Zuma vs Gordhan vs the rand

Finance Minister Pravin Gordhan’s efforts to restore faith in the South African economy are being hampered by the man who put him up to the task: president Jacob Zuma.

A report by Bloomberg has outlined how Zuma has jumped from one scandal to the next over the past 6 months, effectively working against Gordhan as he tried to cut government spending and save the country from a ratings downgrade to junk.

The latest scandal – rumours that the finance minister was about to be arrested on charges relating to a Zuma-sanctioned investigation into SARS – sent the rand crashing to its weakest points against the dollar in months.

Bloomberg highlighted that a dip in the rand has been associated with every conflict between Zuma and Gordhan since he took up the office in December.

The first major crash came when Zuma fired former finance minister Nhlanhla Nene on 12 December 2015. The surprise move – and the fact he was replaced with the unknown Des van Rooyen – caused the rand to weaken to R17.99 to the dollar, before recovering when Gordhan was put in the department.

In late February, the rand tanked again – this time it was due to speculation that Gordhan was going to quit over ongoing friction between himself and SARS commissioner Tom Monyane.

Zuma Gordhan Rand

Monyane, a Zuma loyalist, was in the process of overhauling SARS; Gordhan didn’t want this and requested that he be removed from the revenue service. President Zuma said no, and forced the two to kiss and make up.

The third dip for the rand in the past six months is now tied to speculation that the SAPS investigative unit, the Hawks, is planning to arrest Gordhan on charges of espionage, related to an investigation into a so-called ‘rogue spy unit’ at SARS, which was set up under Gordhan’s watch as commissioner.

It is understood that the investigation was initiated by Monyane – while president Zuma has supported it and recommended that Gordhan comply and work with investigators.

The president also blocked Gordhan’s attempts to revamp the multi-billion rand loss-making South African Airways, by disallowing him from setting up a new board. The current board is headed by Zuma’s friend, Dudu Myeni.

Amid these specific cases, the president has also been hit by the law, with the Constitutional Court finding he had violated the country’s Constitution in failing to pay back money for “security upgrades” at his Nkandla home, as well as the North Gauteng High Court overturning a decision to drop over 780 corruption charges against him.

“I don’t think it would be easy for any finance minister in any country in the world to operate in this kind of environment,” political analyst, Abdul Waheed Patel, told Bloomberg.

Gordhan and deputy president Cyril Ramaphosa have both downplayed the political drama in the country at the World Economic Forum on Africa, held this past week.

The officials said the country was a stable democracy, and played it up at the most developed and advanced economy on the continent, with sophisticated business structures.

“Nobody has raised the political questions. There’s a huge amount of respect for South Africa and what we do,” Ramaphosa said.

More on Zuma and the ANC

Secret UK military plan to keep the ANC in power: report

Gordhan arrest off the cards – for now: report

Gordhan arrest “imminent”: report

ANC has lost massive support in Gauteng: report

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Zuma vs Gordhan vs the rand