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When the dust settles on President Jacob Zuma’s cabinet reshuffle, financial investigators will need to see who profited from shorting the tanking Rand. The currency dropped from R12.80 at 6pm as the ANC’s Big Six were responding to Zuma’s summons to almost R13.60 this morning before a slight recovery – perhaps as the “shorts” started covering their positions. Having advanced knowledge of the cabinet reshuffle is invaluable for financial market traders – a field where the crony capitalist Gupta family have been increasingly, spearheaded by the dodgy former Investec dealer Eric Wood. It’s pretty obvious that quite a few people were privy to the market moving information long before Zuma officially announced loyalists were replacing some of the few competent ministers left in the cabinet. Quite obviously from their reaction, among these insiders were commentators on the television channel owned by the Gupta – and “paid twitter” – who were unable to keep the secret. If ever SA there were an event crying out for an international investigation by the US Justice Department, this is it. With US citizens among those who would have lost to the insider traders, the Feds have jurisdiction. One of the most insightful political commentators around, Cape Messenger editor Donwald Pressly, spent most of last night following developments and then writing about them into the wee hours. Here’s his analysis. – Alec Hogg
By Donwald Pressly*
It is unclear whether the staunch opposition to the axing of Finance Minister Pravin Gordhan will lead to a SA Communist Party walkout of cabinet as widely speculated, but President Jacob Zuma may have thwarted it by keeping in place key communists in the cabinet.
The most notable survivor is Higher Education Minister Blade Nzimande who was widely expected to be axed. In fact the Gupta family TV channel, ANN7 was predicting his axing with a measure of glee in the run-up to the reshuffle which was announced shortly after midnight.
Another SACP member in the cabinet, Health Minister Aaron Motsoaledi, also survived.
Significantly SACP pressure not to appoint disgraced Eskom boss, Brian Molefe, who was recently sworn in as an ANC MP, appears to have been heeded by the president. His name was not mentioned in the new executive lineup. Significantly Buthelezi was also recently sworn in as an MP. He is a former Zuma adviser when he was MEC for economic development in KwaZulu Natal in the 1990s.
Gigaba is not known for his fiscal skills but he is a staunch political ally of President Zuma. He also was highly critical of Julius Malema when he was leader of the youth league – and is probably being rewarded with the position of Finance Minister for his political loyalist pedigree.
A key victim of the reshuffle was Derek Hanekom as Minister of Tourism. This was not viewed as surprising by commentators given that he recently called on President Jacob Zuma to resign his office. He is replaced by a relative unknown, Ms Tokozile Xasa. Hanekom, however, remains active in party work as head of the party’s disciplinary committee.
Tina Joemat-Pettersson, the Minister of Energy, is also out as is Dipuo Peters, the Transport Minister.They are replaced by Joe Maswanganyi and Mmamoloko Kubayi respectively. Joemat-Pettersson, a long-time loyalist of Zuma, is a surprising casualty.
eNCA political commentator Karima Brown – herself once a staunch supporter of President Zuma – predicted that there would be a backlash particularly against the axing of Gordhan. It has long been suggested that the SACP ministers, led by Nzimande, could leave the cabinet. It had also been speculated, she said, that Deputy President Cyril Ramaphosa, could also leave his office as a consequence.
Ramaphosa has backed the retention of Gordhan and was believed to have been instrumental in bringing him back to the office after the abortive attempt to place Des van Rooyen in the finance ministry in December 2015.
Thulas Nxesi, a SACP member, moves from public works to Sport and in comes in Zuma loyalist Nathi Nhleko, who was Minister of Police. Nhleko was outspoken in the defence of security arrangements at the controversial Nkandla compound belonging to President Zuma.
Solly Mapaila, the SACP deputy general secretary, told a press conference earlier on Thursday that it would not necessarily follow that the SACP ministers would resign their posts should Gordhan be removed. SACP ministers and MPs were ANC MPs first. They were not ‘ANC brothers and sisters’, he said. However, Mapaila was adamant that Gordhan and Jonas should not be replaced as they had represented clean governance.
A key survivor is outgoing Communications Minister Faith Muthambi – a hardline Zuma loyalist – who has been under fire for the perilous state of the public broadcaster, the SA Broadcasting Corporation. She is translated to Public Service and Administration. Her post at communications is taken over by Ayanda Dlodlo, who was deputy Minister of Public Service and Administration.
Brown correctly reported before the reshuffle that Nzimande had not received word that he would be removed from office. In the end he remained.
But she said that the new cabinet would be “a factional cabinet”, peopled largely by Zuma loyalists. This included the controversial Social Development Minister Bathabile Dlamini, who has come under flak for the instability of the social grant system.
“There is no indication that corruption is going to be dealt with,” said Brown.
People were being rewarded for “standing firmly as stormtroopers of President Jacob Zuma”, said Brown.
Dlamini had been “a key campaigner” for Nkosazana Dlamini-Zuma’s bid for the presidency of the ANC at the elective conference in December, Brown noted. The two women were “virtually joined at the hip”. The two were criss-crossing the country campaigning at churches and “at ANC branches”, she reported early this morning.
President Zuma would be under pressure to explain why under-performing ministers were being rewarded – like Dlamini, said Brown.
She believed there would be “a push” to reverse the decision to axe Gordhan in the coming days.
It is not clear whether the director general of the national treasury, Lungisa Fuzile, will remain in office. At the last Budget in February he complained about the regular change of finance political leadership. He was also called back from the investment roadshow earlier this week to the US and the UK.
The United Democratic Movement leader Bantu Holomisa said the focus of President Zuma was on the national treasury. “Gigaba will have to hit the ground running.” It was an open question how Gigaba would handle the pressures from the influential Gupta family. “His proximity to the Guptas is worrying,” he said.
Peter Attard Montalto of Nomura said the reshuffle was “an attack on the institution of National Treasury and as such will trigger multiple downgrades. As we’ve highlighted before whilst there are some fiscal risks we are more worried about National Treasury’s role in procurement, preventing corruption and oversight of SOEs including nuclear and banking. We think this is bad for the market and for SA. Equally there are questions hanging over Buthelezi around his role at PRASA and the links of both to various others such as the Guptas. This will concern the market and I think the market will be deeply worried by these appointments.”
- Donwald Pressly is the editor of Cape Messenger.
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