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11 Dec 2015 00:00
Former finance minister Nhlanhla Nene. (David Harrison, M&G)
In a saner time, the Zuma administration prepared the market for Nhlanhla Nene’s appointment over many months. At the time the occupant of the finance portfolio was the robust Pravin Gordhan, who had cut his teeth at the South African Revenue Service, the tax collection machine that had financed the dream that was the new South Africa.
Jacob Zuma’s line was that the country was ready for an African as finance minister, and Nene was given the job.
Gordhan, a respected figure on the world financial stage, was sent to the provinces.
Cynics could have rightly seen this appointment as Number One looking for a more pliant incumbent to look after the public purse.
But Nene proved them wrong.
Until this week, when Nene – who had been carefully groomed for years for this vital job – was summarily chopped in a manner so cavalier that observers could be forgiven for thinking that the firing was designed to cause as much damage as possible.
Nene will be replaced by David “Des” van Rooyen, a parliamentarian who is best is known for his miserable failure as mayor of Merafong, a municipality in the Carletonville area of Gauteng.
If you want to rattle markets, this is a how-to guide. The rand immediately traded below R15 to the dollar and borrowing costs on the capital markets leaped, adding billions of rands to our public sector interest bill.
We were already teetering on the edge of a recession and junk status, and Zuma has pushed us over the edge.
We can expect fresh interest rate hikes, higher inflation and job losses. One of the former Merafong mayor’s first jobs is expected to be announcing tax increases in the February budget.
The longer-term damage to a key institution of the democratic South Africa, the treasury, has yet to be felt, and whether it will manage to retain its key technocratic staff is also an open question. Analysts were quick to note that, if the treasury can come under attack from Zuma, so too can the Reserve Bank.
We have yet to find out for sure what made Zuma play so fast and reckless with our country, but the widespread speculation is that Nene’s threat to prosecute SAA board members if SAA’s proposed new deal with Airbus went ahead is the immediate cause.
Zuma, apparently, would prefer to run the country without a Public Finance Management Act, rather opting to share the largesse with his family and friends. If the country is bankrupted in the process, so be it.
It is also a reasonable bet that Zuma has not found Nene sufficiently pliant on the proposed nuclear deal with Russia. This is mooted to be vendor-financed, meaning that the Russians provide the capital up front and then earn revenues later from the sale of electricity.
But the funds involved – at least R1-trillion – are large and will still call for guarantees and insurances of various kinds, which will be for the account of the treasury.
It is for this reason that Nene is likely heading for a “strategic position” in the political equivalent of Timbuktu.
We should have expected nothing less of Zuma. It was because his personal finances were such a mess, after all, that he once outsourced the running of his affairs to Schabir Shaik, who bankrolled him and consequently went to jail for corruption.
But if Zuma was an economic embarrassment, he was also a political genius who saw that he could hijack our winner-takes-all political system, which gives undue power to Luthuli House and those who control it – the ANC’s 86-person national executive council (NEC).
Control the NEC, which he appears to do, and you can move your personal wrecking ball wherever you like, consequences be damned.
Nominally a democracy, we are now edging closer to a dictatorship where Number One is able to use Parliament to laugh at his detractors as they raise such wonders as the magical palace that has sprung up around him at Nkandla.
And when his appointees stand up to him, using the Public Finance Management Act for protection, as Nene has tried to do, we now know what happens.
Our president spoke at a dinner with business leaders on Wednesday, shortly after the announcement of Nene’s sacking, looking pleased with himself. His unprecedented decision to remove a finance minister with such little regard for the consequences has been interpreted by some as the ultimate show of force. It takes enormous power to cause such wreckage and not have to answer to anyone for it.
Yet this decision paints Zuma not as a strong leader but as an increasingly desperate one: eager to feed at the trough while he still can, before his political power runs out when the ANC chooses a new leader in 2017.
Zuma has created a deep crisis for the country.
This is also a crisis for the ruling party, a liberation movement with a long and proud history.
It is up to this organisation – the African National Congress – to liberate us from Zuma.
*This comment originally appeared as an editorial in the
Mail & Guardian.
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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.
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