LOOK & WATCH: Economists sound rand devaluation alert over future of president Cyril Ramaphosa and 2024 poll

Published Dec 3, 2022


Johannesburg - Economists have warned the ANC to proceed with caution as the uncertainty over whether President Cyril Ramaphosa will continue leading the country until the 2024 elections could devalue the rand.

Late yesterday, senior ANC leaders asked for an urgent meeting with the embattled president on Saturday over the damning Phala Phala report.

The decision was taken during a special ANC national executive committee (NEC) meeting, which lasted less than 45 minutes, at Nasrec in Johannesburg, and which Ramaphosa didn’t attend.

The meeting was scheduled to discuss the party’s reaction to a report submitted which found that Ramaphosa may have violated his oath of office by running his Phala Phala farm while head of state.

Economist Sanisha Packirisamy said the fall in the rand came while there was a significant sell-off of the US dollar.

“On the back of that alone, we would have ordinarily seen a significant strengthening in our currency,” said Packirisamy, chair of Momentum Investments Employment Equity Forum.

However, there was trepidation around who would replace Ramaphosa if he resigned, and whether the structural reform processes he put in place would continue into the future.

“There are heightened fears that we aren’t going to see the same pace of structural reform efforts, or we might actually see a reversal in efforts already made.”

One scenario suggested is that Ramaphosa steps down as ANC leader, but continues as president until his successor is found. This, said Packirisamy, could provide a small element of certainty for the markets.

Dawie Roodt, founder, director and chief economist of the Efficient Group, said financial markets had already reacted negatively to the ANC government.

“But clearly, if Ramaphosa is the least ugly sister, the financial markets are likely to react negatively, and the economy is also likely to react negatively.

“The president must resign. His name has been tainted. I know he hasn’t been proven guilty, but we need a change. We need a political leader who is squeaky clean, and he is simply isn’t.”

But University of the Witwatersrand economist Kenneth Creamer said Ramaphosa was leading many reforms and interventions to improve the economy, including plans to overcome load shedding, increase infrastructure investment and accelerate job creation.

“There are serious concerns that if Ramaphosa were to step down, this reform agenda might be disrupted or derailed, which would plunge the economy more deeply into crisis, impacting negatively on the lives of ordinary people.

“Cool heads are needed in the current context – allegations against Ramaphosa need to be properly tested and due process needs to be followed. South Africa can ill afford a misstep in this regard.”

Yesterday, acting ANC secretary-general Paul Mashatile said the NEC felt the top four should first discuss the panel report and then convene a meeting with the national working committee. Another special meeting could be called on Monday, he added.

Mashatile rejected claims that Ramaphosa had indicated his intention to resign as head of state to the ANC.

The special NEC on Monday is expected to decide on its approach when Parliament Speaker Nosiviwe Mapisa-Nqakula tables the report to the National Assembly for a discussion and possible vote on Ramaphosa’s impeachment.

The NEC members are expected to decide whether they would vote against impeachment or not – a discussion which is likely to lay bare factional differences within the party.

ANC presidential contender, Dr Nkosazana Dlamini Zuma, has publicly urged Ramaphosa to resign. She was joined by others linked to the radical economic transformation faction, such as Tony Yengeni.

Ramaphosa’s supporters, including ANC Veterans League president Snuki Zikalala, came to his defence.

ANC Northern Cape provincial secretary Deshi Ngxanga urged him to “never give in”, “never give up” and to ”fight”.

The Organisation Undoing Tax Abuse (Outa) and Corruption Watch became the latest bodies to ask Ramaphosa to step down.

Corruption Watch executive director Karam Singh said: “We don’t have a stellar record of members of the executive being held to account for their actions, and there is far too much evidence of people acting with impunity. It is supremely important that the president is held to the same standards and processes as everyone else.”

Economist and jurist Professor Bonke Dumisa said the rand could be expected to be volatile, especially until Wednesday, when Parliament resumes.

“It will be volatile on the negative side,” he said. “(Its value) revolves around political and economic certainty. President Ramaphosa, like him or not, was always associated with fighting corruption and understanding markets.”

Dumisa said although the Section 89 report didn’t say Ramaphosa was guilty, there was the innuendo that he may have seriously violated the Constitution and other legislation.

“On Wednesday, we were so happy when the rand strengthened. Then, there was the Section 89 report and it just dropped.”

Additional reporting: Sameer Naik and Duncan Guy