In another baffling Cabinet reshuffle, President Jacob Zuma announced that he has appointed Pravin Gordhan as the new finance minister.
Gordhan replaces David “Des” Van Rooyen, who was only sworn into the post on Thursday.
Van Rooyen will now, after a mere handful of days on the job, take up the position vacated by Gordhan as minister of co-operative governance and traditional affairs (CoGTA).
In a statement sent out on Sunday evening, the president said that after making the decision to replace former finance minister Nhlanhla Nene with the little known Van Rooyen, he had “received many representations to reconsider my decision”.
“As a democratic government, we emphasise the importance of listening to the people and to respond to their views,” Zuma said.
The axing of the well respected and knowledgeable Nene, late on Wednesday last week, sent the Rand into a tailspin – with the currency plummetting to beyond R16 to the dollar.
Nene’s exit, which went unexplained by the presidency for two days, shocked the public and investors and, it is speculated, top ANC structures as well.
Experts argued that with the currency crash during an extremely difficult economic climate, the decision to fire Nene could have resulted in a recession come 2016.
The president came under intense criticism for the manner in which he replaced Nene. The announcement was initially made with no reasons given and it was seen as ill-timed given the intense pressure on the economy. The choice of Van Rooyen, an ANC whip in Parliament’s standing committee of finance, was also questioned given his relative lack of experience in government.
Gordhan, who has held the position of finance minister before, is, however, a widely respected and capable figure. After taking the mantle from Trevor Manuel in 2009, Gordhan was substituted with Nene after the 2014 national elections.
At the time, although Nene was seen as an excellent replacement candidate, the reasons to send Gordhan on to the CoGTA were little understood.
In his statement, Zuma said that Gordhan would return to “a portfolio that he had held proficiently during the fourth administration” and that he would continue with, among other things, “promoting and strengthening the fiscal discipline and prudence that has characterised our management of public finances since the dawn of freedom”.
He also gave reassurances that Gordhan would ensure the “adherence to the set expenditure ceiling while maintaining a stable trajectory of our debt portfolio, as set out in the February 2015 Budget”.
Although the markets may be reassured by the choice of Gordhan, the president’s penchant for rearranging the Cabinet as if it were a lounge suite at his home in Nkandla, may continue to raise questions.
Nevertheless, it is the president’s prerogative to make changes to his cabinet.
The uncertainty created by the Nene recall prompted analysts, experts and senior figures in the ANC to raise the alarm over the erosion of South Africa’s democratic institutions.
The presidency did, however, in a slew of media statements late on Friday, attempt to explain the reasoning behind Nene’s removal – which Zuma said was his candidacy to lead the new Brics development bank.
Zuma also endeavoured to assure the country that Nene’s redeployment did not signify a change from the country’s economic policy or its commitment to retaining government’s spending ceiling and the stabilisation of its debt levels.
In a further statement on Saturday, the president vehemently denied the widespread reports that he had fired Nene because of tensions between Nene and Dudu Myeni, the chairperson of South African Airways.
The week before he was fired Nene refused to sign off on an Airbus deal with SAA, which Myeni’s board had been pushing for, as this threatened onerous consequences for the fiscus.
Zuma also denied claims that Myeni, who is also the chairperson of the Jacob Zuma Foundation, was the mother to one of his children.
On Sunday night following the announcement, the rand strengthened to just under R14.41 against the dollar according to Bloomberg.