South African Economists
SOUTH AFRICA has a new finance minister for the third time in less than a week. Pravin Gordhan, who was rushed into the position on Sunday night, is an old hand whose appointment went some way to calming worried investors after days of confusion. Briefing journalists on Monday, he confidently displayed the economic nous that until last week made South Africa’s financial institutions respected both at home and abroad. Mr Gordhan emphasised sound fiscal management and sober spending, particularly by state-owned enterprises such as South African Airways, the ailing national airline. “We are not going to make reckless decisions, ” he said.
That promise may have come too late, given the events of the past few days. Mr Gordhan had served as finance minister from 2009 to 2014, and was succeeded by his respected deputy Nhanhla Nene, who attempted to rein in state spending, including on a controversial nuclear deal. Last week President Jacob Zuma fired Mr Nene and appointed David van Rooyen, a little-known backbencher with no experience of working in the national government. It was a move that took even the cabinet and the bigwigs of the African National Congress (ANC) by surprise. The rand fell to a record low against the dollar, and investors recoiled. Mmusi Maimane, leader of the opposition Democratic Alliance, accused Mr Zuma of playing Russian roulette with the economy. Angry South Africans signed online petitions demanding the party “recall” Mr Zuma, and began planning marches on the presidential offices. The ANC remained deafeningly silent. A belated explanation for Mr Nene’s departure—a nomination for a regional banking job—rang hollow.
Late on Sunday night, Mr Zuma removed the dismally underqualified Mr van Rooyen as finance minister after just four days on the job, and announced that Mr Gordhan had got his old job back. Mr Zuma said he had made the changes after “listening to the people”; the ANC elaborated, explaining that the decision was “occasioned by public concern stressing the need for experience and market assurance on the person who will champion the finance and fiscal policy of the country.” But it will be difficult to repair the reputational damage done by this strange game of musical chairs in the one of the government’s most important positions.
Most of all, it may be too tall an order to restore confidence in a government led by the capricious Mr Zuma, whose presidency has been notable for its frequent corruption scandals. “South Africa is not safe in the hands of Jacob Zuma, if he can take such decisions that are so injurious to the country, ” said Prince Mashele, a political analyst and co-author of “The Fall of the ANC”. Although Mr Zuma is unpopular among South Africans (a recent Afrobarometer survey found that trust in him had dropped by almost half over the past four years), he has ensconced his powerful supporters within the ANC executive and key state institutions. Some economists have argued that Mr Gordhan is undermined by his willingness to lend his reputation to rescue Mr Zuma from a self-inflicted mess. But the embarrassing reversal of a high-profile presidential decision may also show that within the ANC Mr Zuma’s dominance is starting to wane at last.