Zuma backed himself into a corner over Gordhan – and the clock is ticking
President Jacob Zuma has slowly backed himself into a corner over the issue of firing finance minister Pravin Gordhan, and is now running out of time to act, or risk losing face in front of the ANC faction that supports and relies on his network of patronage.
This is according to research analyst at Nomura, Peter Attard Montalto, who believes that the groundwork has been laid for Zuma to get rid of Gordhan, and that Zuma is willing to take on the risk of firing him.
In a note to investors late on Wednesday, Attard Montalto summarised the events leading up to this point, saying that reshuffling Gordhan, and indeed many SACP members, has been on the cards since the minister took over the position following Nenegate in 2015.
“President Zuma has been attempting a major reshuffle since the start of 2015 but has never found the right timing or coherence of narrative to pull one off,” he said.
“Nene-gate on 9 December 2015 was a specific response to specific events at the December cabinet meeting on nuclear power and the SAA in particular, which led to an ill-thought-through and ill-prepared reshuffle and then a reversal that was ultimately prompted by elements within President Zuma’s own faction.”
Attard Montalto believes that “detailed work” has been done behind the scenes to prepare for Gordhan’s removal, including, among others, a narrative against ratings agencies and markets, while also pushing concepts like “white monopoly capital” and a need for “radical transformation”.
Various tests against Gordhan throughout 2016 revealed where the lines were drawn within the ANC NEC, with a late year NEC meeting showing exactly where NEC members’ loyalties lay. Nomura broadly describes the split as 60% in favour of Zuma, and 40% against.
Read: Why Zuma is so desperate to get rid of Gordhan
The events of the past few days are just the latest move to test these loyalties, the analyst said, but it is almost at a point of no return for Zuma, who feels he has the needed support, and may be willing to take on the risks.
“The key here, we believe, is that President Zuma wants to undertake a reshuffle, is under pressure from his own side for greater access to the National Treasury (and to remove SACP members) and that we are closer than before – both with the market being tested on Monday but also with the briefing of the ANC Top 6 and tripartite alliance members.
“President Zuma has now started to back himself into a corner on this issue and would lose face with his own faction if nothing now happens. As such, we think a reversal could be more difficult than last year or at the time of Nene-gate.”
While Nomura previously held that Gordhan could be safe in any reshuffle, with the pro-Zuma camp’s ground work of “white monopoly capital” and narratives of “foreign powers” and “radical transformation” – along with the recent banking collusion scandal – Zuma is in a much stronger position to get Gordhan out.
“The risk of Pravin Gordhan’s removal is possibly around 76%,” Attard Montalto said.
Nomura holds the view that former Eskom boss Brian Molefe is the most likely candidate to replace Gordhan – but with the pro-Zuma camp’s stance of being reliant and all for patronage and tenderpreneurship, it is unlikely that any candidate under consideration would be positive for the South African economy.
In any event, the removal of Gordhan will likely see an accelerated decline in the markets, with a probable, immediate ratings cut to junk from ratings agencies.
Should the economy crumble on the decision as was the case post-Nenegate, it could have a significant impact on alliances within the ANC NEC, and could see Zuma’s support base fracture, Nomura said.
Read: This is who is lined up to take over Gordhan’s role as finance minister
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