President Jacob Zuma said he made the correct decision to replace Nhlanhla Nene as Finance minister, saying the markets overreacted and people exaggerated the situation.
The rand plunged to an historical low of R16/$ when Zuma made ANC backbencher David van Rooyen the new minister. January has seen the rand hit even new lows, mostly because of market woes in China. On Sunday night it was sitting at R16.24/$.
He was allegedly persuaded by his senior leadership and the banking sector of the South Africa to quickly find a solution to avoid a total collapse of the economy, which he did by reappointing Pravin Gordhan to his old post.
However, Zuma told eNCA on Sunday that he refused to take responsibility for the economic fall-out and said he was correct to replace Nene. “There was an exaggeration in terms of the reaction,” he said.
“People did not consider many things,” he said. “The rand had been going down when Nene was there. It had been going down for months and months. It was not triggered by the decision (to remove Nene).”
“The removal of Nene was ‘not breaking the economy’,” he said. “People didn’t understand what was happening and they exaggerated the issue.”
“There is no single person who can collapse a department, particularly a department like the Treasury, which is well functioning and well established, with a very effective deputy minister, effective director general and DDGs (deputy director generals), etc.
“And with one person walking in, that’s going to collapse it. I mean, that is an imagination. He is going to be working with people who have been doing their work. I think there was an overreaction to that issue. It’s not like breaking the economy, it cannot be true.”
Many analysts complained at the time that Zuma had not given a good enough explanation for Nene’s removal. However, Zuma stuck to his original reason, saying: “Nene is a minister and we took a decision that he should head the regional bank of Brics. It’s an international bank… (and) we want that bank to succeed.”
Zuma said people would have also complained had he allocated Van Rooyen to the Brics post.
He recalled that the markets acted in a “funny way” when Trevor Manuel was made Finance minister, who he said turned out to be one of the best in the world.
Speaking about speeding up economic transformation, Zuma said the process of transformation brought “hiccups along the way”.
He said black empowerment is moving very slowly, because the measure of the economy is so entrenched in many ways.
“Just take the stock exchange,” he said. “Only 3% of the majority have a control there. That’s the structure of our economy.
“We can’t break it in order to correct it,” he said. “We must open up the space. That’s why we talk about infrastructure (and) energy, so that you create the space and you train those that were not trained before so that we can deal with the matter.”
“We have not succeeded to transform the economy,” he said. “That is one of the key elements in any society. Who owns the economy? If the minority owns the economy (and) not the majority, that influences the life and direction of the country. How do you develop the majority to … be a part of it?”
Zuma was speaking after the ANC’s 104 birthday celebrations in Rustenburg and ahead of crucial local government elections, which Zuma said would be one of the toughest they had yet faced.