Gordhan recall a sign of war within the ANC: IRR
The Institute of Race Relations says that president Jacob Zuma’s decision to recall finance minister Pravin Gordhan and his deputy Mcebisi Jonas from an international investment roadshow may herald a cabinet reshuffle and a big swing in policy.
An IRR analyst said that the move by Zuma is a political power play, echoing many other analyst interpretations, between factions within the ANC – those who support Zuma, and those aligned to deputy president Cyril Ramaphosa and Gordhan.
“The move is designed to publicly humiliate and weaken the so-called ‘Western Bloc’ of the ruling party that is aligned with the Deputy President and the Minister of Finance,” the IRR said.
Worryingly, depending on how the wider market reacts to the recall, this could be a precursor to the axing of Gordhan, and a broader cabinet reshuffle, the IRR said.
“Should such a reshuffle occur in favour of the Eastern Bloc of the ANC, this may lead to significant swings in government policy on investment protection, property rights and fiscal prudence,” it said.
The IRR said that this outcome lined up with a previous report out of the group, which laid bare the schisms and contradictions contained within the ANC’s recently published policy documents.
In the report, IRR analysts pointed out that, while the ANC was calling for radical economic transformation, it also admitted that the current economic climate was not conducive to it. The ANC also said that it desires higher levels of private sector investment, but in the same breath wanted the state to play a greater role.
“The contradictions come through very strongly across all nine documents,” the IRR said, alluding to a great deal of pushing and pulling behind the scenes in the ANC itself.
Research analysts at Nomura also described the Gordhan recall as posturing from ‘team-Zuma’ – a power play that Gordhan would have to respond to.
“Either Gordhan obeys (the order) and Zuma is viewed as stronger, or Gordhan disobeys and challenges Zuma to fire him. If the roadshow continues then we will know what path is being taken,” Nomura analyst, Peter Attard Montalto said.
The analyst said that it was also likely a ‘shock test’ to see if the market was ready or open to seeing Gordhan go.
“I believe today could be a test of the water to undertake a reshuffle. The Presidency has seen such a strong ZAR and is wondering how much of a political shock it can take – they do watch these things closely. So far the market reaction has been very muted. Suggesting they could indeed go ahead with a reshuffle,” he said.
“Let’s wait watch in coming days. As we’ve said previously, a reshuffle is ready to go and something Zuma wants to do. It could be deployed rapidly if Zuma does want to do it.”
National Treasury said in a statement on Monday: “Following a directive from the President of the Republic of South Africa, finance minister Pravin Gordhan and National Treasury director general Lungisa Fuzile are preparing to return tonight from the UK and are expected to arrive in South Africa tomorrow morning.
“Deputy minister Mcebisi Jonas who was scheduled to undertake the United States leg of the trip will no longer be leaving tonight as planned in line with the President’s directive,” it said.
The rand continued to lose ground against major currencies by 18h15:
Dollar/Rand – 2.79% weaker at R12.78
Pound/Rand – 3.62% weaker at R16.05
Euro/Rand – 3.48% weaker at R13.90
Read: Why Zuma wants Gordhan to come back to South Africa: analysts
Loading ...