PREMIUM FREE TRIAL

#Zumicon: Gordhan and others fired, Zuma cabinet full of Gupta “associates”

There is every chance that President Jacob Zuma has finally gone too far. The deeply flawed leader of South Africa’s ruling ANC has blown off the advice of party’s stalwarts, half the Top Six, innumerable political and economic analysts, international capital markets and millions of South Africa’s fellow citizens. In his own version of the Hitler’s Night of the Long Knives, Zuma has taken his biggest gamble of his career by firing five members of his cabinet and swapped the posts of five loyalists. Most telling, he has promoted numerous politicians known to have close ties to the crony capitalist Gupta family – and axed public critics of the Indian immigrants. Most critically, Zuma has dispensed with respected Finance Minister Pravin Gordhan and his deputy Mcebisi Jonas, on the strength of a fake “intelligence” report which EFF leader Julius Malema says looks like it was written by a child. Also out is the hard working Tourism Minister Derek Hanekom and respected former Mining Minister Ngoako RamathlodiThe market’s reaction was immediate. At 6pm, when it became apparent Zuma had summonsed the other members of the ANC’s Top Six to Pretoria to inform them of his plans, one US Dollar would cost you R12.80. By midnight the currency had depreciated to R13.41. Losses were extended this morning as the Rand touched R13.60 before some short covering brought it back a little. 

Some of the comments posted on the link to this story on Alec Hogg’s Facebook page

In a brilliant piece published on Biznews last week, bestselling author Rian Malan nailed it when he explained the real battleground is South Africa’s much praised Constitution, the cornerstone of its young democracy, Malan wrote: “On one side we have amorphous forces ranged behind Pravin Gordhan, including the SACP, the DA and the old stalwarts in Save South Africa, all trying to follow some variant of the course charted in our empire-influenced constitution. And on the other, Zuma and his primitive accumulationists, who’d prefer to gut the constitution, cut the judiciary down to size and annihilate mechanisms that prevent them from looting the treasury. The most powerful weapon in the hands of Zuma’s faction is the idea that the present order is a relic of colonialism and white supremacy and must thus be transformed out of existence.”

The future of Africa’s youngest Constitutional Democracy is in the balance. Believe it. – Alec Hogg 

Pravin Gordhan, South Africa’s finance minister, center, arrives at the North Gauteng High Court for a hearing in Pretoria, South Africa, on Tuesday, March 28, 2017. South African President Jacob Zuma, 74, ordered Gordhan to cancel meetings with investors in the U.K. and the U.S. and return home on Monday, a day after he had flown to London to begin the week-long roadshow. Gordhan has since been fired as Finance Minister. Photographer: Waldo Swiegers/Bloomberg

Zuma’s night of long knives threatens split in the ANC

by Sam Mkokeli and Mike Cohen

(Bloomberg) — South African President Jacob Zuma fired Finance Minister Pravin Gordhan and eight other cabinet members in a high-stakes power play that may threaten his own presidency and place the nation’s investment grade credit rating at risk.

Zuma replaced Gordhan, with whom he feuded over state finances, with Home Affairs Minister Malusi Gigaba, who has no financial or business experience. He also named lawmaker Sfiso Buthelezi to take over from Mcebisi Jonas as deputy finance minister. The cabinet overhaul came in a late-night move that threatens to split the 105-year-old ruling African National Congress and trigger a revolt against the president. The rand extended losses, heading for its worst week in more than a year.

“Those walking into the Treasury tomorrow will not reassure anyone that the top institution protecting South Africa’s fiscal stability is in safe hands,” said Anne Fruhauf, vice president at New York-based risk adviser Teneo Intelligence. “The move invites a massive backlash from the anti-Zuma faction.”

Zuma’s decision to replace Gordhan, popular with investors because of his efforts to rein in spending, came in the face of opposition from three of the top six members of the ANC and its alliance partner, the South African Communist Party. Some cabinet ministers were said to be ready to turn against the president, who’s survived a series of corruption scandals and presided over the party’s worst-electoral performance since the end of apartheid in 1994 in municipal elections in August.

ANC Divisions

“This will exacerbate the existing divisions in the ANC,” Daniel Silke, director of Political Futures Consultancy in Cape Town, said by phone. “We are really in for a roller-coaster ride in terms of ANC cohesion.”

Gordhan’s ouster marked the end of a stormy relationship that began almost as soon as Zuma named him as finance minister in December 2015, four days after the president triggered a sell-off in the rand by replacing the respected Nhlanhla Nene with a little-known lawmaker. He clashed with his boss over the affordability of building nuclear power plants and the management of state-owned companies.

Image courtesy of Currency Partners

While removing an opponent in a key position may strengthen Zuma’s grip over the government in his final year as ANC leader, a backlash within the party would galvanize his detractors as he seeks to secure his choice as successor in a party election in December.

The rand tumbled, weakening as much as 2.6 percent against the dollar and was at 13.4641 by 9 a.m. in Johannesburg on Friday. It has plunged 7.6 percent this week, the most of more than 140 currencies tracked by Bloomberg. Yields on benchmark rand-denominated government bonds due December 2026 soared 45 basis points to 8.96 percent.

Unlike when Nene was fired, the opposition to Zuma within his government is now much stronger, presaging a full-blown political crisis,” said Nicholas Spiro, a partner at London-based Lauressa Advisory Ltd., which advises asset managers. “The rand will be punished even more severely and the whiff of a junk rating is in the air.”

Zuma made 20 changes to his administration, capping a dramatic week when he ordered Gordhan on Monday to cancel a series of meetings with investors in the U.K. and the U.S. and return home. The South African Communist Party, an ally of the ANC, slammed the decision to recall Gordhan and warned against firing him.

Jacob Zuma attends The New Age and SABC Business briefing on 16 Mar 2012, accompanied by Atul Gupta, Malusi Gigaba and Nazeem Howa.
Jacob Zuma attends The New Age and SABC Business briefing on 16 Mar 2012, accompanied by Atul Gupta, Malusi Gigaba and Nazeem Howa.

The fourth finance minister in 15 months, Gigaba, 45, was appointed as minister of home affairs in May 2014. A former president of the ruling party’s youth wing, he trained as a teacher and holds a masters degree in social policy. He previously served as the minister of public enterprises, deputy home affairs minister and as a lawmaker for the ANC.

Cabinet Shake-Up

The other cabinet changes announced by Zuma include the appointment of Mmamoloko Kubayi as energy minister to replace Tina Joemat-Pettersson, Joe Maswanganyi as transport minister in place of Dipuo Peters and Tokozile Xasa as tourism minister in place of Derek Hanekom.

Several ministers were given new portfolios including Fikile Mbalula, who becomes police minister, Nathi Nhleko, who was named minister of public works, and Thulas Nxesi, who was appointed minister of sport and recreation. Ayanda Dlodlo will take over the communications portfolio from Faith Muthambi, who becomes minister of public service and administration. Hlengiwe Mkhize succeeds Gigaba as home affairs minister.

Zuma didn’t bring in Nkosazana Dlamini-Zuma, the former head of the African Union Commission and his ex-wife, who is seen with Deputy President Cyril Ramaphosa as a leading contender for ANC president at a party electoral meeting at the end of the year.

Political Survivor

Zuma has survived a series of scandals since he became president in 2009. The Constitutional Court last year ruled that he broke his oath of office by refusing to repay taxpayer’s money spent on his private home.

The brilliant Zapiro’s assessment of the Nkandla whitewash. More at www.zapiro.com

The nation’s graft ombudsman also implied that he allowed members of the Gupta family, who are in business with his son, to influence cabinet appointments and the issuing of state contracts. Zuma and the Guptas deny having ever intentionally broken the law.

The cabinet changes will leave South Africa’s credit rating vulnerable. Moody’s Investors Service, which rates South Africa’s debt at two levels above junk and with a negative outlook, is scheduled to publish a review of the nation’s creditworthiness on April 7. S&P Global Ratings and Fitch Ratings Ltd. kept their assessments at the lowest investment grade late last year.

“We expect the current explosion of political turmoil and its resulting economic and fiscal uncertainties to catalyze sovereign rating downgrades,” said Phoenix Kalen, director of emerging-market strategy at Societe Generale SA in London.

The two biggest opposition parties, the Democratic Alliance and the Economic Freedom Fighters, have filed for votes of no confidence in Zuma in parliament.

“This as an open attack on the Treasury to replace people who are anti-corruption with people loyal to Zuma to help the Zuma faction win in December,” said Peter Attard Montalto, an economist at Nomura International Plc in London. “This is an attack on the institution of National Treasury and as such will trigger multiple downgrades.”

From Save SA

The Gupta Cabinet reshuffle is an outrage. It is time to act!

The Cabinet reshuffle announced by President Jacob Zuma on behalf of the Gupta family is an outrage – an insult to the suffering of millions of South Africans over many decades. It is a brazen attempt to undermine the gains of the liberation struggle by taking power away from the people and handing it over to a clique based in Dubai.

It is therefore a Gupta coup and final confirmation – for those who needed it – that our President, our government and our country have been captured by compradors intent on destroying our democracy.

We cannot submit to this outrage – it is time to fight.

The Save South Africa campaign calls on all South Africans who care about their country to use this moment to say: “This far, and no further.”

We are urging every woman and man, old or young, to make their way to Pretoria and assemble at Church Square, outside the National Treasury, at 10am today to show their objection to this Gupta-inspired coup.

Bring your flags, bring your family and friends, and occupy central Pretoria. This is the only way we can stop the capture of National Treasury, and prevent the Gupta proxies from getting access to our money.

We must #OccupyTreasury. We must march to the Union Buildings, and similar marches should take place on Parliament. We must join hands in common cause and show that we are not prepared to accept any further abuse of power and the undermining of our Constitution.

The scale of the reshuffle is massive – far bigger, even, than the numbers suggest.

Firstly, the Guptas have anointed their proxies to loot National Treasury at their behest. It is clear that they intend to make their first order of business the approval of a banking licence for the Gupta proxies at Habib Bank, and then to facilitate money-laundering and illicit deals.

On top of this, they have put pliable Ministers in charge of other portfolios that are central to their grand plan:

We have to stand up now to defend our democracy.

We must chase Zuma and his cronies out of office. We must make this their final move. We cannot wait any longer. We must take this defence of democracy to the streets.

Get involved, South Africa. Join us in Pretoria at 10am and elsewhere, for as long as it takes.

We must all act, to Save South Africa now.

From the IRR: Take a wait and see approach to new cabinet 

Jacob Zuma has released a statement announcing sweeping changes to his cabinet.

The most important change is that Malusi Gigaba has replaced Pravin Gordhan as Minister of Finance while Sfiso Buthelezi has been appointed as the Deputy Minister of Finance. While Mr Gigaba is well known Mr Buthelezi is less so. Mr Buthelezi is a 55 year old economist who previously worked as an advisor to Mr Zuma. Mr Buthelezi also spent almost ten years as a political prisoner on Robben Island and holds a BCom (hons) degree in economics.

IRR CEO Dr Frans Cronje said that the cabinet reshuffle has been expected for some considerable time. He said, “while caution is obviously warranted around the new cabinet foreign and domestic investors should look to judge it by the policy positions it adopts and the actions it takes. We expect a significant degree of hysterical reaction in the media and on social media over the next few days. A panicked response to the reshuffle will exacerbate its negative effects. Now is a time for cool heads and well informed and reasoned thinking on where South Africa is headed”.

He said, “the new finance minister and his deputy come into office at a time of very weak economic performance as debt levels have increased, the budget deficit remains under pressure, and the government’s tax take as a proportion of GDP is projected to reach a record level. The government also knows that ratings agencies and investors are watching its next moves closely and it will be interesting to see how the government now responds to investor concerns”.

He also said that, “the reshuffle is in many respects a purging of old-guard communists from the government. We expect Mr Zuma’s political enemies to launch a ferocious fight back over the next year. This is far from the end of infighting and uncertainty in the government and the ANC – quite a number of years of instability may lie ahead”.

For a deeper understanding of the world of money and greater financial control, upgrade to BizNews Premium.