Third Finance Minister For South Africa In A Week

South African President Jacob Zuma appointed his third finance minister in a matter of a week, amidst market upheavals. After replacing the previous finance minister, Nhlanhla Nene, with David van Rooyen last week, Zuma came under severe criticism, resulting in a hasty appointment of Pravin Gordhan as the latest incumbent.

The BBC reported that the reason behind the removal of Nene could have been his reluctance to approve a plan to build several nuclear power stations, at a cost of up to $100 billion. While the New York Times mentioned that the reshuffle was related to a clash between Dudu Myeni, the chairwoman of the troubled aircraft carrier South African Airways, who pushed for a purchase of 10 aircraft, and Nene, who opposed the move.

Dudu Myeni has been known to be a close ally of Zuma. Amidst speculations, the President’s office said that the rumors about a romance between the two, and a child, are totally baseless.

Whatever the reason, this abrupt move was met with harsh criticism from all quarters, followed by quick steps from the government. The statement released by the South African President’s office said the following.

“I have received many representations to reconsider my decision. As a democratic government, we emphasize the importance of listening to the people and to respond to their views. In this regard, I have, after serious consideration and reflection.”

The report in Quartz suggests otherwise. The decision of sacking Nene was made with little input or consultations from his cabinet. Jeff Radebe, a minister in the president’s office, said the following in a media briefing.

“Speaking for myself, I don’t think cabinet had any idea that there was going to be a reshuffle.”

Following the appointment David van Rooyen, an A.N.C. lawmaker who has no experience in finance, the South African rand fell steeply against the dollar. The appointment of Gordhan resulted in a 5 percent jump in the rand against the dollar.

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Pravin Gordhan was South Africa’s finance minister from 2009 until 2014. Prior to that, he ran its revenue service from 1999-2009. Trained and worked as a pharmacist, he was one of the main negotiators in the drafting of South Africa’s democratic constitution from 1991-1994.

South Africa faces many challenges. The drought hit the agricultural sector, the falling commodity prices, the reeling mining industry reeling, the electricity challenges, in addition to more than 25 percent unemployment, has reflected into inequality and poverty in the country getting worse.

An employee scans a sack of sugar through the till at the checkout [Photo credit to-Getty Images]
An employee scans a sack of sugar through the till at the checkout [Photo by Getty Images]
With a local government election looming in the first half of next year, such impulsive actions could prove to be expensive for the South African President. Worse still, there is also a risk that he may face a fate similar to that of his predecessor, who was “recalled.”

Former Health Minister Barbara Hogan called on the President to resign. She said that the president had crossed a line and needed to be held to account.

Dawie Roodt, chief economist at Pretoria-based Efficient Group Ltd., told Bloomberg the following.

“This is not about Gordhan or Van Rooyen or Nene, it’s about Zuma. I can’t see how Zuma can politically survive much longer under these circumstances.”

South African banknotes sit in this arranged photograph in Pretoria, South Africa. South Africa's government was left trying to shore up credibility after President Jacob Zuma's debacle over who should run the finance ministry called into question his ability to oversee the economy. [Photo credit to Getty Images]
South African banknotes sit in this arranged photograph in Pretoria, South Africa. South Africa’s government was left trying to shore up credibility after President Jacob Zuma’s debacle over who should run the finance ministry called into question his ability to oversee the economy. [Photo by Getty Images]
With downward spiraling of the economy, a struggling growth rate, inflation heading towards 5 percent, a weak industrial sector, the second most developed nation in Africa has much to fear about. Nigeria overtook South Africa as Africa’s biggest economy after South Africa based its gross domestic product (GDP) calculations in 2014. South Africa’s economy is seen growing by 1.4 percent in 2015 and 1.3 percent in 2016, according to the International Monetary Fund.

It is time for the South African President to contemplate. It is time that he concentrates more on the economic development of the nation rather than indulging in political speculations.

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