SA's new Finance Minister Malusi Gigaba
SA's new Finance Minister Malusi Gigaba

Gigaba an unknown quantity - analysts

By James Macharia Time of article published Mar 31, 2017

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Johannesburg  - South Africa's President

Jacob Zuma sacked finance minister Pravin Gordhan in a cabinet

reshuffle after days of speculation that has rocked the

country's markets and currency, replacing him with home affairs

head Malusi Gigaba.

A statement from the president's office just after midnight

on Thursday said Zuma had also appointed Sfiso Buthelezi as

Deputy Finance Minister replacing Mcebisi Jonas.

A steep decline in the rand underlined Gordhan's reputation

among investors as a guardian of policymaking stability in South

Africa.

Gigaba has been Home Affairs Minister, while Buthelezi did

not hold a position in the cabinet and was a backbencher in

parliament.

Zuma also made several other changes in his cabinet,

affecting ministries such as energy, police, tourism and others.

He brought in new faces and moved some ministers to new

portfolios.

Speculation over cabinet changes began when Zuma called a

meeting of the ruling African National Congress' top officials

on Thursday evening.

"I have directed the new ministers and deputy ministers to

work tirelessly with their colleagues to bring about radical

socioeconomic transformation and to ensure that the promise of a

better life for the poor and the working class becomes a

reality," Zuma said.

Earlier, the ANC-allied Communist Party (SACP) said Zuma had

told its officials on Monday that he planned to sack Gordhan.

The SACP said it had objected, while the main opposition said it

would call a vote of no-confidence in Zuma over the matter.

For the second consecutive day, the influential ANC Youth

League issued a statement on Thursday backing Zuma's planned

cabinet changes.

Local assets have been under pressure since Monday, when

Zuma ordered Gordhan to abandon an investor roadshow in Britain

and fly home. Zuma gave no reason for the recall.

Gordhan said upon his arrival on Tuesday that he was still

finance minister. On Wednesday, he said he would "open a new

chapter" of his life if sacked.

Gordhan first served as finance minister from 2009 to 2014

and was brought back by Zuma in December 2015 to calm markets

spooked by the president's decision to replace his respected

successor, Nhlanhla Nene, with a little-known politician.

Opposition leader Mmusi Maimane, leader of the Democratic

Alliance, urged resistance to Zuma's decision to fire Gordhan

and Jonas. "We cannot sit by and let this happen," he said.

Unknown Gigaba

Gigaba was an unknown quantity, analysts said.

"The market will struggle to digest Gigaba. We think this is

bad for the market and for SA," Nomura emerging markets analyst

Peter Attard Montalto said in a note.

"We view this as an open attack on Treasury to replace

people who are conservative and anti-corruption with people

loyal to Zuma."

Some pundits say Gordhan is being pressured by a faction

allied to Zuma, which has clashed with him over his plans to

rein in government spending, the management of state enterprises

and the running of the tax agency as the economy stagnates.

Africa's most industrialised economy faces the risk of being

downgraded to junk status owing to weak economic growth after it

got a reprieve last year. The economy grew by 0.3 percent in

2016 versus 1.3 percent in the previous year.

"The little that we know at the moment is that its probably

not good news for the markets because he (Gigaba) doesn't have

any real finance experience," said Noelani King Conradie,

managing director at NKC African Economics.

"This definitely raises the risk of rating downgrades and it

is going to continue the uncertainty about future economic

policies."

Zuma shrugged off pressure from within his own party, the

opposition as well as the business circles to keep Gordhan.

Two senior sources told Reuters on Thursday that Zuma was

considering offering to step down next year, at least 12 months

before his term ends, in a deal with his opponents in the party

that would see Gordhan leave office now.

On Wednesday, sources within the ANC told Reuters there was

a split down the middle among its six most senior officials over

whether Gordhan should be sacked.

Julius Malema, leader of the ultra-left Economic Freedom

Fighters (EFF) and a former protege of Zuma, filed a court

application for disciplinary or impeachment proceedings against

the president on Thursday.

Daniel Silke, a political analyst and director at Political

Futures Consultancy said Zuma had taken a risk.

"This has been a long time coming. The president has clearly

taken a politically risky decision to remove a finance minister

who is well regarded both domestically and internationally," he

said.

REUTERS

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