SA needs a finance minister with a proven track record if Nene goes, say economists

South Africa needs a finance minister with a proven track record to replace Nhlanhla Nene if President Cyril Ramaphosa accepts his offer of resignation.

That's according to several economists who weighed in on the matter after News24 reported earlier on Monday that Nene had requested to resign via a phone call to President Cyril Ramaphosa. This follows revelations in his testimony at the State Capture Inquiry last week that he had met with members of the Gupta family several times between 2009 and 2014.

It is not yet known how Ramaphosa intends to respond. As of 13:40, the Presidency had not yet replied to a request for comment from Fin24. 

Analysts on Monday had mixed responses to how markets have reacted to reports of Nene offering his resignation, with some saying it has contributed to rand weakness, while others saying the local currency is still taking its cue from international developments

The rand has been trading at weaker than R14.85 to the greenback all morning. Musa Makoni, a trading specialist at, earlier told Fin24 it would weaken to under R15/$ if Ramaphosa accepts Nene’s resignation.

Reaction will depend on replacement 

Investec Chief Economist Annabel Bishop told Fin24 that market reaction will depend on who takes Nene's place if he does leave Treasury. 

“Given the deterioration of SA's public finances this year, after close to a decade of overspending in a lower revenue environment, only a highly credible finance minister with a proven track record could turn market sentiment around for the rand.  

“Trevor Manuel would be the best candidate in this regard, if Nene is replaced,” she said.

But without any clarity on Nene’s fate, there is growing uncertainty for financial markets, Bishop said, adding this would place the rand at risk of further weakness, in turn possibly signalling a large petrol price increase for November. 

Moody’s review

“The timing is also poor given the credit rating review SA faces on Friday, and if a weak, compromised or unknown candidate replaces Nene, then Moody's may well decide to no longer extend the period of grace SA has enjoyed to consolidate its public finances,” said Bishop.

Ratings agency Moody’s could possibly drop its outlook from stable to negative, essentially placing SA on review for a downgrade, Bishop explained. The agency is set to announce its latest ratings action on SA's sovereign debt on Friday evening. 

RMB head of research Nema Ramkhelawan-Bhana said Moody’s would want to see a continuity of economic and fiscal policy if Nene’s resignation is accepted.

She said the ratings agency will want to see that what was set out in the National budget in February is maintained and that the outcomes of the mini budget are in line with fiscal consolidation. 

“What was more unsettling for the market was uncertainty of the key position being filled rather than what came from the Zondo commission,” she explained.

Dr Azar Jammine, chief economist at Econometrix, said he does not believe that Nene’s possible resignation will affect ratings decisions. Jammine said there are others capable of doing the job. “For that matter, they might turn out to be better,” he said.

Jammine said former deputy finance minister Mcebisi Jonas, former director-general of finance Lesetja Kganyago - who is currently Reserve Bank Governor - and former director general of treasury Lungisa Fuzile are among those he thinks could lead Treasury.

Jammine said that if Nene stayed on, it could be viewed negatively. “People would like to see credibility of the minister of finance and it would cast aspersions on that.”

Professor Matthew Ocran, head of the economics department at the University of Western Cape, said that Nene's possible resignation would not impact ratings and would reinforce perceptions that the president's administration is dealing with corruption. He said that current Deputy Finance Minister Mondli Gungubele could "hold the fort" at Treasury. 

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