Gordhan recall: What we know so far

2017-03-27 17:50
President Jacob Zuma and Finance Mininster Pravin Gordhan. (Alexander Joe, AFP)

President Jacob Zuma and Finance Mininster Pravin Gordhan. (Alexander Joe, AFP)

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On Monday morning President Jacob Zuma ordered Finance Minister Pravin Gordhan and his deputy, Mcebisi Jonas, to return from their trip to Europe where they were meeting with possible investors. After a day of speculation of what this could mean, here is what we know so far:

1. A Cabinet reshuffle has been on the cards for a while

Analysts have predicted that Zuma would reshuffle his Cabinet in the second half of March, following the swearing in of former Eskom CEO Brian Molefe as a member of Parliament and the fact that Nkosazana Dlamini-Zuma handed over her chairpersonship of the African Union (AU) on Tuesday, March 14. This frees her up to serve in a cabinet position. Dlamini-Zuma, the favourite in the Zuma camp to succeed him as ANC president, will need a platform to campaign from and a Cabinet position would go a long way to do so.

2. No explanation given

True to form, the Presidency didn’t give any explanation for Zuma summoning Gordhan and Jonas back to South Africa, leaving the space open for speculation. When asked if he was being recalled, Gordhan also evaded the question by saying it’s the president’s prerogative to recall him. Initial reports said that the finance minister’s trip was unauthorised, but this was implicitly refuted by Naledi Pandor, who confirmed that Zuma had earlier appointed her interim finance minister while Gordhan was out of the country.

3. Coincidence?

After ordering Gordhan home, Zuma on Monday joined court proceedings as an interested party in the matter against Oakbay Investments in which Gordhan seeks a declaratory order to protect Treasury from having to intervene in the closure of the Guptas’ bank accounts by the country’s top four banks. Zuma’s court intervention is with regards to Standard Bank’s extended declaratory order against him and all members of the Cabinet. The state attorney told Fin24 that Zuma seeks a “striking from the roll, with costs, of Standard Bank’s application for the relief … which it styles as a notice of motion." Later in the day the Guptas also filed papers, disputing that the state attorney can represent Gordhan and seeking the minister to pay costs in his personal capacity.

4. Why now?

Some say it's a powerplay, others say Zuma is backed against a wall, but more and more political analysts have been saying that our president will be throwing caution to the wind in the coming months as he is forced to make good on agreements with those in his patronage network who are dependent on him being president. The Guptas are furthermore in a tight financial spot with the banks shutting down their accounts (as is evident by their court action) and they’ll be leveraging everything they have to get out of it, including their power over the president.

5. A reshuffle could be disastrous for the economy

It was reported after Zuma fired then Finance Minister Nhlanhla Nene in December 2015 that the South African economy suffered a loss of roughly R500 billion. The Public Public Investment Corporation alone lost R99 billion on the markets over two days in December according to an IOL report. With the rand plummeting with more than 30 cents to the US dollar in response to the news that Zuma ordered Gordhan to return to South Africa, there can be no doubt that firing him will only impact the currency, but will also in all likelihood worry the rating agencies.

Also read: Rand tanks as Zuma's Gordhan move fuels reshuffle fears

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