Cape Town - South African President Jacob Zuma’s
year-long feud with his finance minister over the nation’s purse strings
appears to be coming to a head.
When Pravin Gordhan presents his annual budget in
Parliament on Wednesday, Gordhan will seek to keep state spending in check and
fend off a junk credit rating. Zuma, meanwhile, wants to spend billions of rand
on new nuclear plants and embark on “radical economic transformation” to target
yawning racial inequality and widespread poverty. Those factors contributed to
the ruling African National Congress’s worst electoral performance in a
municipal poll in August.
The two men have scrapped over the management of state
companies and the national tax agency as well as a decision by the country’s
biggest banks to close accounts of companies controlled by members of the Gupta
family, who’re in business with the president’s son. Speculation that Gordhan
is on the verge of being fired has been fuelled by an announcement
that the ANC will install Brian Molefe, the former chief executive officer
of the state power utility, as a lawmaker, easing the way for Zuma to name him
to his cabinet.
“Gordhan is under a lot of political pressure” and could
be replaced in “a matter of months,” said Mzukisi Qobo, an associate professor at
the University of Johannesburg and co-author of “The Fall of the ANC: What
Next.” “The budget is a major battleground for Gordhan and the Treasury. He
doesn’t want the economy to implode under his watch.”
Economic conspiracy
Zuma tapped Gordhan, 67, as finance minister in December
2015 after his decision to install a little-known lawmaker to replace the
respected Nhlanhla Nene pummeled the nation’s bonds and currency and spurred
ANC and business leaders to plead with him to reconsider. S&P Global
Ratings and Fitch Ratings Ltd. endorsed Gordhan’s economic stewardship in
December by keeping their investment-grade ratings on the nation’s debt. But
they warned that political turmoil, low growth and any budget-target slippage would
heighten the risk of a downgrade.
Read also: #Budget2017: DA presents own tax proposals
Firing Gordhan would have “a very negative market
effect,” said John Ashbourne, an economist at Capital Economics in London.
“To sack one respected finance minister may be regarded as a misfortune.
Sacking two looks like a conspiracy against the economy.”
Police investigation
The 74-year-old Zuma, who’s due to step down as ANC
leader in December and as president of the country in 2019, denies he’s at
war with his finance chief or that he intends dismissing him.
Yet Zuma has said a police investigation into allegations
that Gordhan oversaw the establishment of an illicit investigative unit when he
headed the tax agency that’s dragged on for more than a year must run its
course. He also rebuffed his request to fire tax chief Tom Moyane for
insubordination.
And while Gordhan has asked the High Court to order that
he can’t intervene in the banks’ decision to shut the accounts operated by the
Gupta-controlled companies after an anti-money laundering unit implicated them
in irregular transactions, Zuma suggested the lenders may have been guilty of
collusion.
Gordhan said “we are just humble civil servants” and
that he’s “not indispensable” during an interview Monday with broadcaster eNCA.
“Treasury is an institution and ministers come and go,”
Deputy Finance Minister Mcebisi Jonas said in the same interview. “We
hope that the capacity embedded within the institution will be sustained.”
Disinformation campaign
The National Treasury said last week that disinformation
was being circulated to discredit its leadership before the budget. Two days
later, the ANC’s youth wing, a close Zuma ally, said Gordhan had failed to
exercise proper oversight over more than a dozen banks accused by an antitrust
regulator of having rigged foreign-currency trades, and called for him to be
held accountable.
Local newspapers have speculated that a cabinet reshuffle
is imminent and that Zuma may tap Molefe to replace either Gordhan or Jonas,
who last year accused the Guptas of offering him the finance ministry post in
exchange for business concessions. The family denies the allegation.
Read also: Gordhan unperturbed by Molefe reports
Molefe resigned as the head of state power company
Eskom Holdings in November last year after the nation’s graft
ombudsman indicated he may have given the Guptas preferential treatment by
awarding them coal-supply contracts. Molefe, the Guptas and Eskom all deny
wrongdoing.
While it’s clear Molefe has been earmarked for a senior
government post, Gordhan has proved his staying power and Zuma’s authority is
waning as his term draws to a close, said Dirk Kotze, a politics professor at
the University of South Africa in Pretoria.
“President Zuma will think more than twice before he
kicks out Gordhan and replaces him with Brian Molefe,” Kotze said. “There is a
growing sense in the ANC that they don’t want to be seen as ridiculous and they
don’t want to support people who are almost a laughing stock.”