Market researchers Nomura have made it clear that it believes a war is brewing between president Jacob Zuma and finance minister Pravin Gordhan, where the president is urgently trying to give Gordhan the boot.
The group has posted a damning note updating investors on the status of South Africa, following news that the SAPS investigative unit, the Hawks, was honing in on the finance minister, preparing to lay formal charges against him.
This turn of events, Nomura said, was a clear play by the Zuma faction of the ANC to push Gordhan out, and gain control of National Treasury to keep its policy of patronage and tenderpreneurship alive.
To do this, however, Zuma would have to reshuffle his Cabinet – something which is looking increasingly likely – and appoint a new minister of finance (and deputy minister, too).
According to Nomura, there are four main candidates which it sees as the most likely to take up the position, should Zuma succeed in pushing Gordhan out.
(Most likely appointment, possibly least worse market reaction)
Molefe is the current CEO of Eskom. The market would likely take his appointment positively, initially at least, but there would be serious questions over his relationship with the Guptas after previous supportive media comments on them.
Also in question will be issues around tendering and patronage at Eskom (though he was previously viewed very positively from his time running Transnet). His name was widely touted before the early elections as a possible to take over the position.
Des Van Rooyen
(Possible appointment, worst market reaction)
Van Rooyen as finance minister is still on the table, Nomura believes, and may get another economic position in a reshuffle.
Currently the Minister of Cooperative Governance and Traditional Affairs, previously (briefly) Finance Minister between Nene and Gordhan. He is viewed by business locally and by markets as a ‘Gupta deployee’.
Buthelezi is a businessman believed to be close to Zuma. He’s a new MP, previously touted to become new Deputy DTI Minister or Deputy Finance Minister. Very little is known about him.
(Moderate chance of appointment, difficult to gauge market reaction)
Ramokgopa is the former Mayor of Tshwane, and is now out of a job. He is believed to have shifted from being in the anti-Zuma camp to being in the Zuma camp recently, and is seen as a capable pair of hands, technically.
“The problem here, we believe, is any replacement would be appointed with the express view to facilitate tenderpreneurship and patronage,” Nomura said.
“The two key boxes that need ticking are a candidate that is fiscally conservative and anti-patronage (that would uphold the PFMA) – we don’t believe we can say any of candidates above tick both boxes.”
According to Nomura, National Treasury could find itself in “an impossible situation under a new Minister”, where civil servant advice is ignored on important matters (SAA, Nuclear) and given political instructions to proceed.
“They would have a choice between leaving – resulting in a serious loss of capacity and weakening as an intuition – or staying and attempting to use the law and media to frustrate whoever is put in power,” the group said.
The group noted, however, that changing Finance Minister “is not a shortcut to Zuma getting what he wants – it’s simply the start of that process”.
“We would have to particularly watch for departures from the senior ranks, as well as what guarantees or memorandum appear before parliament on SOE issues in particular.”
“In May, Pravin Gordhan sounded a rallying cry that people should protect National Treasury and its staff. We should remember that in the coming weeks,” the group said.