All eyes will be on the markets on Monday to see whether the rand will recover after President Jacob Zuma redeployed new finance minister David van Rooyen on Sunday night after only four days in the job.
Van Rooyen will be replaced by a safe pair of hands in Pravin Gordhan‚ who was finance minister from 2009 to 2014 and secured an excellent reputation for the South African Revenue Service before entering Parliament and cabinet.
Since last year’s election‚ Gordhan has been minister of co-operative governance and traditional affairs. That portfolio‚ which means cabinet responsibility for municipalities in the run-up to next year’s local government elections‚ will now be Van Rooyen’s responsibility.
Zuma’s move‚ which was entirely unexpected‚ followed a cataclysmic collapse in the value of the rand since Van Rooyen’s appointment‚ which was universally and roundly condemned by all role-players‚ even the African National Congress’ (ANC) alliance partners — the South African Communist Party (SACP) and the Congress of South African Trade Unions (Cosatu).
It is understood that Zuma took the decision shortly after returning from the ANC’s Mpumalanga provincial conference‚ which took place in Nelspruit this weekend. The decision means Van Rooyen had the shortest official spell as fully fledged finance minister in South Africa’s history.
The events since Van Rooyen’s appointment led to panic on the markets‚ especially at a time when South Africa has just been downgraded to one notch above junk status by leading rating agencies‚ making borrowing very expensive.
Although cabinet appointments are the complete prerogative of the president‚ which means he never has to provide any reasons for changing the cabinet and is not legally required to consult anyone before doing so‚ the tradition in the ANC and the ruling alliance has always been to consult nevertheless.
The angry reaction from the SACP and Cosatu‚ and even from some top ANC figures‚ led to a belief among political pundits that the president may have gone rogue on the ruling party and its allies last Wednesday when he fired respected finance minister Nhlanhla Nene and replaced him with Van Rooyen‚ but this could not be proven conclusively.
Van Rooyen is a junior politician and the fear amongst government allies‚ the opposition and big business alike was that he would not have the gravitas to make the necessary‚ politically unpalatable decisions to get the South African economy back on track.
Gordhan‚ on the other hand‚ is known to specifically bow to Zuma’s every whim and is seen as a strict taskmaster who enjoys strong international standing.
His first big test will be whether he can rekindle local and international trust in the management of the South African economy.
Gordhan’s second big test will be whether he can stand his ground on the proposed swop deal between the South African airways (SAA)‚ which is in a sorry state‚ and French company Airbus.
A nasty difference of opinion on the Airbus issue between Nene and controversial SAA chairperson Dudu Myeni‚ who is a close confidante of Zuma‚ was widely believed to have been Nene’s undoing.
Gordhan’s handling of the issue will thus set the tone for the way he will handle the job this time around.
The third big test for Gordhan would be how he approaches the cost of the proposed nuclear new build as a solution to the country’s energy crisis.
The nuclear new build is believed to be a priority for Zuma‚ but fears of corruption‚ mismanagement and an unaffordable price tag of up to a trillion rand has meant that the treasury is very sceptical and cautious about the proposals.
All eyes will also be on the extent to which Gordhan can keep the public sector wage bill and extravagant excesses by civil servants under control at a time when many economists are calling for some degree of relative austerity.
Initial reaction on Sunday night at the Presidency’s announcement was one of disbelief with many thinking it was a hoax‚ but the real test will come on Monday when locals and the international community will react on the financial markets.