South African President Cyril Ramaphosa on Tuesday appointed former central bank governor Tito Mboweni as finance minister, replacing Nhlanhla Nene who admitted to having meetings with the business family at the centre of alleged corruption.
Nene faced calls to resign after he admitted visiting the Gupta brothers, friends of scandal-plagued former president Jacob Zuma who have been accused of high-level influence-peddling, and failing to disclose the meetings earlier.
Zuma and the Guptas have denied any wrongdoing.
The rand firmed moments before Mboweni was announced finance minister at a ceremony in Cape Town. Banking stocks closed more than one percent firmer.
South Africa has had four finance ministers in the last two years, with the rand and bonds reacting badly to the upheavals.
Moody’s is set to review its rating of South Africa on Friday and Nene’s departure and replacement by an insider in Mboweni is seen as restoring stability and positive investor sentiment towards an economy now in recession.
The crisis over the finance minister had thrown a spotlight on Ramaphosa’s promise to crack down on corruption and boost economic growth.
Ramaphosa said he had received a resignation letter from Nene and had decided to accept it.
“It’s a measure of his character and commitment to the country that he has decided to resign despite not being implicated in any wrongdoing,” the president said.
“I am confident that Mr Mboweni will bring the leadership that is needed now,” Ramaphosa said.
“As former governor of the Reserve bank and before that as minister of labour Mr Mboweni brings with him vast experience in areas of finance, economic policy as well as governance.”
Mboweni said Ramaphosa called him at around 9 pm local time last night to inform him about the appointment.
Mboweni, who was sworn into office, did not want to be drawn on what his priorities were as minister. One of his first tasks will be delivering the medium-term budget this month.
“I think the president has just taken away my freedom,” he said in his first comments to reporters as finance minister.
South Africa dollar-denominated debt trimmed losses across the curve on Tuesday after Ramaphosa appointed Mboweni as finance minister.
Nene became a divisive figure in the scandal after acknowledging in a hearing that he had visited the Gupta brothers at their homes in Johannesburg, a confession his opponents said tarnished his credentials. He publicly apologised on Friday.
The Gupta brothers – Ajay, Atul and Rajesh – have been accused of using their friendship with Zuma, Ramaphosa’s predecessor, to siphon off billions of rand in state funds and of inappropriately influencing cabinet appointments.
Nene is a pivotal ally of Ramaphosa, who reappointed him finance minister in a cabinet reshuffle shortly after he became president earlier this year.
“Ramaphosa had very little choice. He had to let Nene go,” Isaac Matshego, senior economist at Nedbank said.
“When Tito was governor of the Reserve Bank he was the darling of the markets. He was the one who introduced inflation targeting, they really loved him. This will also be a positive sign in the eyes of Moody’s.”