The political cliché “a week is a long time in politics” has been attributed to former British Labour Party Prime Minister Harold Wilson in the 1960’s reportedly first said at a media briefing for journalists at the time of the sterling crisis in 1964.
After the reaction of the South African voters and financial markets that sent the Rand plunging to record lows of over R16.00 to the US$ and President Zuma’s popularity plummeted he and the ANC will probably ctell you that four days is a long time in politics.
For the first time in South African politics since the introduction of the new democratic order in 1994 we have seen ANC stalwarts joining in the criticism against the President.
The Presidency tried to curb the damage by taking the following actions:
- On Thursday announcing that Nhlanhla Nene was going to take up an appointment at the BRICKS Bank. He then tried to blame China saying that the nomination had to be sent to Shanghai urgently.
He did not explain why he had not discussed it with his cabinet colleagues a few hours earlier.
- On Friday it was announced that “The implementation of the National Development Plan remains the cornerstone of our economy. We will continue our actions in alleviating the most binding constraints to growth and we have set out a series of urgent economic reforms to build a more competitive economy.” Zuma added that to support the economy, government would be committed to sustaining public sector capital investment, by attracting private sector capital into public infrastructure projects.
- In desperation on Saturday they announced that Nene was not fired because of the SAA deal and also that there was no romantic relationship between Zuma and the Chairperson of the SAA Dudu Myeni. “Her relationship with the president is purely professional, and is based on the running of the (Jacob Zuma) foundation. Rumours about a romance and a child are baseless and are designed to cast aspersions on the president,” according to the statement.
By Sunday evening the criticism had reached a crescendo and Zuma had to back down from his ill-conceived and irresponsible decision on Wednesday to fire Nhlanhla Nene. He therefore appointed Pravin Gordhan as Minister of Finance. Within an hour the Rand had recovered by 80 cents.
In announcing the appointment Zuma tried to salvage some dignity and released a statement in which the president said that after making the decision to replace former finance minister Nhlanhla Nene with the little known Van Rooyen, he had “received many representations to reconsider my decision. As a democratic government, we emphasise the importance of listening to the people and to respond to their views,” Zuma said.
However, a few hours earlier while addressing the ANC Mpumalanga provincial congress the president was joking in a speech to the delegates saying that they must not listen to his critics on television because it is “all blah blah blah’!
David van Rooyen’s appointment will surely go down as the shortest cabinet appointment in history – four days.
I can imagine how President Zuma must have handled the situation on Sunday evening when he had to speak to both van Rooyen and Gordhan. The conversation probably went something like this:
Zuma: Heh heh heh Comrade Des, these neoliberals with their white monopolistic capital heh heh heh have put pressure on me so I am going to promote you to Cogta and demote Pravin Gordhan to Finance. Heh heh heh I don’t know how to stop my laughter. Is it hurting?
Van Rooyen: Thank you Comrade President, thank you anything you say Comrade. As a loyal ANC cadre I will accept any deployment with a good salary.
Zuma: Heh heh heh Comrade Pravin, these white neoliberals with their monopolistic capital heh heh heh have put pressure on me so I am going to promote you back to the Minister of Finance because I need a loyal trusted cadre like you to save our glorious movement. Heh heh heh I don’t know how to stop my laughter. Is it hurting?
Gordhan: Yes Comrade President but you must realise that I cannot agree to all your expenditure and I will not take orders from your girlfriends.
Zuma: Heh heh heh yes comrade but just save my career I need a few more years to finish Nkandla and to arrange some more tenders for my family and the Guptas. Heh heh heh I don’t know how to stop my laughter. I will always laugh.
Monday saw Gordhan addressing the media at 13:00 to try and reassure South Africa and the world that the country’s finances were on an even keel once more – but will this be enough – I doubt it.
Gordhan made the following points:
- Our currency fell, the stock market dropped by 2.94 per cent and bond yields shot up by over 150 basis points. Our government is acutely aware of the financial impact this had on those who are invested in this economy;
- We will stay the course of sound fiscal management. Our expenditure ceiling is sacrosanct. We can have extra expenditure only if we raise extra revenue. We will unreservedly continue our fiscal consolidation process and we will stabilise our debt in the medium term;
- I want to be very clear: we will not cut pro-poor programmes, growth inducing programmes and investment. Instead we will seek to increase investment in the 2017 Budget.
- We are going to redouble our efforts to ensure efficiency of expenditure across the public service. New measures are being put in place to contribute to reducing corruption and enhancing transparency and these will be complemented by stern enforcement
- We have been clear that one of the risks to our fiscal framework is the financial state of State-Owned Companies. Let me emphasize that any support to these companies will be done in a fiscally sustainable manner. As President Zuma said “no state-owned entity will dictate to government how it should be assisted and nothing will be done that runs contrary to the fiscal prudence that our country is renowned for.”
Gordhan stated that “It’s time that individuals or groups of individuals stop playing with state entities, whether they are SOCs [state-owned companies] or other government components as if it’s a personal toy from which you can extract money when you feel like.”
Pravin Gordhan is making all the right noises just what the markets want to hear. However, the proof of the pudding is in the eating. Will he be able to withstand the pressure?
He must be reminded that he still has to deal with Jacob Zuma’s three problematic women appointees who for some reason seem to have undue influence over the president:
- Tina Joemat-Pettersson MP the Minister of Energy still hell bent on a Nuclear Procurement Programme.
- On Wednesday the Cabinet approved the start of the nuclear procurement programme, clearing the way for the Department of Energy to call for proposals to provide SA with 9.6GW of nuclear power without first doing a cost-benefit analysis.
It is known that Nhlanhla Nene was opposed to this approach. In my opinion irrespective of what the ANC says as to why Nene was fired I believe that he probably opposed the decision and in a fit of anger Zuma decided to fire him. The programme is controversial as several independent studies have found that the cost of new nuclear energy will be greater than energy produced by other technologies.
- Communications Minister Faith Muthambi continues to run the SABC into the ground. She wastes money on appealing court cases in support of the COO Hlaudi Motsoeneng. She is reported to have said “But Baba (Zuma) loves him (Hlaudi Motsoeneng), he loves him so much. We must support him.”
- Chairperson of SAA Dudu Myeni will no doubt continue to be problematic interfering in the management of the Airways as its losses continue to rise and have risen from R2.2billion in 2013 to R4.8billion in 2014. There is no indication that 2015 will be any different.
- Myeni’s interference in management has meant that the SAA is on its sixth permanent or acting CEO in three years. She is also at odds with the SAA Pilots Association by publicly stating that they are overpaid.
- Currently the Hawks have announced that they intend to probe charges of corruption and the irregular closure of routes by the airline
At this rate the SAA is going to need a further bailout from Pravin Gordhan.
Over and above these three challenges the new Minister of Finance has to find the money to pay for the decision to suspend the university fees increase for next year estimated at about R2.8billion. Having now tasted success it is inevitable that in the New Year we are going to have renewed calls for Free education for all. After all this is ANC policy according to President Zuma. No doubt in an election year he will be pliable and agree to it at an additional cost of R71billion per year.
On Friday the Minister of Health Aaron Motsoaledi release a government white paper on the proposed National Health Scheme.The NHI will require a monumental amount of money. According to the White Paper an additional R71.9 billion taken at 2010 prices will be required by 2025/2026. To fund it will require additional taxes under circumstances where citizens are groaning under the strain of low growth, unstoppable large-scale plundering of state resources and assets, a growing and unsustainable debt to GDP.
Not surprising Motsoaldi said we should not focus on the cost of the scheme. Little wonder because it will probably require a 4% increase in the rate of tax. Government opposes an increase in vat because it will hurt the poor. Therefore the 1million taxpayers who pay 70% of the income tax will have to carry the bill. Ironically, those who are paying for the scheme will, according to the proposal, also lose their right to pick the doctor or hospital of their choice.
Gordham and the ANC will be wise to remember what Winston Churchill had to say about tax increases:
“we contend that for a nation to try and tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle”
As well as Margaret Thatcher on Socialism:
“the problem with socialism that eventually you run out of other peoples money” or;
“there is no such thing as government money it is all taxpayers money”
Not with standing all the current financial challenges Gordhan still has to deal with the investment deterring bills passed by parliament awaiting Zuma’s signature viz: the Private Security Bill; the Promotion and Protection of Investment Bill; The Secrecy Bill. If signed into law the laws will in all probability lead to a further flight of foreign capital. Will Pravin Gordhan be able to control the president and his cabinet colleagues?
Today’s ANC media briefing left more questions unanswered than it answered. Once again the ANC are putting the interests of Zuma and the ANC ahead of South Africa. Immediately after the media conference the Rand depreciated to above R15 to the US$ again.
The ANC that released a statement late Wednesday night that “The African National Congress notes and respects the decision of President Jacob Zuma to appoint a new Minister of Finance … The president has exercised his Constitutional prerogative.” No welcoming of the decision.
After a lengthy briefing on Friday which made no mention of the firing, Minister Jeff Radebe was asked: “Did the president give any indication that the finance minister would be replaced?”
Radebe replied “Speaking for myself, I don’t think Cabinet had any idea that there was going to be a reshuffle.”
Health Minister Aaron Motsoaledi stated on television the same evening that he knew nothing about the cabinet appointment
However today it was said that the ANC new about it about six weeks ago.
If this was true why did Zuma not announce Nene’s appointment to the BRICS bank on Wednesday night but rather wait until the markets collapsed and only announce it on Friday night?
So which version is true?
The ANC now sings Zuma’s praises “The president’s willingness to change an earlier deployment in the face of our sluggish economic climate and representations from role player’s demonstrated bold leadership, bringing certainty and assurance in the finance portfolio.”
However, a good leader would have consulted all role players prior to announcing the appointment of a total outsider with no experience as Minister of Finance.
Deputy ANC Secretary General Jessie Duarte stated on television today that “We knew that there would be a fall out from the appointment of van Rooyen, we were a bit worried about his age”
Worried about his age but not his credibility? Come on!
This begs the question why did the President not brief the media on Wednesday prior to the announcement of the cabinet change? This is the procedure in most democracies.
But no we have an arrogant President and governing party that treat the voters as fools; they will one day learn the lesson of Richard Nixon and Watergate – that initial deed is not the problem it is the subsequent cover up – that is why Nixon had to fall.
An interesting question that is not fully answered is – where was Deputy President Cyril Ramaphosa? He has not been seen or heard of during the whole episode. The ANC says that he has been with them since Friday, but it was noticeable that he was not at van Rooyen’s swearing in as he was not at today’s media briefing.
I would assume that he is caught between a rock and a hard place. If he is seen to have approved of the fiasco he would lose creditability with the markets, business and the general public. However if he is seen to be opposed to it he will lose support in the ANC. So the best option is to go incognito and pretend that nothing is happening.
Hopefully in next year in the local government election the voters of South Africa will turn out in large numbers and send a clear message #ZumaMustFall!
My best wishes to the thousands of people marching today in support of #ZumaMustFall
Until next time,
This newsletter is published by Clive Hatch former Leader of the Opposition in the Mpumalanga Provincial Legislature and former DA Provincial Leader. These views are my personal views and do not represent those of any other person or organisation.