Zuma appoints second new finance minister in 4 days

JOHANNESBURG, Dec 14 South Africa’s rand leapt on Monday after President Jacob Zuma named Pravin Gordhan as finance minister, seeking to draw a line under days of market turmoil that have triggered calls for him to stand down as leader.

On Sunday evening, the presidency said it had chose to replace David van Rooyen with former finance lead, Pravin Gordhan, a move that sparked an immediate recovery in the rand. “If anyone still does not think we are in a banana republic, they can not be helped”, said spokesperson Mbuyiseni Ndlozi in a statement.

The president issued a series of statements after markets roiled following Nene’s ouster, from pledging fiscal prudence to denials of an affair with the chairwoman of South African Airways, the state-owned national carrier.

“It may stop the rot short term but I’m not sure it’s really going to turn the situation around and make anybody really that much more happier about South African investments”, Nigel Rendell, senior EMEA analyst at Medley Global Advisors, said by phone from London.

Moments after the announcement that Nhlanhla Nene had been axed and would be replaced by unknown David “Des” van Rooyen, the rand plummeted and the likelihood is that the economy will follow.

He says Zuma did not anticipate the damage his decision would do to South Africa’s economy, nor the backlash he would receive, both from the public and the Tripartite Alliance.

President Zuma gave no reasons for dismissing Nene, who has been serving as head of the Treasury for just under two years.

The rand firmed to as low as R14,94 and was trading in a broad range between R14,9420-R15,8847 in overnight trade in NY from Friday’s close of R15,8952. Zuma’s second late-night Cabinet shuffle in three months sent shock waves through the political system and among investors and the reaction was mostly negative.

“Markets should rally back very strongly but I would not expect a total retracement with a permanent loss of trust in leadership even if we are in a better place”, said Peter Attard Montalto of Nomura in London. “Zuma has lost his political aura and now the vultures will circle ever more tightly and the possibility of an early recall looms large”, Hartley wrote.

“The stunning re-appointment of the respected Gordhan indicates the levels of consternation that must’ve prevailed within the ANC this weekend”, he said.

– In a previous interview with News24, Myeni, who is the chairperson of the Jacob Zuma Foundation, said her relationship with the president was professional.

Achmat pointed out another challenge of the reshuffle.

The president has appointed Van Rooyen as the new minister of cooperative governance and traditional affairs. Gordhan’s deployment to the post was seen as sending an effective official to a troubled sector.

Mr Zuma said he had removed Mr van Rooyen so quickly because he was responding to representations.