Firing of South Africa’s Finance Minister Widens a Political Rift

Firing of South Africa’s Finance Minister Widens a Political Rift

- in Business
28
0

“It’s unprecedented to have senior A.N.C. members come out with dissenting views in public like this,” said William Gumede, a political scientist at the University of the Witwatersrand in Johannesburg and executive chairman of the Democracy Works Foundation, a good-government group.

“Now that the conflict has gone public, people and party members can see the divisions clearly,” Mr. Gumede said. “It will be very difficult for Zuma to shrug this off and claim that everything is fine.”

The firing was a result of a long-running battle between Mr. Zuma and Mr. Gordhan, and the interests they represent. Mr. Zuma’s supporters have accused Mr. Gordhan of representing South Africa’s white-led business community and have urged Mr. Zuma to fire the minister and replace him with someone with a looser grip on state coffers, so as to carry out “radical transformation.”

Mr. Gordhan’s backers belong to the urban faction of the A.N.C., one less beholden to the politics of patronage that the party practices in rural strongholds.

Mr. Ramaphosa, a liberation figure who also became one of the country’s richest black businessmen after the end of apartheid, is considered the leader of the urban faction, and he is seen as a leading candidate to succeed Mr. Zuma as the party’s leader in December.

The other top contender, Nkosozana Dlamini-Zuma, a former chairwoman of the African Union who was once married to Mr. Zuma, has been backed by groups most loyal to the president.

The finance minister’s dismissal sent the currency, the rand, plummeting as much as 5 percent at one point. The cost of borrowing for the government jumped, amid fears that rating agencies would downgrade South Africa’s government bonds to junk status. Africa’s most industrialized economy, South Africa is projected to grow 0.8 percent this year, and unemployment is 27 percent.

Pravin Gordhan in Johannesburg on Wednesday. The dismissal of Mr. Gordhan as finance minister sent the rand plummeting on Friday and prompted fears that rating agencies would downgrade South Africa’s government bonds to junk status.

Credit
Gianluigi Guercia/Agence France-Presse — Getty Images

Speculation is rife that Mr. Zuma might be compelled to step down before the scheduled end of his second five-year term in 2019, clearing the way for another party leader to take the reins.

Mr. Gordhan, who learned of his dismissal from a television report, defended his record on Friday as protesters gathered at the headquarters of the National Treasury, part of the Finance Ministry.

“We hope more and more South Africans will make it absolutely clear that our country is not for sale,” Mr. Gordhan said. “It is important that the public knows what we do at the Treasury, how we serve South Africa, how the budgeting process works and how we make sure that the poor in South Africa benefit from the taxes that we collect from all South Africans, as well.”

The firing on Thursday night capped a week of tensions that began on Monday when Mr. Zuma ordered Mr. Gordhan to return abruptly from a trade and investment roadshow in Britain. As rumors circulated that Mr. Gordhan would be fired, Mr. Zuma summoned A.N.C. leaders for a meeting. The meeting did not produce a consensus, officials have said.

The South African Communist Party, part of the A.N.C.-led coalition that governs the country, said that Mr. Zuma had cited an intelligence report speculating that Mr. Gordhan might be plotting to undermine the president. Mr. Gordhan has called the report preposterous. Mr. Mthembu, the senior A.N.C. lawmaker, said that the intelligence report’s accusations were “plain rubbish.”

Mr. Zuma, in a statement on Friday, announced that he had replaced Mr. Gordhan with Malusi Gigaba, the home affairs minister. Mr. Gordhan’s deputy, Mcebisi Jonas, was also fired and replaced by Sfiso N. Buthelezi.

The two new finance appointees — A.N.C. loyalists active in the party since their youth, and members of Parliament — are “largely unknown to investors,” Morgan Stanley said in a research note on Friday. “This could create further uncertainty in South Africa’s financial markets.”

Mr. Zuma said that the shake-up — 10 new ministers and 10 new deputy ministers were named — was intended to “improve efficiency and effectiveness” and to “bring some younger M.P.s and women into the national executive in order to benefit from their energy, experience and expertise.”

Mr. Gordhan, after a stint as finance minister from 2009 to 2014, was reappointed to the job in December 2015, after Mr. Zuma abruptly replaced his successor, Nhlanhla Nene, with a little-known junior lawmaker. Mr. Zuma changed that decision four days later, after the rand and the stock market tumbled, and Mr. Gordhan’s return to the job helped reassure investors.

But Mr. Gordhan has repeatedly been at odds with the president since then. He resisted Mr. Zuma’s push to approve expensive nuclear power plants, and he tried to rein in public spending. He also clashed with a powerful family, the Guptas, who are close to Mr. Zuma and are so influential that Mr. Zuma was obliged to publicly insist last year that he was in charge of his government.

Trieu Pham, a credit analyst at MUFG Securities in London, said there were important differences between this week’s dismissal of Mr. Gordhan and the firing of Mr. Nene in 2015. Mr. Gordhan’s departure, if not the timing, had been expected; his replacement, unlike Mr. Nene’s, is a cabinet minister, albeit one with limited experience in finance; and the rand and stock prices have risen in recent months, allowing some room for maneuver.

“The long waiting time indicates that Zuma has well weighed the factors for and against the reshuffle, and thinks that he has garnered enough support to resist a power struggle and a breakup of the A.N.C.,” Mr. Pham said.

Continue reading the main story

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

You may also like

Senators Demand Online Ad Disclosures as Tech Lobby Mobilizes

That attitude has many fewer adherents after the