

Yesterday, there were concerns that the rand would be subjected to another battering when Asian markets open today. The run on the currency is reminiscent of events two months ago when Zuma appointed ANC backbencher David van Rooyen as finance minister before being forced to redeploy him and reappoint Gordhan.

"We need a really strong signal from the president on whether he is in full support of the minister of finance so we can try to quell any volatility that can take place in financial markets given what we already know and see as a risk.

"So, that statement needs to reassure us that there is no rift and that everything is in control. We need to show the world that South Africa is open for business," Wits University School of Economics and Business Sciences' Lumkile Mondi said yesterday.

Economist Dawie Roodt said the rand and bond markets weakened after the "so-so budget" but the rift between Zuma and Gordhan could lead to "all sorts of bad things".

"There is only one variable now that stands between us and a possible [rating] downgrade and that is economic growth. How is the spat between Zuma and Gordhan going to affect potential economic growth? This is a proxy war. Let's be honest about this. It's going to affect economic growth via political uncertainty and possible policy uncertainty," Roodt said.

"If they don't sort this out soon . like really soon, within a week or two, then the rand will weaken and a weaker currency will become entrenched and then it leads to weaker economic growth and this will lead to an automatic downgrade. There is a lot at stake at the moment," he said.

Despite Friday's statement from the Presidency to the effect that Zuma had confidence in Gordhan, news of a rift, coupled with a letter from the Hawks to Gordhan asking him to answer questions on a so-called rogue unit formed when he headed SARS, gave rise to concern over the sustainability of his economic plans.

Mondi said: "It's now a question of whether the plans can be implemented given the rift between him and the president. That is the issue that is going to keep a lot of people worried about what is going to happen next."

He said risk from the rift would push struggling South Africans deeper into financial woes.

"This risk will weaken the rand and bring more inflation to South Africa. The majority of South Africans are poor and spend most of their money on food. So, if the rand weakens, they won't be able to afford food for their own survival. And the interest rate may start rising more sharply than we thought. These are the issues that we face in the next few days."

Gordhan has until Wednesday to answer 27 questions from Hawks' boss, Major-General Berning Ntlemeza, on the SARS unit that allegedly spied on taxpayers, including leading political figures.

On Friday, ANC secretary-general Gwede Mantashe strongly defended Gordhan and questioned the timing of the Hawks letter.

The Sunday Times reported that after receiving the letter a few days before the Budget speech, Gordhan apparently complained to Zuma about the investigation. On Monday, he met Zuma and the rest of the ANC's top six and expressed his frustrations with Moyane.

"One version of the events at the meeting, given mostly by sources sympathetic to Zuma and Moyane, is that Gordhan threatened to resign from the ministry if the president did not fire Moyane and did not order the Hawks to stop harassing him. But those close to Gordhan deny that the minister put a gun to Zuma's head, saying all he pointed out at the meeting was that he had told party leaders when he was appointed to the post in December that he did not want to work with Moyane," the paper said.

Political analyst Shadrack Gutto said the ANC would not impeach Zuma as there were too many career politicians who feared losing their positions. "The ANC doesn't know what to do about Zuma because of the various crises facing him, which are weakening the party. As the party goes into elections without a president who has full support within the party it is going to be difficult because each politician looks at what is in it for them.

"They must be seen as supportive of the president because he still has the power to remove any minister from their position. So, they're also trying not to be seen to be gunning for him to be removed," he said.

"There are a lot of career politicians. They don't have the courage and ability to come forward and say enough is enough. And that really says at the moment that the ANC doesn't have a clear leader."


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