South Africa pays the price for the night of the Iklwa
By Carol Butcher
South Africa has had its own “night of the long knives,” or perhaps it would be more apt to call it “the night of the Iklwa – stabbing spear.”
President Jacob Zuma fired Pravin Gordhan as Finance Minister earlier this week, and Standard & Poor has downgraded South Africa to junk status. Neither event was totally unexpected. Nenegate (December 2015) provided a precedent. We knew the Rand would tumble if the Finance Minister was axed and we knew this would make South Africans poorer.
Nenegate wiped R500bn off stocks and bonds. The impact of South Africa’s downgrade will be felt for years to come. Investment grade pension or provident funds investments are not allowed to invest in jurisdictions with a junk status. The poorest of the poor are those that will suffer the most. The downgrade to junk status will make it increasingly expensive and also difficult for government to borrow.
Best case scenario, Dr. Iraj Abedian, CE at the Pan-African Investment and Research Services predicts a six to ten year turnaround. However, this “best case” scenario, will not happen out of the blue, it will require political and financial changes. We are at the crossroads – will it be scenario: Argentina, which is still repaying debt thirty years later, or scenario: South Korea, which turned things around relatively quickly.
As President, it is within President Zuma’s rights to hire and fire Ministers.
Many South Africans agree there is a need for radical socio-economic transformation. However, whether this is possible in the face of disinvestment and higher cost of borrowing remains to be seen. The working class and the poor may find themselves even poorer. A weaker Rand means everything costs more – clothing, petrol, food.
Government incentives to invest in the country, and tax breaks for job creation, may have yielded far better results for the country as a whole. A relentless drive to get rid of corruption would also increase the funding pool; it would also help our national coffers if President Zuma paid back the R52.9 million cited in Madonsela’s Report.
Many would welcome the appointment of some younger MPs and women into the National Executive “in order to benefit from their energy, experience and expertise.” Here, we are unfortunately on very shaky ground. I could only find the dates of birth for eight of the ten appointees: Minister of Transport, Mr Joe Maswanganyi (51); Minister of Finance Malusi Gigaba (45); Minister of Police, Fikile Mbalula (45); Minister of Public Works, Nathi Nhleko (50); Minister of Sports and Recreation, Thembelani Nxesi (58); Minister of Tourism, Tokozile Xasa (52); Minister of Home Affairs, Prof Hlengiwe Mkhize (65); and Minister of Communications, Ayanda Dlodlo (56).
Some of these candidates may be younger than the Ministers they have replaced, but they are all nevertheless, baby boomers and generation X. Only four of the appointees are women.
The appointment that concerns South Africans most of all is the appointment of Malusi Gigaba as Minister of Finance; this is undoubtedly the most important portfolio of all. Does Minister Gigaba have any work experience in this area, or are his academic qualifications aligned to the portfolio? No, but then the same could be said of former Ministers of Finance, Trevor Manuel and Pravin Gordhan.
Minister Gigaba has told South Africans to “Judge me by my actions in the coming months.” South Africans will certainly do this; it is also something that the markets will do. We can only hope that Minister Gigaba recognises that markets are sentiment-driven.
Where does this leave us? What is clear is that the ANC leadership is divided. Deputy President Cyril Rampaphosa, Secretary-General, Mantashe and Treasurer Zweli Mkhize have all slated President Zuma for axing Pravin Gordhan.
Cosatu affiliates, the SACP and many opposition parties, civil society groups, religious leaders and ordinary South Africans have called upon President Zuma to resign. Opposition MPs are also calling for the President to step down. Labour federations have called for a national shut down on 7th April. In the interim, we wait for Speaker Balkea Mbete to convene a special sitting to debate the motion to remove President Zuma. We do not know at this stage whether this will happen.
Much hangs in the balance for the ANC, opposition political parties and ordinary South Africans. The road ahead is treacherous. Fortunately, King IV provides a roadmap. As a country and as leaders we should strive for four outcomes within the political arena– an ethical culture, good performance, effective control and legitimacy. This is not too much to ask of our country’s leaders.