In U-turn, South Africa’s Zuma restores Gordhan to finance ministry

JOHANNESBURG, (Reuters) – President Jacob Zuma appointed Pravin Gordhan as finance minister yesterday, in a dramatic U-turn that gave South Africa its third finance chief in a week after a selling frenzy in the markets.

Pravin Gordhan
Pravin Gordhan

The shock announcement restoring Gordhan to the post sent the rand surging nearly 5 percent last evening, but failed to quell a tide of criticism of the president.

“This is reckless by President Zuma, he is playing Russian roulette with the South African economy,” opposition Democratic Alliance leader Mmusi Maimane said.

Zuma sacked Nhlanhla Nene from the ministry late on Wednesday, sparking a wave of criticism and financial turmoil, and replaced him with the relatively unknown lawmaker David van Rooyen.

The removal of Nene, who was keen to rein in government spending in Africa’s most industrialised economy, sent the rand currency to record lows, sparked a sell-off in bank stocks and sent yields in both local and dollar-denominated debt soaring.

The JSE All-share index lost 169.6 billion rand ($10.68 billion) between Thursday and Friday.

“Critics would say having a finance minister serving only two days doesn’t bode well for the reputation of South Africa,” said Mohammed Nalla, head of research at Nedbank Capital.

“International investors are probably thinking: Why didn’t the president make a much more considered decision in the first place?”

Many economists had questioned van Rooyen’s ability to steady an economy hammered by falling prices for commodity exports that range from coal to gold.

Nene’s reluctance to rubber-stamp an ambitious plan to build a number of nuclear power stations to ease severe electricity shortages, a project that might cost as much as $100 billion, is also seen as contributing to his downfall.

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