How world sees SA: Why London investors liked Gordhan – and distrust Zuma

Despite historic links between the countries, South Africans have always struggled to decode the British – especially unemotional capitalists who occupy the City of London. Treatment interpreted in Pretoria as heartless or unfair is, from the other side of the water, simply a rational response to freely available information. When it comes to South African investment appeal, that information is less than alluring right now. Capital is cowardly. It flows where the best returns are available and flees from the places where those providing it are either disadvantaged – or the risk of losses are high. This brilliant contribution by City insider Simon Lincoln Reader provides some insight into the way London sees Nenegate and last week’s visit by a Pravin Gordhan-led Team SA. It’s brutally honest. But only by knowing and accepting reality, can behaviour be adjusted to achieve the best results. – Alec Hogg

By Simon Lincoln Reader*

On a miserable December morning last year, I sat in the central London offices of a stock brokerage to watch President Jacob Zuma deliver an unprepared speech I had heard might explain why he had just fired his finance minister, Nhlanhla Nene. The day before, Zuma’s face had appeared on the front page of the Financial Times beneath an unflattering headline, next to a graph illustrating the rand’s collapse.

More magic available at Zapiro.com.
More magic available at Zapiro.com.

After 40 minutes of watching Zuma’s now infamous address at a business gala, the projector was turned off.

“That’s a man trying to hide something,” someone jeered casually.

Exactly what he was trying to hide was partially revealed in the ensuing weeks, but London, a place Zuma regards as the home of an enemy, was wise to his schemes and ploys long before this.

During his state visit to the UK in 2010, he addressed the media without someone else’s notes.

Zuma is most revealing in these encounters, be he making strange remarks to women or speaking to tribal chiefs, but what troubled reporters on this occasion was the ease with which he deflected any questions about the corruption charges dropped the previous year, to the evils of colonialism.

A seasoned journalist who broke the story of Ugandan president Idi Amin arriving unannounced at Buckingham Palace in 1971 (Amin claimed he was struggling to find size 14 shoes in Kampala) recalled: “Zuma spoke like someone convinced that, whatever he was, whatever he had done or was going to do, the British had already done far worse.”

The boardrooms of the City’s asset managers — the location of Finance Minister Pravin Gordhan’s presentations this week during the first leg of his investment road show — are not warm places. They are filled with absurdly qualified men and women of cold hearts and clinical minds to whom long memories are a burden and guilt is meaningless.

Along with associate traders, high-profile African National Congress personalities and patriotic Treasury officials, these managers form the reflex that rattled Zuma into reversing his decision to replace Nene with Desmond van Rooyen.

Their particular role in the incident must haunt Zuma as the ghost of the historical injustice he laments, an extension of oppression now mutated into algorithms he cannot understand and into numbers he cannot count.

There has been scant recognition of the symbolism of Gordhan’s visit, invariably due to the announcement by Moody’s Investor Services that SA’s investment rating will be reviewed in a fortnight.

But, the fact that he is there illustrates, firstly, a comforting shift in the fortunes of traditional relationships and, secondly, the relegation of Zuma to an arbitrary role.

The alternative, had the president succeeded in his project to capture the Treasury, is almost too ghastly to consider: instead of Gordhan in London, it could have been van Rooyen in Toulouse, the headquarters of Airbus, attempting to strong-arm the corporation into the ridiculed third-party leasing fantasy of Dudu Myeni, the chairwoman of South African Airways.

Seeing things as London does avoids most of the peripheral detail that enrages so many in SA — the president’s relationship with Myeni, the identities of the Gupta-linked “advisers”, who arrived at the Treasury the morning after Nene’s axing, the Premier League as well as the nuclear programme.

Instead, London seizes upon suspicious patterns without remorse. On December 10, the City remembered the puzzling appointment of Mosebenzi Zwane as mining minister in September, marking it as a dress rehearsal for what had just happened.

“Outrage in SA was relatively muted,” one analyst remembers, “so Zuma was mistakenly encouraged into believing a second, albeit bigger, project would be entertained.”

Gordhan has been welcomed in London and New York because he is seen as a pragmatic, loyal public servant intent on departure from hostile patterns.

Zuma’s emphasis on the word “enemy” is another example of these patterns; during his second term, particularly at unscripted, sometimes incidental proceedings, the insult has been repeatedly directed at so-called “clever blacks”, colonialists, financial instruments, the media and, of course, the institutions that determine the price of a commodity through supply and demand.

The City, despite its ruthlessness, doesn’t make enemies so much as expose them, and there is no greater enemy than the man who uses the legacy of mass dispossession to hide his own attempts to capture the state.

  • Simon Reader works for an energy investment and political advisory firm and is based in London. This piece is republished with his permission. It appeared first in Business Day.