Pravin on US, UK roadshow
THE ANC and the government have moved to allay the concerns of major foreign investors about the South African economy while attempting to explain the impasse between Finance Minister Pravin Gordhan and South African Revenue Service commissioner Tom Moyane.
ANC treasurer-general Zweli Mkhize and Gordhan held separate meetings with a group of bond market investors from the US and Europe behind closed doors in Johannesburg this week.
Gordhan is also scheduled to fly to Britain and the US next week to meet more investors, where he is expected to be grilled about the SARS saga.
Mkhize, who met the investors at the Standard Bank offices in Johannesburg on Wednesday, fielded questions about President Jacob Zuma’s ill-fated decision to fire Nhlanhla Nene as finance minister and replace him with the unknown Des van Rooyen, and about the quarrel between Gordhan and Moyane.
He admitted that Nene’s removal had caused a crisis and made a commitment that Zuma would fix the standoff between Gordhan and Moyane. “We explained issues around the finance ministers. The
one of Van Rooyen is history. That was recognised and corrected. On the current one, the president expressed full support in the minister. It is just that the issue of the [Hawks’ investigation into the SARS rogue unit] predates the minister,” Mkhize told the Sunday Times.
He said he had explained to the investors that the situation between Gordhan and Moyane was “very sensitive”.
“What you have is a minister who has certain concerns in relation to what is going on in the SARS department. At the same time you’ve got a SARS commissioner who has been doing investigations before,” he said.
The jittery investors were seeking clarity on the politics surrounding the South African economy — particularly related to instability in the Treasury just three months after Zuma inexplicably fired Nene, which resulted in a plummeting rand and the risk of a sovereign downgrade to junk status.
The investors from Europe and the US are said to control at least $3-trillion (about R45-tril- lion) in investments, particularly on the bonds market. They met Mkhize on their arrival on Wednesday and thereafter met with ratings agency Standard & Poor’s, public protector Thuli Madonsela and Reserve Bank governor Lesetja Kganyago, and concluded their two-and-a-halfday visit by meeting Gordhan on Thursday.
Standard Bank chief economist Goolam Ballim, who attended the meetings, said the investors were encouraged that the ruling party had admitted to the crisis in the economy.
He said they were more upbeat about the economy after meeting Gordhan.
“Business found a meaningful and substantial partner in Minister Gordhan,” said Ballim.
He said that in the coming months South Africa would likely see tractable evidence of the agreements between the government and big business.
The group of foreign investors left South Africa encouraged but cautious, he said.
“They are encouraged by the commitment to fiscal probity by the National Treasury and they believe that the budget framework is credible . . . under the leadership of Pravin Gordhan,” said Ballim.
He described the spat between Gordhan and Moyane as a natural evolution as South Africa establishes a new politicaleconomy equilibrium.
“We will see further skirmishes in coming months. It’s naive to believe that a path to a more fertile investment climate will be entirely smooth.”
He said it was typical that with attempts at reforms came resistance. “In this respect, it’s likely there will be further friction between those who seek to assert a reformist agenda and those that see opportunity prised out of their palms,” he said.
Business found a meaningful partner in Gordhan