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Nene: Let's hope Zuma can explain Gordhan recall to appease investors

Mar 29 2017 09:00
Liesl Peyper

Cape Town - There may be compelling reasons for President Jacob Zuma's decision to cancel the investment roadshow attended by Finance Minister Pravin Gordhan. Let's hope these are explained so that international investors still see SA as being an attractive investment destination.

This was the reaction of former finance minister Nhlanhla Nene, who was interviewed by Xolani Gwala on the 702 Breakfast Show on Tuesday.

Gwala spoke to Nene after Zuma unexpectedly ordered Gordhan and a delegation to return to South Africa immediately and cancel any further plans to engage with international investors at a roadshow in the UK and US.  

"The purpose of these roadshows are twofold," Nene said. "It's to sell SA as an investment destination, but also serves as a precursor to another round of roadshows where officials go to capital markets to borrow money.

"Our resources are not adequate to finance expenditure and the borrowed money enables SA to create employment and spend on infrastructure development. Those roadshows are being attended not only by government, but also business and labour."

Gordhan, senior leaders from the National Treasury and senior South African business  leaders on Monday held a series of scheduled meeting with rating agencies and investors in London as part of official trips planned for the week, National Treasury said in a statement issued on Tuesday. 

The second leg of the roadshow was intended to take place in the US, to be led by Deputy Finance Minister Mcebisi Jonas. The trip however was subsequently cancelled before Jonas' planned departure. 

Nene would not be drawn into commenting about a possible new finance minister or what is transpiring at government level.

"I assumed a new life - a private life - and I can't comment on that," Nene said, when asked about talk that a new finance minister may be appointed.

Nene also declined to comment on the amount of money investors had already lined up to invest in South Africa on the first day of Gordhan's roadshow.

In its statement, National Treasury said the South African government needs to borrow more than R13bn in the domestic market. "Of government's total borrowing requirement, $6bn needs to be raised in the international market over the next three years to partly meet government's foreign commitments." 

This money will contribute towards the building of public infrastructure, such as roads, schools and health facilities among other things. 

Meanwhile, the rand continues to lose ground against the USD on the back of news of Zuma's recall of Gordhan from his investor roadshow. The unit is currently trading at R13.09, compared to the 20-month high of R12.31 against the USD reached on Monday morning, before the Gordhan debacle. 

Read Fin24's top stories trending on Twitter:

zuma  |  jacob  |  pravin gordhan  |  nhlanha nene  |  investment  |  sa economy


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