Calculating Zuma’s R500bn #Nenegate blunder – Rand depreciation excluded

December 9 2015 will go down in South African folklore, it was the day the heart of the Finance Ministry was literally ripped out, only to be replaced by a complete unknown. It was the day President Jacob Zuma, dispatched of then Finance Minister Nhlanhla Nene, replacing him with David/Des van Rooyen. Van Rooyen’s appointment was the country’s shortest and common sense prevailed as Pravin Gordhan, who was replaced by Nene as finance minister not two years prior, was re-instated. Parity restored? Not quite. The aftermath of the event has been well documented and founder Alec Hogg calculated the immediate loss to the country as R500 billion. The actual loss may turn out to be a lot more as the R500 billion was off equities and bonds. And this staggering number may deepen, especially as this moment in South Africa’s history may have speeded up the path to ‘junk’, which will lead to further losses. A slippery slope. – Stuart Lowman

By Alec Hogg

I recently received this letter from Lebohang Mojapelo, a journalist at Africa Check, a non-profit fact-checking website based in the Wits Journalism Department.

She wrote: “We are currently looking into a statement made by Julius Malema during the State of the Nation debate in which he stated that R500 billion was lost when Zuma changed finance ministers. I can also see that you have made the claim too. I would like to find out from you:
1. Is this accurate?
2. If yes, in what ways did South Africa lose that much money?
3. Why does the switching of finance ministers have that much effect on the economy?
Here is my response:
Former South African Finance Minister Nhlanhla Nene
Former South African Finance Minister Nhlanhla Nene


As our detailed table shows in the linked article, in two days the market value of the country’s 17 biggest financial and property shares fell by R290bn (below). I only referred to the financial and property stocks in the JSE’s Top 40 – there are numerous others outside the Top 40 which, obviously, also fell sharply in value.


In the two days post Van Rooyen’s appointment, South African bonds lost 12% of their capital value.

At the end of 2013 there was R1.8 trillion in South African bonds listed on the JSE. That has grown since but using the end 2013 number,  a12% capital loss on R1.8 trn is R216bn.


The total capital losses sustained by South African bonds and directly affected equities was at least R506bn.

The EFF was thus accurate in quoting of this figure in Parliament.

Thankfully sanity prevailed on the Sunday night with the reinstatement of Pravin Gordhan of Finance Minister, first stabilising the market and then helping it to recover part of the Nenegate losses. Had Gordhan not been reappointed, as Mr Canter points out in the interview linked, the losses would almost certainly have escalated still further.

Please note I was only using quantifiable facts. The impact of the Rand’s depreciation on the national capital stock and the ongoing additional cost of servicing the R300bn of foreign-owned SA bonds and the annual balance of payment deficit of R100bn have not been included.


  • I think that tracking values only over three days (the fateful Wed – Fri) tends to over-emphasise the magnitude of the problem.
    If you plot Rand – Dollar exchange rates, these took a dip from the Wednesday (9 Dec), but had completely recovered by about ten days later. This was superimposed on a fairly steady drop from about R13.10 in mid-October 2015 to around R16.70 by the third week of January 2016. (Following on a slightly slower, but still continuous, drop from the beginning of July 2015.)
    A further item of confusion is to ask questions such as: “Who actually sustained that loss?”, “Was it a real loss of money, of just a temporary book-loss?” and “Over what period?” Stock exchange quotations are notorious for wild fluctuations from day to day, but tend to even out over longer periods, so an investor “in it for the long haul” should be less perturbed.
    By far a greater effect though, was the damage to SA’s reputation, with unknowable influences on disinvestment patterns. However, in that area “Nenegate” was probably only one incident among many.

  • RodB

    I believe a major factor behind the undervaluing of the rand and the lack of any recovery after Gordhan delivered his budget, is that fact that the ANC government has lost all credibility. It is viewed by many as a venal, corrupt organisation whose honest members (there are some, surely) do nothing or too little to bring the organisation back on course.

    Hence, as much as Gordhan is a man of integrity, he is seen as surrounded by people who are not and who will ignore those requests of his that don’t suit them, in the area of cost saving, cutting expenditure etc.

    From a president who makes off-the-cuff pronouncements without any reference to how the issues in question are to be paid for, to a provincial premier who ran up a fast-food bill of tens of thousands in a couple of months, to the government’s utter failure to abide by the terms of its ICC membership, this government has proved time and again it cannot be trusted to keep its word. Just the other day Stone Sinzani claimed that the ANC always wanted Zuma to pay towards Nkandla… Did you believe him?

    Case in point… the economy is tanking… but Zuma wants a new jet costing billions… so much for economising.

    Trust is the absolute foundation of any relationship, be it romantic, business, between countries, or between a government and its peoples.

    That has all gone…

    Hence, when it comes to believability and acceptance, whatever Gordhan says, and Zuma says, the former’s statements are likely to be met with ‘Yeah, right… We believe you, but how many times have you called for restraint in spending, an end to corruption, an end to wasteful expenditure etc – and many in government have ignored you?’

    In the case of the Zuma, well… we all know the answer to that, right?