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South Africa’s President Fires Finance Minister Pravin Gordhan South Africa’s Currency Tumbles After Finance Minister Is Fired
(about 20 hours later)
JOHANNESBURG — South Africa’s president has replaced his finance minister in an expected move that had spooked investors this week and sent the country’s currency tumbling. LONDON — The abrupt firing of South Africa’s finance minister sent the country’s currency tumbling on Friday, deepening a split within the governing African National Congress and raising new doubts about the tenure of President Jacob Zuma, who has been in office since 2009.
President Jacob G. Zuma’s replacement of his finance minister, Pravin Gordhan, was announced early Friday, and it comes as part of a cabinet shuffle that changes 10 of the country’s 35 ministers. The dismissal of the finance minister, Pravin Gordhan, part of a late-night cabinet reshuffle in which 10 of 35 ministers were fired, sent the currency, the rand, plummeting as much as 5 percent at one point. The cost of borrowing for the government jumped, amid fears that rating agencies would downgrade South Africa’s government bonds to junk status. The leading opposition party vowed to challenge the dismissal of Mr. Gordhan in court.
Pressure has been growing on Mr. Zuma to step down after he recalled Mr. Gordhan, who has a strong reputation as a bulwark against corruption, from a trade trip in London earlier this week. The president’s recall of Mr. Gordhan caused South Africa’s currency, the rand, to lose nearly 5 percent, another blow to the country’s economy, which has stalled amid high unemployment. Africa’s most industrialized economy, South Africa is projected to grow 0.8 percent this year, and unemployment is 27 percent. But Mr. Gordhan was seen as a bulwark against corruption and a responsible steward of public finances.
Many South Africans had viewed Mr. Gordhan as a responsible steward of an economy facing possible credit rating downgrades. Mr. Zuma’s decision to fire Mr. Gordhan has exposed bitter rifts within the A.N.C., the country’s dominant political force since the end of apartheid. The deputy president, Cyril Ramaphosa, called the decision “unacceptable.” Mr. Ramaphosa is seen as a leading candidate to succeed Mr. Zuma as the party’s leader in December, along with Nkosozana Dlamini-Zuma, a former chairwoman of the African Union, who is also Mr. Zuma’s former wife.
Frustration has been growing with Mr. Zuma after numerous allegations of corruption. South Africa’s two main opposition parties took aim at the president on Thursday, with one appealing to the country’s highest court to order impeachment proceedings and the other announcing that it would call for a vote of no confidence in Mr. Zuma. Speculation is rife that Mr. Zuma might be compelled to step down before the scheduled end of his second five-year term in 2019, clearing the way for another party leader to take the reins.
On Wednesday, Mr. Gordhan inspired a standing ovation at the funeral of one of South Africa’s leading anti-apartheid activists as longtime leaders of the governing African National Congress, the country’s former liberation movement, called for Mr. Zuma to step down. Mr. Gordhan, who learned of his dismissal from television, defended his record on Friday as protesters gathered outside the headquarters of the National Treasury, part of the Finance Ministry.
Mr. Zuma has selected Malusi Gigaba, a former minister of home affairs, as Mr. Gordhan’s replacement, a statement from the president’s office said. “We hope more and more South Africans will make it absolutely clear that our country is not for sale,” Mr. Gordhan said. “It is important that the public knows what we do at the Treasury, how we serve South Africa, how the budgeting process works and how we make sure that the poor in South Africa benefit from the taxes that we collect from all South Africans, as well.”
The changes were made “in order to improve efficiency and effectiveness,” the statement said. The firing Thursday night capped a week of tensions that began on Monday when Mr. Zuma ordered Mr. Gordhan to return abruptly from a trade and investment roadshow in Britain. As rumors circulated that Mr. Gordhan would be fired, Mr. Zuma summoned top leaders of his party for a meeting. It did not produce consensus, officials have said.
But even allies of the governing party had warned against replacing Mr. Gordhan. Solly Mapaila, deputy general secretary of the South African Communist Party, which is in an alliance with the A.N.C., warned Thursday that the party’s seven cabinet members would resign if Mr. Zuma fired the finance minister. The South African Communist Party, part of the A.N.C.-led coalition that governs the country, said that Mr. Zuma had cited an intelligence report speculating that Mr. Gordhan might be plotting to undermine him. Mr. Gordhan has called the report preposterous.
The cabinet shuffle comes as calls for Mr. Zuma to resign increase. Jackson Mthembu, a senior A.N.C. lawmaker, said that the intelligence report’s accusations were “plain rubbish” and that Mr. Gordhan’s only crime was “incorruptibility.”
“Zuma has bowed to the whims of those who determined to enrich themselves at the expense of the poor & jobless,” the country’s the main opposition party, the Democratic Alliance, said in a message posted on Twitter after the announcement. The party on Thursday said it would call for a no-confidence vote in Parliament. Gwede Mantashe, the party’s secretary general, said the cabinet reshuffle was not done with the party’s approval. “Ministers have been moved, and the majority of them were good performing ministers,” he said.
Also Thursday, the Economic Freedom Fighters opposition party applied to the country’s highest court to order Parliament to begin impeachment proceedings against the president for lying to the legislative body. The leading opposition party, the Democratic Alliance, said it would file an urgent petition in court to halt the firing, but the chances of a successful legal challenge seemed slim.
The E.F.F. called it “a last resort” after Parliament, which is dominated by the A.N.C., had failed in its duty to hold the president accountable, said the party’s leader, Julius Malema. Mr. Zuma, in a statement on Friday, announced that he had replaced Mr. Gordhan with Malusi Gigaba, the home affairs minister. Mr. Gordhan’s deputy, Mcebisi Jonas, was also fired and replaced by Sfiso N. Buthelezi.
Mr. Zuma in November survived an attempt by senior party members to oust him as president. Last year, South Africa’s highest court found that Mr. Zuma had violated his oath of office by refusing to abide by an order to pay back some of the millions of dollars in public money spent on upgrading his rural home. The two new ministers for finance — A.N.C. loyalists active in the party since their youth, and members of Parliament — are “largely unknown to investors,” Morgan Stanley said in a research note on Friday. The note added, “This could create further uncertainty in South Africa’s financial markets.”
Mr. Zuma said that the shake-up — a total of 10 new ministers and 10 new deputy ministers were named — was intended to “improve efficiency and effectiveness” and to “bring some younger M.P.s and women into the national executive in order to benefit from their energy, experience and expertise.”
Mr. Gordhan, after a stint as finance minister from 2009 to 2014, was reappointed to the job in December 2015, after Mr. Zuma abruptly replaced his successor, Nhlanhla Nene, with a little-known junior lawmaker. Mr. Zuma changed that decision four days later, after the rand and the stock market tumbled, and Mr. Gordhan’s return to the job helped reassure investors.
However, Mr. Gordhan has repeatedly been at odds with the president since then. He resisted Mr. Zuma’s push to approve expensive nuclear power plants, and he tried to rein in public spending. He also clashed with a powerful family, the Guptas, who are close to Mr. Zuma and are so influential that Mr. Zuma was obliged to insist publicly last year that he was in charge of his government.
Trieu Pham, a credit analyst at MUFG Securities in London, said there were important differences between this week’s dismissal of Mr. Gordhan and the firing of Mr. Nene in 2015: Mr. Gordhan’s departure, if not the timing, had been expected; his replacement, unlike Mr. Nene’s, is a cabinet minister, albeit one with limited experience in finance; and the rand and stock prices have risen in recent months, allowing some room for maneuver.
“The long waiting time indicates that Zuma has well weighed the factors for and against the reshuffle, and thinks that he has garnered enough support to resist a power struggle and a breakup of the A.N.C.,” Mr. Pham said.