“I have decided to remove Mr Nhlanhla Nene as Minister of Finance, ahead of his deployment to another strategic position” said President Jacob Zuma on 09 December 2015 during his cabinet reshuffle statement. When everyone listening and watching waited with interest to hear who was to be announced as the new Finance Minister, The president went on and said “I have decided to appoint a Member of Parliament Mr David Van Rooyen, as the new Finance of Minister.”
The president’s announcement of Mr David Van Rooyen as new finance minster was received with mixed reactions by ordinary South Africans and the business community. Chief Ecomomist at Standard Bank Mr Goolam Ballim quoted on moneyweb saying “government will have to give a sound explanation why the decision was taken to remove a pragmatic finance minister at a time when South Africa is probably at its lowest in 20 years in terms of credible policy making.”
The South African Chamber of Commerce and Industry in its statement said “The South African Chamber of Commerce and Industry (SACCI) notes with concern President Zuma’s removal of Finance Minister, Nene”
The following morning, Thursday 10th December 2015 after Mr David Van Rooyen appointment as a new Finance Minister the rand traded at R15.08 against the dollar, R16.58 against the euro and R22.86 against the pound.
It was quite clear that Mr David Van Rooyen’s appointment Finance minster was not welcomed by many especially the financial services industry, specifically banks. According to the reports the Nenegate has cost the South African economy R500 billion in losses due to rand depreciation.
13 December 2015, President Jacob Zuma replaces Mr David Van Rooyen with Mr Pravin Gordan as the new finance minister. Mr Pravin Gordhan held the position of finance minister before appeared to right and capable person to save the rand.
The Competition Commission said it has found that from 2007 the banks had a general agreement to collude on prices with to currency trading of US dollar / rand. This finding means that South Africans bank and other foreign banks were in a position to manipulate the direction which they wanted the rand to take.
It is alleged that these banks might have assisted each other to reach the desired prices by coordinating trading times. Agreements were in place to halt or refrain from trading, taking turns in transacting and by either pulling or holding trading on the trading platform. They created demand and supply in order to achieve their profit motives through fictitious bids and offers.
What makes Mr Nhlanhla Nene better than Mr David Van Rooyen even though Mr Van Rooyen is the most qualified? The way the market has reacted to Mr David Van Rooyen’s appointment leaves much to be desired. The R500 billion loss is it fair to blame it on President Jacob Zuma’s decision alone considering South African banks trading conduct, was the loss manipulated on the trading platform?
What was planned over the trading platform and phone calls is slowly coming to the fore. The banks have given themselves too much power to an extent that they manipulate currency prices to influence political decisions.