Cape Town — President Jacob Zuma fired his finance minister, Pravin Gordhan, in a Cabinet reshuffle on Thursday night, precipitating an immediate drop in the value of the South African currency, the rand.
Announcing the move, he said he had instructed new Cabinet members to work to bring about “radical socio-economic transformation,” reflecting his belief and that of his friends, the controversial Gupta family, that “white monopoly capital” in South Africa is obstructing the economic progress of black South Africans.
Zuma also fired the deputy finance minister, Mcebisi Jonas, who reported last year that in October 2015, the Gupta family had offered him a bribe of R600 million if he would agree to become finance minister and remove obstacles the National Treasury was putting in the way of their business ambitions. The Guptas have made a fortune in South Africa since immigrating from India in the early 1990s.
Two months after Jonas reportedly had turned down the bribe, Zuma fired the finance minister at the time, Nhlanhla Nene, and appointed in his place a relatively junior minister closely identified with the Zuma/Gupta faction of the party.
But Zuma faced a backlash from other leaders of the ruling African National Congress and from business leaders. Forced to back down, he quickly but unwillingly appointed Pravin Gordhan, who had previously served as finance minister, to the post. Since then Gordhan has led joint missions abroad representing government, business and labour to talk up the country’s prospects with investors.
Gordhan and Jonas were on such a mission in London on Monday when Zuma ordered them home. On the same day, Zuma told firstly the ANC’s allies in the South African Communist Party (SACP) and then the other top five leaders of the ANC of his intention to fire the finance team. Both the SACP and three of the five ANC leaders opposed his plan but to no avail.
The Communists, big business and a large constituency in the ANC reject Zuma’s transformation narrative as, in the words of a Johannesburg Financial Mail report, “a crude crony-capitalist scheme in which the interests of his friends, the Gupta family, seemed to actually drive policy.”
Over the past 15 months, Gordhan, Jonas and officials of the National Treasury have staved off threats by international ratings agencies to downgrade South Africa’s credit rating to junk status. Responding to the reshuffle, emerging market economist Peter Attard Montalto of the Japanese investment bank Nomura said he viewed Zuma’s reshuffle as “an open attack on Treasury to replace people who are conservative and anti-corruption with people loyal to Zuma” and “as such will trigger multiple downgrades.”
The effect of downgrades would be to make it more difficult to raise investment abroad and to increase the cost of borrowing to the government, leaving less money available for government spending on development.
Contrary to speculation earlier on Thursday, Zuma did not make a clean sweep of SACP members of the Cabinet, leaving a number of high-profile members and other opponents in place.
But he did axe tourism minister Derek Hanekom, who proposed a vote of no confidence in him at an ANC national executive meeting last November. He also fired Ngoako Ramathlodi, a former political secretary to ANC icon Oliver Tambo, who diplomatically registered concern on Wedneday at what action Zuma would take.
In Gordhan’s place, Zuma appointed Malusi Gigaba, an energetic Minister of Home Affairs who denies being influenced by the Guptas but is a Zuma loyalist regarded as more malleable than Gordhan, as is the new deputy finance minister, Sfiso Buthelezi.
The full list of new Cabinet appointments: http://allafrica.com/stories/201703300841.html