Zuma haemorrhaging the economy, warns BLSA

Cape Town - President Jacob Zuma and the African National Congress must act decisively to stem the economic fallout from his wholesale Cabinet reshuffle, said the Business Leadership South Africa (BLSA) on Friday in a strongly-worded statement.

BLSA is an independent association whose members represent South African big business leadership and major multinational investors.

"While we acknowledge that the makeup of the Cabinet is the President’s prerogative, last night’s decision and how it was taken has severely damaged investor confidence and will negatively impact private investment in the economy."

It reiterated its belief that the manner and timing of the Cabinet changes are not in the economic interests of the country.

"We strongly condemn the action. It is irrational, ill-timed and completely disregards the national interest," it said.

"The President needs to explain why he removed some of the best performing ministers, while leaving in place those who have underperformed."

Zuma fired Pravin Gordhan and Mcebisi Jonas, who have both been lauded as excellent leaders. However, Zuma kept in his Cabinent Faith Muthambi and Bathabile Dlamini, who have faced severe criticism over a lack of oversight and inefficiency.

"Until a plausible explanation is provided there will continue to be speculation that these decisions were influenced by external parties with an agenda unrelated to the interests of South Africa and its citizens," said BLSA.

For the past year, the National Treasury, labour and business, under the guidance of Gordhan, had forged a common purpose, which was beginning to yield positive results. This strategic partnership had helped South Africa avoid a credit downgrade, which would have threatened the viability of the country’s public expenditure programme, including one of the largest social welfare programmes outside the developed world.  

"All of this this is now once again in jeopardy," said BLSA. "All South Africans, and especially the poor, will suffer as a consequence."

The costs of South Africa’s bonds have already increased and the rand has fallen sharply.

"The loss of investor confidence will constrict private investment, thus adding to the millions of jobs that have already been lost under his (Zuma's) tenure," warned BLSA.