Zuma late on Sunday restored a widely respected Gordhan to the ministry in a dramatic U-turn that gave Africa’s most advanced economy its third finance minister in a week.
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Last week Wednesday, South Africa received news that President Jacob Zuma had appointed a new finance minister, David van Rooyen.
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.
South Africa’s Beeld newspaper, citing an informed person, said Gordhan’s appointment was preceded by a crisis meeting between Zuma, politicians and representatives of the private sector on Sunday afternoon.
The leader of the opposition Democratic Alliance, Mmusi Maimane, said: “This is reckless by President Zuma – he is playing Russian roulette with the South African economy”.
Gordhan promised to uphold South Africa’s spending ceiling, reform failing state-owned enterprises and protect the country’s credit rating.
Bank executives, including Barclays Africa Group Chief Executive Officer Maria Ramos, Investec CEO Stephen Koseff and Goldman Sachs local head Colin Coleman, met with senior ANC officials Jeff Radebe and Zweli Mkhize to express their concern at Van Rooyen’s appointment, Radebe told reporters.
This is over 100c firmer from the record low of R16.05/$ reached after the news of Nene’s axing.
Gordhan, returning for a second stint at the Treasury, was speaking at a media briefing in Pretoria on Monday.
I have appointed Mr Pravin Gordhan, the current Minister of Cooperative Governance and Traditional Affairs as the new Minister of Finance.
But by 0700 GMT, the rand had inched down 0.39 percent to 15.1540 per dollar.
Nigeria is ranked 136 out of 175 nations in Transparency International’s 2014 Corruption Perceptions Index, with South Africa at 67, and the West African nation’s debt is rated B+, or four levels below investment grade, by Standard & Poor’s, versus South Africa’s assessment of BBB-, one step above junk. “We will only spend more if we raise more revenue”, he said.
Deputy Secretary-General of the ANC, Jessie Duarte, says that the ruling party does not support calls for Jacob Zuma to be recalled as president. “Not even the introduction of Mr Gordhan can make right the value of damage that has been caused”, he said.
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However, despite the mini-rally following Gordhan’s appointment, investors said the rand and South African bonds were unlikely to recover further to levels seen before Nene’s departure.
