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Cape Town – The rand immediately improved after the reappointment of Pravin Gordhan as Finance Minister on Sunday, after a week of market turmoil followed a shock move by President Jacob Zuma.
Zuma reshuffled his cabinet for the second time in five days on Sunday, reappointing Gordhan after reconsidering his decision to replace Nhlanhla Nene with unknown lawmaker David van Rooyen on Wednesday.
Zuma’s dramatic turnaround occurred after the rand tumbled to historic lows and bond yields jumped the highest they have been in seven years, following his decision to axe respected African National Congress (ANC) member Nene.
Analysts and politicians believe the president was caught off-guard by the market reaction as well as the intense reaction from South Africans from all sectors, including from within his own party.
There was even a #zumamustfall campaign, as well as a planned march and a petition to remove the president from power.
Zuma said in a statement late on Sunday that as a democratic government, “we emphasise the importance of listening to the people and to respond to their views”.
“I have received many representations to reconsider my decision,” he said.
Zuma first appointed Gordhan as finance minister in 2009, succeeding Trevor Manuel. However, he was replaced by Nene in 2014 and “demoted” to the Department of Co-operative Governance and Traditional Affairs.
It is here where Van Rooyen will find his new home as minister, as Zuma did a switch between the two on Sunday.
At the time, analyst Peter Attard Montalto was quoted in the Mail & Guardian as saying: “...this is a tiny ministry with little power".
The reaction from politicians has been one of caution.
Playing Russian roulette
Democratic Alliance leader Mmusi Maimane said Gordhan must stand up to Zuma and ensure fiscal discipline is sustained. “Zuma must stop playing Russian roulette with our economy,” he said. “Both these decisions have an impact on the poor in South Africa.”
Congress of the People president Mosiuoa Lekota said Zuma’s sudden change of heart won’t fix the damage he caused last week. “Not even the introduction of Mr Gordhan can make right the value of damage that has been caused,” he said.
“The mood in the country and abroad is one of complete uncertainty as to what is next and as to the management of South Africa,” he said.
United Democratic Movement leader Bantu Holomisa said Zuma has lost control and should be recalled with immediate effect. "It's clear President Zuma has lost control. He is actually panicking beyond comprehension as we speak," he said.
"It’s clear also that he was told to remove this guy [Van Rooyen] perhaps by Luthuli House but it is not going to work. They should recall Zuma immediately, recall and go back home," said Holomisa.
Political analyst Daniel Silke said that from ‘capturing’ the Treasury only a few days ago, Zuma must have come perilously close to a palace coup.
“He must have been cornered by a segment of his own senior leadership both in and out of cabinet to restore a semblance of positive governance and attempt to undo the damage,” he said.
“The stunning reappointment of the respected Gordhan indicates the levels of consternation that must have prevailed within the ANC this weekend,” he said. “But for President Zuma, it is a massive political defeat. And the president now is more vulnerable than ever.”
The rand firmed to as low as R14.94 in overnight trade in New York from Friday's close of R15.88.
Gordhan will be sworn in at 10:00 on Monday.
