Behind Zuma’s U-turn: ‘SA will go bust’
ANC and business leaders warned of ’Brazil meltdown’
TOP ANC leaders gave President Jacob Zuma a stark choice just hours before he reversed his catastrophic decision to appoint David van Rooyen as finance minister — change your mind or preside over a Brazil-style economic meltdown.
This followed a series of interactions last weekend among senior business leaders, bankers and ruling party bosses, in which the ANC was told of the devastating effects Zuma’s controversial axing of Nhlanhla Nene, and his replacement with Van Rooyen, would have on the economy.
The ANC gave Zuma two options: reinstate Nene or appoint former finance minister Pravin Gordhan in the crucial post.
In those three days Zuma appeared to have lost his grip on the party and the country, with Deputy President Cyril Ramaphosa angrily telling his staff that he had nothing to do with Nene’s removal.
It has now transpired that, between Friday and Sunday evening, Zuma’s colleagues at Luthuli House took charge in a bid to avert the consequences of the worst political decision since the recall of former president Thabo Mbeki from office.
Even Zuma’s erstwhile comrades in the SACP and Cosatu turned on him, telling the president at a meeting held at his official residence, Mahlamba Ndlopfu, late that Friday that he would be “on your own” if he did not remove Van Rooyen.
But it is what business leaders told ANC emissaries Jeff Radebe, treasurer-general Zweli Mkhize and deputy secretary-general Jessie Duarte that forced the ANC to demand that Zuma reverse his decision.
The Sunday Times has pieced together details of the dramatic scramble in the top ranks of the ANC to get Zuma to see the light after he had shocked the nation and sent the rand into free fall.
Among the business leaders in constant consultation with the ANC as the rand and markets tumbled last weekend were Barclays Africa CEO Maria Ramos, Investec CEO Stephen Koseff and Goldman Sachs’s Colin Coleman.
The business figures painted various economic scenarios for the senior party leadership of what would happen over the next 12 to 24 months without urgent steps to restore investor confidence.
According to some of those business leaders, who spoke to the Sunday Times this week on condition of anonymity, the ANC was told the first step towards undoing the damage would be to fire relative unknown Van Rooyen “before the deadline of midnight on Sunday” when Asian markets would reopen.
The ANC was further told that the most likely scenario was of a multiyear recession and economic decline on the scale of Brazil’s. The South American giant is facing its longest recession since the ’30s, with inflation in double-digit territory, the highest since 2003.
Fitch Ratings handed Brazil its second junk rating this week.
The ANC leaders were also told of the risk of the rand’s accelerated decline and the impact on interest rates, with the expectation that there would be an increase of between at least one and 1.5 percentage points in rates over 2016.
Although ANC spokesman Zizi Kodwa yesterday said Zuma had given his blessing to Luthuli House’s interactions with business leaders, the president seemed unaware of what his comrades were being told when, on Sunday afternoon, he addressed an ANC conference in Mpumalanga.
“When we fire someone, we don’t just do it . . . we follow the constitution,” Zuma told delegates in defence of his decision to fire Nene.
But a few hours later, a delegation of ANC leaders told Zuma to sack Van Rooyen and replace him with Gordhan. He was told that if he did not remove Van Rooyen before the Asian markets started trading, there was a greater danger that South African assets would continue to be sold off — putting some of the country’s banks at risk of a hostile takeover.
It has also emerged that Nene’s sacking widened an apparent rift between Zuma and Ramaphosa.
Last Friday, two days after Zuma’s controversial decision, Ramaphosa told senior members of his staff he had nothing to do with the decision.
“He told them that he was as shocked as they were upon hearing that Minister Nene had been fired. He said he wasn’t party to the decision and like everyone else he had learnt about it in the media,” said a source privy to the meeting.
In what appears to have been Ramaphosa’s confirmation that there were tensions among party leaders, he warned his staff that next year would be “a tough year” as there would be many “negative stories leaked” about him as part of the ANC succession battle.
Ramaphosa’s spokesman, Ronnie Mamoepa, declined to discuss the meeting.
Yesterday, Ramaphosa denied claims that he had threatened to resign from the government over Van Rooyen’s appointment.
Speaking during an ANC door-todoor campaign in Ga-Rankuwa, north of Pretoria, Ramaphosa said: “No! No! That is not true. Rumours that I threatened to resign, or anyone else threatened to resign, are not true. We are together with the president on this issue.
“We have addressed the challenges that we faced and we continue to address the challenges of governance more broadly.”
Although the controversy over Nene’s removal has weakened Zuma’s power within and outside the government and the ANC, political analyst Tinyiko Maluleke said, this was not enough to have him removed from office — despite thousands of South Africans marching this week to demand his removal.
He warned Zuma’s critics against celebrating just yet because the ANC leader had been “to the brink and back several times”.
“The very corrective action that he took in four days shows you how much of a survivor this guy is, and that he would do what it takes to survive,” Maluleke said.
Kodwa denied that the interaction between business and ANC leaders, which excluded Zuma, signified that the president was now politically isolated within his party.
“The decision to meet with business arises out of the consultation of officials including him [Zuma] and that it must be an ANC-led process.
“It was agreed that comrade Jeff [Radebe] and TG [Mkhize] must meet with business,” said Kodwa.
Rumours that I threatened to resign, or anyone else threatened to, are not true