S Africa’s Gordhan returns, awaits decision on sacking
Rand, govt bonds weaker after Gordhan recall
Finance Minister Pravin Gordhan flew back to South Africa yesterday, obeying an abrupt recall from President Jacob Zuma, and said “let’s wait and see” when asked about reports that he was about to be sacked. The rand fell two percent against the dollar in volatile trade, extending losses seen on Monday after Zuma ordered Gordhan’s immediate return from a trip to Britain, rattling investors who see the minister as a focus of stability.
“The president is my boss so if he asks us to come back, we come back,” Gordhan said. “There are many in government who want to do the right thing and make sure we keep our economy on track and keep our development moving in the right direction,” he added without elaborating.
Zuma’s order cut short Gordhan’s investor roadshow in Britain and the United States, triggering jitters that a long-running power struggle between the two men was coming to a head, threatening more turmoil for Africa’s most developed economy. Talk Radio 702 said Gordhan’s dismissal had been discussed at talks between Zuma and the South African Communist Party, allies of the ruling African National Congress, on Monday. The six most senior members of the ruling African National Congress (ANC) party had approved Gordhan’s removal, ANN7 television reported, citing unnamed sources. ANC Secretary-General Gwede Mantashe, one of the ANC’s top six, told Reuters he could not comment on the report.
Gordhan went to the ANC’s Luthuli House headquarters in downtown Johannesburg after his arrival, eNCA channel said. Some pundits say Gordhan is being pressured by a faction allied to Zuma, which has criticized his plans to rein in government spending as the economy stagnates and rapped his running of the tax agency. Gordhan has wrangled for months with the head of the agency. “Were Pravin Gordhan to actually be removed, we think that the rand could fall by another 5 percent against the USD,” Capital Economics Africa economist John Ashbourne said in a note.
The main opposition Democratic Alliance party asked Zuma to explain his order to recall Gordhan. “Why does he simply not tell South Africa?” it said in a statement.
Gordhan first served as finance minister from 2009 to 2014 and was brought back by Zuma in December 2015 to calm markets spooked by the president’s decision to replace respected finance minister Nhlanhla Nene with a little-known politician. South African media reports suggest Zuma and Gordhan have an uneasy relationship, though the president has denied suggestions he is “at war” with his finance minister. Gordhan returned as a court hearing over the closure of accounts belonging to friends of the president, the Gupta brothers, started. The case has been a particular bone of contention between Zuma and his finance minister. Zuma has come under mounting political pressure since South Africa’s anti-graft watchdog called last year for a judge to investigate allegations of influence peddling in his government, in particular allegations that brothers Ajay, Atul and Rajesh Gupta wielded undue influence over the president.
Zuma has said the Guptas are his friends, but denies there is anything improper about the relationship and the brothers have denied any wrong-doing. Gordhan has said the Guptas have repeatedly asked him to intervene to reverse a decision by major banks to close some of the business accounts of the brothers’ Oakbay Investments. In December, Gordhan asked the High Court to rule he was not allowed to interfere in the banks’ decisions. The state attorney said Zuma had applied to be represented in the case as an interested party, but the court rejected his application. Separately, Zuma said yesterday he was not considering setting up a commission of inquiry into the banking sector in written answers to parliament. — Reuters