Zuma puts Knife into SA Economy by firing Gordhan and 8 other Ministers

In a show of blatant ignorance and god-complex against all reasonable voices from all ranks including his own, a mentally questionably fit President has wielded his Axe in last night of long knives. Most likely to show his power one last time on his way out, he has removed from cabinet, whoever filed applications against him (Derek Hanekom, Minister of Tourism) or prevents him from following through with his Nuclear Power Plant plans costing the country trillions of Rand without corresponding budget (Tina Joemat-Pettersson, Minister of Energy and Pravin Gordhan, Minister of Finance).

Not only South Africa, the world is in shock and asks if South Africa has got any safe-guards in place to prevent one single man driving the local currency into the abyss (The rand lost more than 8% towards the Greenback) and lowers the economy down to a level on par with any given Banana Republic? Apparently none, which were available around midnight, when the “Butcher of the SA Economy” tried to show one last time, who is Boss and that Mugabe is not the only African President, who “gets away with murder”, this time of the economy that is! The Rating Agencies are already scratching the last positive points from South Africa’s scorecard, mainly as with Pravin Gordhan at least the country had good financial governance and budgets under control.

Gordhan, now being sacked the second time as Minister of Finance, was replaced by current Home Affairs Minister Malusi Gigaba, who has no financial or business experience, while ANC MP Sfiso Buthelezi takes over from Mcebisi Jonas as deputy finance minister. This is not surprising and in line with Zuma’s reckoning, as Gigaba also had no clue about Home Affairs politics, but nevertheless played minister and drove Tourism and Infrastructure Projects almost to the brink of collapse by introducing visa conditions that prevent pretty any visit or involvement of skilled foreigners, especially those with children. One wonders, who – later in retrospective – was the worst Finance Minister ever? Malusi Gigaba or Daniel van Rooyen, whose appointment already once almost sank the economy into junk status.

The cabinet overhaul came in a late-night move that threatens to split the 105-year-old ruling African National Congress and triggers a revolt against the president. Those walking into the Treasury tomorrow will not reassure anyone that the top institution protecting South Africa’s fiscal stability is in safe hands. The move invites a massive backlash from the anti-Zuma faction as it is an open attack on the Treasury to replace people who are anti-corruption with people loyal to Zuma to help the Zuma-faction win in December.

Zuma’s decision to replace Gordhan, who was popular not only with the public but especially with investors, because of his efforts to rein in spending, came in the face of opposition from three of the top six members of the ANC and its alliance partner, the South African Communist Party (SACP). Some cabinet ministers were said to be ready to turn against the president, who’s survived a series of corruption scandals and presided over the party’s worst-electoral performance since the end of apartheid in 1994 in municipal elections in August.

h3. ANC Division

Zuma’s erratic midnight cabinet shuffle will exacerbate the existing divisions in the ANC and South Africa is now in for yet another roller-coaster ride in terms of ANC cohesion. Gordhan’s dismissal marks the end of a stormy relationship that began almost as soon as Zuma named him as finance minister in December 2015, four days after the president triggered a sell-off in the rand by replacing the respected Nhlanhla Nene with the little-known lawmaker van Rooyen. He clashed with his boss over the affordability of building nuclear power plants and the management of state-owned companies.

The reshuffle comes in Zuma’s last year as leader of the ruling party and while removing an opponent in a key position may strengthen his grip over the government, a backlash within the party would galvanise his detractors as he seeks to secure his choice as successor in a party election in December. It must be noted that in a space of only 15 months, Zuma has fired two well-regarded finance ministers, but unlike when Nhlanhla Nene was fired, the opposition to Zuma within his government is now much stronger, presaging a full-blown political crisis. The rand will be punished even more severely and more than just a whiff of junk rating is in the air.

Zuma made 20 changes to his administration, capping a dramatic week when he ordered Gordhan on Monday to cancel a series of meetings with investors in the UK and the US and return home. Even the SACP, generally an ally of the ANC, slammed the decision to recall Gordhan and warned against firing him. Gordhan’s successor, Gigaba was appointed as minister of home affairs in May 2014. A former president of the ruling party’s youth wing, he trained as a teacher and holds a masters degree in social policy. He previously served as the minister of public enterprises, deputy home affairs minister and as a MP for the ANC.

h3. Cabinet Shuffle

The other cabinet changes announced by Zuma include the appointment of Mmamoloko Kubayi as energy minister to replace Tina Joemat-Pettersson, Joe Maswanganyi as transport minister in place of Dipuo Peters and Tokozile Xasa as tourism minister in place of Derek Hanekom. Over and above, several ministers were given new portfolios including Fikile Mbalula, who becomes police minister, Nathi Nhleko, who was named minister of public works, and Thulas Nxesi, who was appointed minister of sport and recreation. On the only positive notes of the “Zuma Shuffle” an experienced Ayanda Dlodlo will take over the communications portfolio from Faith Muthambi and gives hope for a speedier implementation of non-telestrial broadcasting and cleaning up the mess on the floors of the SABC., Muthambi now becomes minister of public service and administration, a department in which rests little hope as long as the ANC holds the reigns, and Professor Hlengiwe Mkhize succeeds Gigaba as home affairs minister, a surprisingly intelligent choice, who steps into shoes that nobody wanted to wear anymore after Gigaba had messed the immigration policies up and introduced endlessly xenophobic regulations that prevent those from entering the country who would benefit it most!

Zuma didn’t bring in Nkosazana Dlamini-Zuma, the former head of the African Union Commission and his ex-wife, who is – together with Deputy President Cyril Ramaphosa – one of the leading contender for ANC president at a party electoral meeting at the end of the year.

h3. Political Survivor

Zuma has survived a series of scandals since he became president in 2009. The Constitutional Court last year ruled that he broke his oath of office by refusing to repay taxpayer’s money spent on his private home. The Public Protector also implied that he allowed members of the Gupta family, who are in business with his son, to influence cabinet appointments and the issuing of state contracts. Zuma and the Guptas deny having ever intentionally broken the law. The cabinet changes will leave South Africa’s credit rating vulnerable. Moody’s Investors Service, which rates South Africa’s debt at two levels above junk and with a negative outlook, is scheduled to publish a review of the nation’s creditworthiness on April 7. S&P Global Ratings and Fitch Ratings kept their assessments at the lowest investment grade late last year.

We can be almost 100% sure to expect the current explosion of political turmoil and its resulting economic and fiscal uncertainties to catalyse sovereign rating downgrades The two biggest opposition parties, the Democratic Alliance and the Economic Freedom Fighters, have filed for votes of no confidence in Zuma, while Julius Malema in addition instituted proceedings for Zuma’s impeachment in front of the Constitutional Court.

h3. The Truth behind the Scenes?

The recent events leave everyone in South Africa gasping for air, but also alone with the question: “Why did he do it?”

Zuma is not ignorant, he is sitting in a cul-de-sac, whose only exit is labelled “Life-long Imprisonment”. With these decisions he did last minute, Zuma tries to secure his dream of a nuclear powered nation (and probably his personal financial interest he negotiated with the Russians and the Chinese…!). That there will be nothing left to be powered except for the warning light on the country’s debt-register, he does not care as he will not roam the hallways of Nkandla anymore. He also repaid his debt with the Gupta Brothers as once he is out of office, they will hardly find a new puppet that is so easy to control. Either to assist in financing the takeover of Habib Bank or any other business or asset,which so far has not come to light, the Guptas needed a bad exchange rate. Thus the best was to time it right the night before the funds arrive for the take-over.

South Guptistan is in a mess, but the joy of exporters and foreign tourists having with a weak rand will be short-lived. South Africa will again bounce back and on the burned ground of a failed economy may rise like the proverbial phoenix from the ashes if puppet and puppeteers are removed, decisions repealed and revised as well as a flag being hoisted, to be seen by investors, trading partners and rating agencies alike:

“South Africa is – once again – open for business, compliments of the President of South Africa, Mmusi Maiman, Democratic Alliance!”

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