Johannesburg - It most certainly was not on his birthday wish list, but Nhlanhla Nene got the boot from President Jacob Zuma’s administration a mere four days after the finance minister had celebrated his 57th birthday.
While his removal has sent shockwaves through the financial markets and sparked fury among South Africans, wondering about the damage that this would do to the economy and livelihoods, it was clear from the beginning that Nene was no cookie cutter.
His ouster will now go down in history as one of the costliest blunders ever made by the current administration. It taints South Africa’s image at home and abroad. Moreover, the short-circuiting of Nene’s tenure puts South Africa many steps down the road to economic wilderness.
Of course, some may argue that this view is way too overly pessimistic, but looking at all the obvious signs, it is also a more realistic view. Why? Because the shock announcement by Zuma on Wednesday night was devoid of any logic and justification, especially when his government is meant to be doing everything possible to restore confidence and growth.
Poor assessments
Last Friday, South Africa was slapped with poor assessments on its economy and a threat of a downgrade to “junk status” by the credit rating agencies. The Treasury, whether you agree or disagree with many of the policy directives that it has implemented over the years, as an institution, has been an oasis of stability and sanity.
That a finance minister can be shown the door at a time when the country is struggling with a moribund economy and one of the world’s highest unemployment rates, shows how little or no appreciation there is of the risks the country faces.
There are now concerns that even the Reserve Bank under governor Lesetja Kganyago, a friend of Nene, might just not be so untouchable after all. Time will tell.
One economist even went so far as to say that Zuma has essentially thrown market considerations and sensitivities out of the window.
In simple terms, what this means is that South Africa’s economy will be in intensive care a lot longer. But an economy of a country is not a play thing for any individual or individuals, especially a country like South Africa, with a broken past and now an uncertain future.
This uncertainty was very apparent as the rand crashed through the R15 barrier against the dollar in the aftermath of the president’s announcement.
But even before Nene’s removal, the currency was already in free-fall because of stalled growth, sliding commodity prices, sinking business and household confidence, policy ambiguities, power shortages and labour strife.
‘A big unknown’
These and many other challenges will not go away with Nene. His successor, David Douglas Des van Rooyen, is a big unknown, whereas Nene had the fortune to serve as deputy to Pravin Gordhan before his appointment in May 2014.
The new minister said after taking the oath yesterday that he planned to meet with what he called the Treasury’s “winning team” as soon as today.
But by the look of things, he already has his work cut out and must move with speed to reassure the markets that he is someone they can trust and do business with.
Granted, the Treasury certainly did not just ride on Nene’s shoulders alone. He had an able team around him but there is doubt now about its ability to ever be able to do its work unencumbered by politics, opportunism and subterfuge.
From dealing with haemorrhaging parastatals to stabilising the government’s finances to battling demand for higher civil servant wages, it was only a matter of time before the Treasury saw the ugly side of realpolitik.
In June, when I had a conversation with Nene at the World Economic Forum on Africa, I started by saying to him: “I don’t envy you for what you have to do.” And his response was: “I also don’t envy myself.”
In hindsight, the sub-text of his retort was that he was well aware of the immense strain of navigating political pressure points, the biggest of which was his failed attempt last week to stand up to the SAA board led by Dudu Myeni, Zuma’s long-time friend and chairperson of his foundation.
Nene slammed the board for pursuing a controversial aircraft procurement deal which he said would have dire financial consequences for the country. In that instance, Nene had effectively signed his own career suicide note when he wrote to the SAA board, saying: “I will not entertain any further discussions or applications relating to amending the transaction structure.” A red line had been drawn.
So it is really not surprising that Nene then had to have an ignominious exit. At least he still had the weekend to celebrate his birthday.
But while many unanswered questions still remain, what is certain is that his ejection amounts to a real humiliation, not only for him as an individual, but for the country as well.
In that light, one would have thought that the humiliation that the government suffered in the most recent #FeesMustFall protests by university students would have made it clear even to the president that South Africans are increasingly tired of the permanent paralysis that is robbing the country of its true potential, and is driving many to live on the edge as poverty, hunger and destitution mounts.
Most people think US maverick Donald Trump is a clown, but the latest developments will surely make it harder for anyone to be entirely dismissive of what he said on April 21, via this Tweet: “As I have long been saying, South Africa is a total – and very dangerous – mess. Just watch the evening news (when not talking weather).”
Well, many of us still hope he is wrong.
* Ellis Mnyandu is Editor of Business Report. Follow him on Twitter: @Ellis_Mnyandu
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