Johannesburg - President Jacob Zuma's
midnight sacking of his finance minister shook South African
markets on Friday, undermining his authority and threatening to
split the African National Congress (ANC).
Deputy President Cyril Ramaphosa, who is one of the leading
candidates to replace Zuma as ANC president, described the
decision to remove Finance Minister Pravin Gordhan as "totally,
totally unacceptable".
The comments by Ramaphosa, who usually publicly backs Zuma,
were a sign of deepening divisions in the ANC that are likely to
worsen until the party elects a new leader in December.
Zuma's cabinet reorganisation rallied support, however,
among powerful sections of the party that are hostile to banking
interests they see Gordhan as representing.
The Women's League and the influential ANC Youth League welcomed the reshuffle, which included moving former Youth League leader Malusi Gigaba, 45, from home affairs to replace
Gordhan, 67.
"Younger ministers will mean more transformation," Youth
League leader Collen Maine said, citing hopes for land
redistribution for poor black farmers, free education and more
black involvement in state financial institutions.
Ramaphosa said Zuma removed Gordhan on the basis of a
"spurious" intelligence report that accused him and his deputy
Mcebisi Jonas of plotting with banks in London to undermine the
South African economy. Jonas was also fired by Zuma.
"I told the President so, that I would not agree with him on
his reasoning," he said.
Opposition parties and ANC sources say Zuma removed Gordhan
because he was obstructing Zuma's allies' access to state funds.
Zuma and his followers have been accused by opponents and
some senior ANC members of corruption and links with the wealthy Gupta family. A report by the Public Protecor last year said the Guptas influenced Zuma in making
government appointments.
The Guptas and Zuma deny the allegations.
Gordhan said "we should all be afraid" when government
decisions are made outside formal structures.
Ramaphosa and former African Union Chairwoman Nkosozana
Dlamini-Zuma are viewed as the front-runners to replace Zuma.
Dlamini-Zuma is Zuma's ex-wife and he is expected to support
her while a separate faction will back Ramaphosa, analysts say.
ANC Secretary General Gwede Mantashe also openly criticised
Zuma, in what analysts believe is a sign he will back Ramaphosa.
"I'm very uncomfortable because areas where ministers do not
perform have not been touched. Ministers who have been moved,
the majority of them are performing ministers," Mantashe told
Talk Radio 702.
"I felt like this list has been developed somewhere else and
was given to us to legitimise it," Mantashe added, in a comment
that will fuel speculation Zuma is being influenced by people
outside government.
Rumours Zuma was to replace Gordhan have unsettled markets
all week and ANC members urged the president to reconsider.
The rand has fallen 5 percent since its highest
point on Thursday prior to the reshuffle and is set for its
biggest weekly decline since December 2015. Banking stocks
were down more than 5 percent on Friday and bond yields
climbed sharply.
Late on Friday evening, Zuma presided over the swearing in
of new ministers and deputy ministers.
High risk
Zuma's determination to change his cabinet has thrown the
ANC into its deepest crisis since it swept to power under Nelson
Mandela at the end of apartheid in 1994.
Opposition parties called for Zuma to resign; but analysts
mostly predicted Zuma would survive the fallout after picking
Gigaba to replace Gordhan, a more prudent choice than investors
had feared, despite concern budget discipline would falter.
Zuma met with the most senior members of the ANC, known as
"The Top Six", late on Thursday to inform them of the reshuffle
but flouted accepted procedure in deciding not to consult them.
"Jacob Zuma has taken a huge political risk, possibly the
biggest political risk of his career thus far," Daniel Silke,
director at Political Futures Consultancy said.
"This will put further strain on an already fractured ANC.
Zuma will survive but he will survive within an ANC that finds
itself unable to accomplish just about anything."
So far the race to replace Zuma has been muted but the
divisive reshuffle is likely to split the ANC into two sides,
one aligned to Zuma and the other to Ramaphosa, a former trade
union boss turned business tycoon.
"These tensions will barrel into the ANC’s succession debate
and here we expect the president’s move has strengthened the
support for Mr Ramaphosa," Simon Freemantle, Senior Political
Economist at Standard Bank said.
Business and political leaders condemned Zuma and predicted
that South Africa's sovereign credit rating would be downgraded
to "junk" in the coming months.
Fitch, one of two rating firms that rate South Africa's
credit score just one notch above junk, said the reshuffle could
weaken public finances and standards of governance if the fiscal
consolidation championed by Gordhan became less of a priority.
Tripartite alliance partner, the South African Communist Party said the firing
of Gordhan, who was seen by investors locally and abroad as a
champion of fiscal responsibility, risked triggering the looting
of treasury.
Last year the Constitutional Court ordered Zuma to repay 7.8
million rand ($579,004) in inappropriate state spending on his
sprawling Nkandla homestead.