Pravin Gordhan is to Compensate for Zuma's Blunder

After making a monumental error in firing Nhlanhla Nene as Finance Minister, bringing about a crash of the Rand against all other currencies and a collapse of world business confidence in South Africa, Jacob Zuma has now fired the unknown he put into the top ministerial position in his government and reinstalled Pravin Gordhan.  No doubt he is hoping that Gordhan will restore South Africa to the luster it once held in the eyes of the investment world.

There is some hope that this may work, to a small extent, but it is clear that huge and long-lasting damage has been done.  The world has now had solid evidence that South Africa is run at the whim of a capricious and solely self-interested man.  The only reason for the change back to what might be perceived as competent leadership of the Finance portfolio can be that Zuma was facing a revolt from his multitudinous Cabinet Ministers, all of whom, no doubt, understand that the huge salaries and perks they enjoy were finally on the line.  Zuma’s arrogance in making the announcement of Nene’s firing, and the subsequent comments by Minister Radebe that ‘the President is entitled in his discretion to appoint and replace Ministers’ must have long-term consequences throughout the international investment community, and his hasty back-stepping is almost as weak as his original decision.  Gordhan must have been involved in the discussions (if indeed there have been discussions) regarding the acquisition of the new Presidential aircraft and regarding the ongoing support of the Board of SAA in the face of the continued illegality of the racialist and economically retrogressive policies it is pursuing.  Gordhan was at the helm at the time that Zuma was bleeding the poor of the country dry to fund the monument to his ego that is Nkandla, as well as during the build-up to the undoubtedly corrupt Russian nuclear deal.  He held the portfolio at the time that Eskom was building down to the near-collapse of the electricity supply of the country.  He was instrumental in providing continuing funding to the frequently-insolvent SAA.  He was the head of the South African Revenue Services at a time that it was involved in corrupt and illegal activities.  It would be folly to assume that Gordhan will suddenly see the light and reform his ways to become the sort of honest politician that South Africa deserves.  It is much more likely that Zuma has grasped at the Gordhan straw for two reasons:  Gordhan has gained a reputation for his ability to squeeze the last drop of blood out of the diminishing taxpayer base, and he has some reputation at least for being one of the best of a series of incompetent Ministers of Finance. 

Unfortunately, the ability to squeeze tax out of the public is one of the least desirable qualities needed in the South African Government, particularly at a time of galloping collapse of the economy.  Remember the smirk on Gordhan’s face when he announced that the Budget had, for the first time, exceeded one trillion Rand?  It did not seem to occur to him that the removal of that huge sum of money from economic use, to be applied to buying the votes of the bloated and ineffective Civil Service and undertaking projects that would most easily bleed off funds to the ANC and the Party favorites, would hasten the economic decline that the ANC seems to have been determined to achieve.  Gordhan’s return to the post seems to be a warning to taxpayers that the squeeze will be tightened dramatically, if the questionable solvency of the country is to be retained, at least in the short term, until the miracle occurs that the ANC hopes will pull it back from the brink.  It seems also to be a warning, if such is still needed, to all businesspersons that the downward spiral of the country will continue, increasing in steepness year by year.  The move toward China and Russia will continue, at the cost of worsening relations with the West, from where most of the country’s foreign funding flows (for the present – the future in that regard seems bleak).  The move to favor Blacks in every way, regardless of their ability to contribute effectively to the economy, will continue, regardless of the very clear injunction in the Constitution to treat every South African equally, regardless of race.

The recent days have demonstrated very clearly that Jacob Zuma, and by implication, the ANC, are prepared to sacrifice South Africa, all South Africans, to feather their own nests.  They are willing to pursue their lunatic and discredited economic and social policies, regardless of their patently negative effects.  One can only hope that the investors who, in the past have been willing to overlook the many failings of the country in the interests of gaining an extra 1% on their money, perhaps influenced by the lingering view that the South Africa that Nelson Mandela aspired to still exists, will now see that the country is managed by a kleptocracy.  If those investors wish to support the dream of Mandela, they must understand that their best hope is to withhold investment in the country until economic sanity once again prevails.