After two days of unprecedented value destruction, President Jacob Zuma moved on Friday afternoon to explain his sacking of former finance minister Nhlanhla Nene. The reason offered for Nene’s removal was that he is to be nominated to head up the African Regional Centre of the New Development Bank that will be based in Johannesburg.
Zuma fired Nene on Wednesday night without giving any reasons and appointed as his successor relatively unknown ANC MP Des van Rooyen. This led to the dramatic weakening of the currency that briefly breached R16 to the dollar on Friday and carnage on the JSE where especially banking shares fell to record lows.
In a statement issued by the presidency late on Friday afternoon the following was said: “The urgency of the changes in the leadership of the National Treasury was occasioned by the need to send nominations to Shanghai, of the head of the African Regional Centre of the New Development Bank/BRICS Bank, to be based in Johannesburg.
“Mr Nene is our candidate for this position. We are fully backing his candidature, knowing full well that he will excel and make the nation proud in his next assignment.”
Zuma did not explain why Nene was not retained until it was clear whether his candidacy was successful. It is also somewhat surprising as Nene has indicated, since his retrenchment, that he will reassume his position as MP in Parliament.
In a clear effort to calm the markets, Zuma said Van Rooyen’s appointment does not signal a change in the government’s fiscal stance.
“Government will not abandon the fiscal path that we have chosen in the last few years. Maintaining a prudent fiscal position remains one of government’s top priorities.
“The new minister will strengthen the path and continue to support all efforts aimed at improving the lives of ordinary South Africans,” Zuma said.
Deputy finance minister Mcebisi Jonas, who was overlooked as Nene’s successor, will support Van Rooyen, Zuma said, pointing out that Jonas “carries many years of experience in the economic cluster”.
Zuma said they are supported “by the hard-working and capable National Treasury team, led by the Director-General, Mr. Lungisa Fuzile.”
Zuma thanked Nene “for his sterling contribution to the National Executive and to taking forward the goals of building a better life for all our people. Government remains committed to adhering to the set expenditure ceiling while maintaining a stable trajectory of our debt portfolio, as set out in the February 2015 Budget.”
The statement said government’s commitment to diversifying the economy, reducing the cost of doing business and utilising resources much more efficiently to enable a more inclusive economic growth remains important. “We will continue to improve the budget process in order to maintain our international reputation as a global leader in budget transparency. South Africa continually seeks to enhance the expansive information it provides to its citizens on how public resources are generated and used with the aim of improving budget participation.
“To support the economy, government is committed to sustaining public sector capital investment, by attracting private sector capital into public infrastructure projects.”
Zuma referred to the national carrier by saying government remains committed to support State-owned companies, including SAA, in a fiscally sustainable manner. “We assure the nation that nothing will be done, in supporting State-owned entities, that runs contrary to the fiscal prudence that our country is renowned for.
“No State-owned entity will dictate to government how it should be assisted.”
Zuma said the implementation of the National Development Plan remains the cornerstone of the economy and government will continue to address constraints to economic growth.
He said the economic cluster will meet on Tuesday, December 15 as announced by Minister in the Presidency Jeff Radebe to prepare for a special cabinet meeting on the economy, which will take place on Friday December 18. “This will enable us to focus specifically and exclusively on the current economic climate and on the country’s response.”
In a separate statement, the Presidency rejected speculations about further cabinet moves and asked that cabinet be given space to do its work.