Donwald Pressly: Not a #PravinGate, surely not Mr President. Economy won’t survive.

The South African economy won’t be able to withstand another #NeneGate. And while most of the losses have been recouped since 9/12, the country is only standing where it is now, on the edge of this cliff, because of Nhlanhla Nene’s second replacement, Pravin Gordhan. But ever since his relegation in 2014, and his reappointment in December, there’s been an ongoing battle between him and President Jacob Zuma. But what are the options? Donwald Pressly looks at the current scenario, which finds Zuma between a rock and a hard place. Firing Gordhan will surely lead to his exit as the country is likely to be fast-tracked into a recession with ‘junk status’ inevitable. But if Zuma leaves now, there are still a host of potential clouds hanging over his head, so what becomes of Nkandla, the spy tapes etc. when you aren’t the President. It’s a delicate situation but Pressly’s conclusion is that it will be business-as-usual but with the economy on the edge of the precipice, change is likely to come sooner, rather than later. – Stuart Lowman

By Donwald Pressly*

Donwald Pressly
Donwald Pressly

17 May 2016 – President Jacob Zuma surely cannot afford to do another Nhlanhla Nene? Or can he? He must surely have run out of the political capital required to repeat the December axing saga of an able finance minister six months down the line? But in the fluid state of our current politics – in particular in the, of late, murky political currents running in the ruling party – one can never be entirely sure.

Since the Sunday Times reported that Zuma was poised to rid the government of Pravin Gordhan – yes once again – as finance minister using the excuse that he is implicated in a SARS scandal, the markets have already given a hint of the fallout. The rand plunged precipitously against the major currencies on Monday. But if the real thing happens, the impact on the economy will be massive. It has just emerged  that the Public Investment Corporation – which manages about R1.8 trillion in pension fund assets of the state – lost just short of R100 million in December. If this madness happens again, this will be a drop in the fiscal ocean.

It is suggested that Gordhan could be arrested by the Hawks for his role in the formation of an alleged “rogue unit” in SARS. There is a question as to why the Hawks are investigating this unit given that it surely makes sense that the tax collection agency should have powers of intelligence to track down tax fraudsters? There is clearly a political motive lurking with the president’s friend, current SARS commissioner Tom Moyane, leading the charge against Gordhan, a one-time SARS commissioner himself.

Zuma is stuck between a rock and a hard place

There have, of course, been strong denials that another cabinet reshuffle is in the offing. But if the president is mad enough to do it – he still says that Des van Rooyen was the best candidate for finance minister – it may be the straw that breaks the emperor’s back. If he kicks out Gordhan, he risks being booted himself. Aic analyst Stef Terblanche says that there is a strong indication that an exit strategy for the president was still being prepared in the governing ANC. The Mail & Guardian on Friday noted that ANC secretary general Gwede Mantashe would present an exit strategy report to the national executive committee within two weeks. Terblanche notes that the ANC would not opt for Zuma being fired immediately – or indeed, that nothing was done. It is suggested that a phased exit be considered.

With polls showing that the ANC is doing rather badly in Gauteng in particular – and it is very likely to lose control of the Johannesburg metro where it is polling at a dismal 34% – the pressure is building to find a suitable exit strategy. One can imagine that the president is doing everything possible to avoid corruption charges being reinstated against him. Indeed, if these charges are reinstated, it may give fuel to a quicker presidential departure.

So the president is already stuck between a rock and a hard place. If he chooses to fight Gordhan, who has increasingly being seen as the leader of the sensible, incorruptible, faction within the ANC, the economy will suffer. Terblanche suggests that it would bring the economy to its knees. Nomura’s Peter Attard Montalto does not dismiss this possibility of the madness playing out – there are enough people in the ANC who do not care for prudent political or fiscal management. They don’t give a damn what the rating agencies say either. They appear to have no sense of what fiscal damage would ensue.

Of course, the president has developed an enormously thick skin. If he does, indeed, do the mad thing, he may not survive the fallout himself. One imagines that he knows that, but one can never be sure. A man caught in a corner may flare up. The people in the “good” faction – which appear to include Deputy President Cyril Ramaphosa, ANC treasurer general Zweli Mkhize and even Mantashe himself – are likely to use such a crisis to step up to the plate and say to the president: “No more.” It is for that reason that Zuma is likely not to make the same mistake again. If he chooses business-as-usual, it will mean he will live to fight another day in high office. But the president – and the economy – are looking over the edge of the precipice.

  • Donwald Pressly, Editor of Cape Messenger.
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