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Cape Town - The Federation of Unions of South Africa (Fedusa) has launched a blistering attack on the Presidency and the ANC after President Jacob Zuma abruptly halted an overseas roadshow led by Finance Minister Pravin Gordhan.
"President Jacob Zuma has instructed the Minister of Finance, Mr Pravin Gordhan and Deputy Minister Mcebisi Jonas to cancel the international investment promotion roadshow to the United Kingdom and the United States and return to South Africa immediately," the Presidency announced on Monday.
Gordhan, who is in London together with Business Unity South Africa, is expected to be on an overnight flight back to South Africa, Treasury confirmed.
It has fuelled fresh speculation that there may be a Cabinet reshuffle on the cards, and that Zuma is testing the markets.
Rand not happy
At 16:21 the rand was trading at R12.74 to the dollar, after falling 19 cents in no time on the news of a Gordhan "recall".
Fedusa was the only trade union federation invited by Gordhan in a letter dated March 14 to participate in the international roadshow. It was aimed at engaging and updating current and potential investors in South Africa on economic developments, fiscal outlook, monetary policy and other related matters.
Initially the union federation was adamant that it would join Gordhan abroad, however it later backtracked and took aim at Zuma.
"What is so important that it cannot wait," asked Fedusa general secretary Dennis George. "Sometimes the Presidency wants to create its own crisis," he told News24.
From crisis to crisis
George said similarly a crisis was created when former finance minister Nhlanlhe Nene was unceremoniously axed in December 2015, creating turmoil in the markets.
He said a financial or economic crisis can move towards a constitutional crisis.
"A constitutional crisis is when a person responsible to protect the interest of South Africa and the constitution, acts in an irresponsible manner. It means you are no longer suitably qualified to occupy that position of president," explained George.
He said Zuma "can't be so set on breaking our country down", while taking a swipe at the ANC. "His party has the responsibility to take him out or recall him otherwise they will also pay in the future," said George.
"Do you think South Africans are going to trust a party that will sit with its arms folded, while doing so much damage to them and the economy."
A bad message
Dr Kenneth Creamer, economist from Wits University, told Fin24 the unexpected and unexplained cancellation of the investor roadshow sends a very bad signal and introduces added uncertainty regarding government's management of the economy.
"Own goals such as these will likely result in increased borrowing costs, rand volatility and investor uncertainty. This will result in a slow down in investment and will retard economic growth and job creation," he warned.
The public is owed a full explanation from government as to what exactly is going on, Creamer said.
Shock move meant to test the waters
Emerging markets economist Peter Attard Montalto said in a statement on Monday "the shock way of doing things" is the Presidency's way of testing the market waters for a reshuffle.
Montalto reckons that if Gordhan obeys Zuma's instruction, the president will be viewed as the stronger party; however, if the finance minister goes against him, it will give Zuma reason to fire him.
"If the roadshow continues, then we will know what path is being taken."
BNP Paribas economist Jeffrey Schultz cautioned that axing Gordhan or Jonas - or both - could have an adverse effect on the rand, fixed income markets and equities – especially financial indices.
“It could also see South Africa downgraded to ‘junk status’ earlier than expected,” he warned.
No show for SA roadshow
Treasury announced over the weekend that Gordhan, Jonas, Treasury director general Lungisa Fuzile and business and labour representatives were to meet credit rating agencies and investors in the United Kingdom and the United States.
The delegation was meant to spend a total of five days in London, Boston and New York.
This international roadshow follows similar events held last year where Team South Africa, made up of government, labour and business, was able to convince credit rating agencies and investors that they were working together to tackle structural challenges facing the country.
READ: As Guptas head to court, Gordhan flies off to sell SA overseas
Treasury said on Saturday the "non-deal international investor roadshow" follows extensive engagements by senior officials with domestic investors after the tabling of the 2017 National Budget in February.
“Treasury has a consistent and long-standing strategy of engaging investors on a regular basis," it said in a statement.
"The purpose of this is to provide an update on the most recent developments, engage constructively with investors and share government's thinking behind its' latest policy proposals,” Treasury explained at the time.
