In a surprise move, the presidency released a statement saying that Pravin Gordhan would be reinstated into the Finance portfolio, just four days after the president replaced Nhlanhla Nene with DD van Rooyen in the prized position.
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In the statement, Zuma says that he has listened to the criticism – The Economist said that the decision to fire Nene “could not have been more foolish” – and reconsidered his decision. The appointment of Gordhan resulted in a 5 percent jump in the rand against the dollar.
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.
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President Jacob Zuma accompanies Finance Minister Pravin Gordhan to Parliament.
The South African Property Owners Association (Sapoa) expressed their disappointment on the axing of Nene and was deeply concerned about this latest rounds in the economy.
The rand firmed to as low as R14.94 in overnight trade in NY from Friday’s close of R15.88.
The turmoil comes at an acutely sensitive moment when South Africa risks being reduced to a country offering junk bonds. “We are not going to make reckless decisions”, he said.
“I have been associated with the finance family for nearly two decades”, he said in his first media address as the new finance boss. The South African government has officially denied the reports.
DA leader Mmusi Maimane said Zuma the criticism Zuma got “both inside and outside the ANC shows that he is a president who has lost internal control of his party and who no longer enjoys public support”.
But the market rebound will do little to change the grim outlook for the South African economy.
Mr Gordhan was respected when he served as South Africa’s finance minister from 2009 until 2014, but still, with South African assets under heavy pressure the government’s perceived indecision may not help.
How Mr Zuma will be affected by this latest crisis in the short term remains unclear, but many analysts said the events had weakened him significantly, portraying him as a leader who is unsure of what he is doing.
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Gordhan’s appointment has received positive market response thanks to his financial experience, said Nsununguli Walter Mbongolwane, a project management consultant from Expert Factor. “The downgrading means that these banks can not not attract investment from outside the country”, Mbongolwane said. As President Zuma indicated, when a decision triggers developments such as these, a democratic government has a duty to listen and respond appropriately.
