South Africa vows to strengthen its economy

Gordhan is the second finance minister appointed by Zuma in four days.

Following the financial and political fallout from his inscrutable decision, President Zuma backtracked on Sunday evening and appointed Pravin Gordhan as the Minister of Finance.

Zuma gave Gordhan the job late on Sunday, in a dramatic U-turn that gave Africa’s most industrialised economy its third finance minister in a week.

AT LEAST one of the three leading ratings agencies, Fitch Ratings, is not convinced that replacing little-known Desmond van Rooyen with more experienced Pravin Gordhan as finance minister will change the country’s fortunes.

Late last Wednesday, when Zuma fired finance minister Nhlanhla Nene after just 19 months in the position, the currency dropped to 15 rand to $1 dollar. This fueled speculation that Mr. Nene was sidelined because of a relationship between the CEO of South African Airways (SAA) and President Zuma.

The markets cheered Gordhan’s appointment, the rand bounced back 5% against the dollar and stocks recovered.

Jeff Radebe, ANC head of policy, said meetings had been held over the weekend with “major CEOs in South Africa including…” Gordhan replaces David van Rooyen, who was sworn in last Thursday, when he replaced Nhlanhla Nene, after a surprise removal the night before.

Bonds also responded positively, with the benchmark 186-rand bid at 9.3 percent from a close of 10.4 percent on Friday. The South African government has officially denied the reports.

“The reappointment of Gordhan by Zuma is an official admission that we truly are a joke as South Africa”.

Zuma also considered the views of the party’s allies in the union movement, as well as the concerns of the financial markets, Duarte said.

His axing set off a firestorm of controversy and exposed fault lines in the notoriously closed ranks of the ANC, with the former health minister calling for Zuma to resign and more junior party members openly expressing criticism.

“Our humble appeal to the nation is to work with us, as we continue to build a resilient economy and a better life for all South Africans in the context of a challenging global, emerging markets and domestic economic environment”, he said.

But on Wednesday, the ANC’s deputy secretary general, Jessie Duarte, spun a very different story at the ANC’s press conference where it closed ranks behind Zuma. It is abundantly clear that the president has no understanding of economics and the impact of his rash decisions will impact most on the poorest of the poor.