Rand Falls as Finance Minister Gordhan is Ordered Home

On March 27, Finance Minister Pravin Gordhan and Deputy Finance Minister Mcebisi Jonas were on an investor road show to the United Kingdom and the United States when they were abruptly ordered to return to South Africa by President Jacob Zuma. There was media speculation that Zuma was about to reshuffle his cabinet, removing from office the well-regarded finance minister and his deputy. (There is much speculation that former ESKOM CEO Brian Molefe will replace Gordhan.)The Rand (ZAR), South Africa’s currency, swooned, losing 3 percent of its value against the U.S. dollar. Foreign investor confidence in South Africa, which had been on the upswing, fell.

Zuma’s power within the ruling African National Congress has been eroding ever since he tried and failed to replace the well-regarded Finance Minister Nhlanhla Nene with one of his inner circle in December 2015. Since then, he has suffered severe political reverses because of court rulings, and his party is looking toward its leadership election in December 2017. Intra-party factionalism has been increasing even as Zuma’s star has been waning. It is likely that Zuma’s recall of the finance minister is part of intra-party maneuvering rather than presaging Gordhan’s removal. Indeed, parts of the ANC have already expressed their displeasure with the idea. Enoch Godongwana, the ANC’s head of economic policy was quoted by Bloomberg as saying that if Gordhan was fired “it would be tragic and damaging for the local economy, which has struggled with poor growth levels.”

The president might, indeed, carry out a cabinet reshuffle, not least to include in his ex-wife, Nkosanza Dlamini-Zuma, the just-returned former Africa Union Commission chair. Zuma has signaled that she is his candidate to succeed him as party leader in December. But, Gordhan has substantial support within the ANC, as well as among the business community, civil society, and the media. A cabinet reshuffle does not mean that he would go.