The resignation of Finance Minister Trevor Manuel on Tuesday — alongside 13 senior Cabinet ministers — caused confusion and volatility in the country’s financial markets.
The Presidency confirmed by midday on Tuesday that President Thabo Mbeki had received and accepted the resignation letters of 11 Cabinet ministers and three deputy ministers.
South African markets fell after news of the resignations. The rand extended its losses to more than 2,5%, bonds fell sharply and the blue-chip JSE securities exchange top-40 index plunged more than 4%.
However, Manuel’s spokesperson said both he and and his Deputy Minister Jabu Moleketi were willing to serve under the country’s new president in any capacity, which initially led to the rand recouping some of its earlier losses.
“The minister has resigned as a member of the Cabinet and felt duty-bound to do so as he served at the pleasure of the president, and President [Thabo] Mbeki had resigned,” Treasury spokesperson Thoraya Pandy said. “However, the minister has indicated a strong willingness to assist and to serve the new administration in whatever capacity they may ask of him.”
T-Sec economist Mike Schussler said: “He [Manuel] resigns and then in the next hour he says he may be prepared to stay on. He should have announced his situation upfront — now people in the market are really confused.”
As a consequence, there had been tremendous pressure on the rand, he said. “It bounced back but now it’s gone backwards again.” At 2.33pm the local currency was trading at R8,14 to the dollar, Schussler said.
He added that the resignation and the subsequent announcement that Manuel may be prepared to stay on had scared both local and foreign investors. “No one knows what the markets will do in the next few hours,” he said.
South Africa’s new political leaders need to put financial markets at ease, said Efficient Group chief economist Dawie Roodt.
“What we need now is political leadership. I don’t know if they realise how it impacts on financial markets and they must put the markets at ease,” he said.
Roodt said if Manuel did not stay on, then a new replacement would be in place for next month’s Medium-Term Budget Policy Statement.
However, he did not think any radical changes could be made to the the budget statement as there would not be enough time, but he would definitely expect changes come February next year.
Tuesday’s other resignations were:
- Minister of Defence Mosiuoa Lekota;
- Minister in the Presidency Essop Pahad;
- Minister of Intelligence Ronnie Kasrils;
- Minister of Correctional Services Ngconde Balfour;
- Minister of Public Enterprises Alec Erwin;
- Minister of Science and Technology Mosibudi Mangena;
- Minister of Public Works Thoko Didiza;
- Minister of Provincial and Local Government Sydney Mufamadi; and
- Minister of Public Service and Administration Geraldine Fraser-Moleketi.
Deputy ministers who resigned:
- Deputy Minister of Foreign Affairs Aziz Pahad;
- Deputy Minister of Finance Jabu Moleketi; and
- Deputy Minister of Correctional Services Loretta Jacobus.
“The resignations will be effective from the day that the president’s resignation takes effect [Thursday],” the Presidency said.
Deputy President Phumzile Mlambo-Ngcuka had earlier in the day announced her decision to leave her position, to which she was appointed after African National Congress president Jacob Zuma was released from his responsibilities as deputy president in 2005.
Meanwhile, South African lawmakers rubber-stamped Mbeki’s resignation on Tuesday, as he attempts to mend his bruised reputation from charges that he interfered in the prosecution of Zuma. The ANC-dominated Parliament voted overwhelmingly in favour of effecting Mbeki’s resignation from Thursday September 25, with only 10 votes against the motion.
ANC deputy chief Kgalema Motlanthe was named as the party’s candidate to take over as head of state. Parliament will on Thursday vote on his election, and he will be sworn in later in the day.
Mbeki, who announced his resignation on Sunday after pressure from the ANC, attempted to salvage his reputation in the Constitutional Court, as he challenged a court ruling that he says cost him his job as president.
The resignation of 14 Cabinet ministers loyal to Mbeki shows deep dissatisfaction with the ANC’s decision on the weekend to “recall” the president, opposition Democratic Alliance leader Helen Zille said on Tuesday.
“It is clear that behind the display of unity, that there is deep dissatisfaction with the ANC NEC’s [national executive committee] decision to recall the president,” she said.
Many of the ministers resigning, including Manuel, Lekota and Kasrils, had served their office with distinction.
“That the ANC is willing to sacrifice them and risk our country’s stability in order to wreak revenge on the president speaks volumes about its lack of commitment to stable government,” said Zille, adding that it was time “radically realign the political landscape” and build an alternative to Zuma’s ANC.
The ministers’ resignations was “an unmitigated disaster”, said Inkatha Freedom Party president Mangosuthu Buthelezi.
They demonstrated that the ANC’s decision to recall Mbeki was made in “indecent haste”, “ill-conceived and ham-fistedly handled”, he said in a statement. It could only serve to erode further the political stability of South Africa, he added.
Buthelezi paid tribute to the courage of the ministers who had resigned and described Tuesday’s events as “a watershed moment” in the history of the country’s democracy.
The United Democratic Movement (UDM) also said the resignations were the latest repercussion of the ANC’s “over-hasty” action against Mbeki.
“The chickens are coming home to roost,” UDM president Bantu Holomisa said in a statement. “If the ANC is surprised by this news, they need to relook how they have publicly disrespected and humiliated the president of the republic in the past week-and-a-half — a trend rooted in more than two years of increasingly public disdain.”
Political analyst Aubrey Matshiqi said the string of resignations were an indication of a sectionalised ANC.
“Their resignation is an indication of how sectionalised the ANC has become over the last three-and-a-half years,” said the senior political analyst for the Centre for Policy Studies, adding that most of the ministers seemed to have made the decision to resign on a “factional basis”.
Matshiqi said a possible split of the ANC would be significant if it was a sizeable and qualitatively significant portion of the ANC leadership that left. The effects on the party probably would not be felt in the short term, but could become serious in the medium and long term.
The resignation of Manuel and the other key Cabinet ministers did not bode well for South Africa’s economic policies, the South African Chamber of Business said.
“It does not augur well for the prospect of continuity in our economic policies,” said consultant to the chamber Bill Lacey.
The South African Reserve Bank’s communications department confirmed on Tuesday that Governor Tito Mboweni would not be resigning in the wake of the Cabinet resignations.
Mboweni’s spokesperson confirmed that his stance as stated on September 2 remained.
“My own position is that I have been governor of the bank since August 1999 and I will complete my current term in August 2009. If asked to serve, I will. That should put that issue to rest and I will not entertain that question in future,” Mboweni had said in his speech on September 2.