Cape Town – The uncertainty surrounding South African Finance Minister Pravin Gordhan’s future risks heaping extra pressure on consumers and delaying a rebound in the country’s economy, according to the nation’s largest provider of loans not backed by assets.
“It’s going to be a difficult year if you look at the political risk,” Capitec Bank Holdings CEO Gerrie Fourie said by phone on Tuesday. “It’s probably going to be much longer before there’s a turning point in the economy.”
President Jacob Zuma told senior leaders of the South African Communist Party, which governs in an alliance with the African National Congress, during a meeting on Monday that he plans to fire Gordhan, according to people with knowledge of the matter.
While Gordhan has led efforts to keep spending in check and fend off a junk credit rating, Zuma wants to embark on “radical economic transformation” that he says will tackle racial inequality and widespread poverty.
The rand has weakened more than any other currency, falling 3.5 percent against the dollar, since Zuma ordered Gordhan on Monday to cancel investor meetings in the UK and US and return home.
Read also: Zuma tells Communist Party Gordhan is out
The clash is coming to a head just as signs were starting to emerge of an improvement in South Africa’s economy.
Inflation last month eased to the lowest level in four months, the current-account deficit narrowed, while the rand was the best performing currency in the world this year until Friday.
A further drop in the rand will reignite inflation and pressure consumers already grappling with job losses and lower income, with many of Capitec’s customers snared by a decline in output in manufacturing and mining, Fourie said.
The CEO’s comments come after Capitec reported earnings before one-time items that rose 18 percent in the 12 months through February.
Capitec is building more branches and offering cheaper accounts to expand faster than South Africa’s four biggest banks, adding 1.3 million new customers in the past fiscal year to take it’s total active customer base to 8.6 million as an economic downturn forced consumers to cut costs.