South Africa's ANC Rallies Behind Zuma After Finance ChaosAmogelang Mbatha and Franz Wild
ANC officials knew Nene would be replaced as finance minister
Zuma's willingness to go back on his decision was bold: ANC
South Africa’s ruling African National Congress rallied behind President Jacob Zuma after he bowed to party and business leaders’ demands to reverse a decision to install an unproven finance minister.
Zuma briefed senior party officials on his plan to remove Nhlanhla Nene from the post and to nominate him as a director of the new BRICS development bank, Jessie Duarte, the ANC’s deputy secretary-general, told reporters in Johannesburg on Tuesday. While they knew that appointing David van Rooyen, 47, on Dec. 9 would cause a market reaction, they didn’t anticipate the rout in the rand and bond yields that followed, she said.
Zuma put Pravin Gordhan, who had served as finance minister from 2009 until 2014, back into the post on Sunday, resulting in a partial recovery of the markets and relief among South Africans and investors. While party leaders held a “very robust” debate on the finance minister appointments and the aftermath, they didn’t discuss recalling Zuma, officials said.
“The president’s willingness to change an earlier deployment in the face of our sluggish economic climate and representations from role players demonstrated bold leadership,” the National Working Committee, a group of mostly top ANC officials, said in a statement after it met on Monday. “The ability of the leadership to review their positions in the face of legitimate concerns of our people are the hallmarks of a listening, responsive and accountable organization.”
Following Nene’s dismissal the rand tumbled to a record low and bond yields jumped to a seven-year high. The banking index on the Johannesburg stock exchange lost 19 percent of its value.
Bank executives, including Barclays Africa Group Ltd. Chief Executive Officer Maria Ramos, Investec Plc CEO Stephen Koseff and Goldman Sachs Group Inc. 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.
At a meeting of the ANC’s top six officials on Sunday, in which those concerns were relayed to Zuma, the president suggested bringing back Gordhan to address the misgivings over assigning the role to Van Rooyen, Duarte said.
ANC spokesman Zizi Kodwa said rumors that Sunday’s meeting had discussed recalling Zuma from his position as the head of government weren’t true.
While ANC officials have pledged the party’s commitment to prudent fiscal management, some observers say their response to the market turmoil is inadequate, especially as South Africa remains at risk of a credit-ratings downgrade to junk status.
“There is nothing new on growth or policy, no recognition of the damage done,” Peter Attard Montalto, an economist with Nomura International Plc, said in an e-mailed note. “Nothing to save South Africa from junk status here, which is negative and a disappointment for the market.”