Gordhan crackdown: Chaos, confusion and Cyril

Minister of Finance Pravin Gordhan. (Netwerk24)
Minister of Finance Pravin Gordhan. (Netwerk24)

Cape Town - Crude, bizarre, uncertainty and disrespect - these were some of the words used by economists responding to President Jacob Zuma's decision to cancel a crucial investor roadshow led by Finance Minister Pravin Gordhan.

On Monday Gordhan was abruptly ordered by Zuma to return to South Africa immediately, after he embarked on a post-budget investor roadshow to the UK. Deputy Finance Minister Mcebisi Jonas was set to join a delegation in the US on Tuesday.

No explanation

The Presidency didn't give a reason for cancelling the roadshow and didn't respond to Fin24's request for comment.

"The president knew that the minister would be overseas for a period, and was promoting SA among the investors for the forthcoming government bond issues. To intervene in such a crude manner is highly unusual and reflects poorly on his leadership style as the president of the country," economist Iraj Abedian told Fin24.

"It sends a message of chaos and confusion, unnecessary power play and uncoordinated governance. There is nothing happening in the country that would justify this and could not wait for the minister’s return."

Abedian said Zuma's move reflects the tense relationship between the Presidency and Treasury.

"It is more than a rift. It almost signifies two centres of power within the same cabinet. It is highly confusing for those who would like to invest in SA bonds, especially government bonds. How do you trust what such a government tells us, if the level of coordination within the cabinet is so poor?"

A Mexican standoff?

Abedian said in his view it is quite clear that the "Mexican standoff" between different factions within the Cabinet is coming to the open. "Certainly the economy continues to suffer the consequences of this bizarre political game being played," he added.
The reaction from the markets on Gordhan's call back was swift, with the rand tanking more than 3%.

A weakening rand represents the possibility of higher prices for consumers, economist Xhanti Payi told Fin24. "This will harm ordinary South Africans who will have to pay more for goods and services, given the inflation problems that we already have."

The moved also fuelled fresh speculation of an imminent Cabinet reshuffle, with analysts' reaction on Zuma's move ranging from highly embarrassing, economic sabotage and pain-inflicting to the president being 'hell-bent on breaking SA'.

Economist Dawie Roodt told Fin24 Gordhan cemented a good relationship with investors over the past few months. "This trip was to build on it. The fact that it was cancelled and the way it was done creates many questions and uncertainty."

Professor Jannie Rossouw, head of the school of economic and business sciences at Wits University, said Zuma needs to explain himself to the public.

"It seems to me that President Zuma really no long cares about the country. He is treating us with total disrespect and he has shown a total disregard for the effects (of cancelling the trip) on the financial markets."

'Cyril the saviour'

Rossouw also questioned the leadership of Deputy President Cyril Ramaphosa.   

"Where is Cyril our saviour?,” he asked. "He is giving no leadership in this crisis and we would expect from him to give some sort of leadership in a crisis of this magnitude. However, he is just nowhere to be seen."

Ramaphosa's spokesperson Ronnie Mamoepa told Fin24 the Presidency issued a statement on the matter. "There is nothing more for us to add.”

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