Durban – Finance Minister Malusi Gigaba on Thursday said the rand has always been volatile and this cannot be attributed to President Jacob Zuma’s Cabinet reshuffle at the end of March.
Gigaba was one of the panellists at a discussion on the growth outlook for Africa on the second day of the World Economic Forum (WEF) on Africa that is taking place in Durban. The session was facilitated by Bronwyn Nielsen, editor-in chief of CNBC Africa.
During the discussion Frederic Lemoine, chair of the executive board of French company Wendel, was critical of African governments which are unpredictable regarding policy direction.
He cited currency volatility and “unexpected reshuffling of government” as reasons for concern that would cause his company to withdraw its investment.
“We’d then be reluctant to trust a particular government,” said Lemoine.
Nielsen asked Gigaba to respond to Lemoine’s utterances, particularly with regard to the rand’s rapid movements lately.
“The exchange rate is okay,” Gigaba said. “We’ve seen it appreciating and stabilising.”
Nielsen, however, interjected pointing out that the rand has been in fact very volatile - “especially when there’s a quick succession of finance ministers.”
“Oh that,” Gigaba responded. He maintained, however, that the rand has been volatile for a “long time”. “It has nothing to do with Cabinet reshuffles, because they don’t happen very often.”
Nielsen asked Gigaba how he’d assure investors of political stability in South Africa.
Gigaba said it’s normal for democratic countries to go through periodic elections. “General elections, party leadership elections – they’re all part of democracy.
“In December this year you’ll see a contestation for leadership when the ruling party elects a new leader. It happens everywhere in the world - sometimes even abruptly.
“In South Africa – through democratic processes – we’ve seen the peaceful transition from one administration to the next.”
He noted, however, that South Africa needs to strengthen its institutions and ensure there are policy certainty and predictability.