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Africa

Market uncertainty greets new South African finance minister

South African Finance Minister Nhlanhla Nene has been replaced by inexperienced ANC backbencher David van Rooyen. The announcement comes at a critical time for the country's economy.

South African finance markets were in turmoil on Thursday (10.12.2015) following the surprise sacking of Finance Minister Nhlanhla Nene which saw the rand fall to a record low. By midday it had reached 15.10 to the dollar and 16.52 to the euro, with analysts predicting it would fall still further as investors digested the news.

Making the announcement on Wednesday evening, President Zuma gave no reason for the sacking. He said Nene had "done well since his appointment as minister of finance during a difficult economic climate." Nene is to be transferred to "another strategic position." Zuma said, without immediately specifying what that position would be.

Independent political analyst Daniel Silke told DW that Nene's most serious error of judgment may have been "to be quite strong with his own government in relation to excessive and wasteful expenditure." He may also have "run foul of his political masters over issues of support for some of the ailing state-owned enterprises, particularly South African Airways (SAA)," said Silke.

former finance Minister Nhlanhla Nene

Nhlanhla Nene was keen to curb excessive expenditure

Nene recently prevented SAA from renegotiating a plane-leasing deal with Airbus. SAA board chairperson Dudu Myeni is a close friend of President Zuma.

Nene also criticized the affordability of a nuclear plant-building program intended to ease electricity shortages.

Inexperienced successor

Zuma's announcement that member of parliament and long-time ANC member David van Rooyen would succeed Nene as finance minister came as a surprise. Silke described van Rooyen as "a career politician and party apparatchik." He was doubtful whether the 47-year-old back bencher had the "necessary experience and gravitas needed for the position of finance minister in a very complex environment."

Opposition parties have been blunt in their response, describing Zuma’s decision as uninformed and politically motivated. Mosiuoa Lekota, president of the Congress of the People party, criticized the timing of the move.

"Precisely at this vey sensitive moment, the president takes another reckless act that can only deepen the crisis in which we find ourselves by eating away at the confidence of the international community," Lekota said.

Buildings in Johannesburg

The South African economy is under pressure on several fronts

News of Nene's dismissal came just days after rating agencies reviewed South Africa's debt which they set at just one notch above junk status. Apart from fiscal concerns, the South African economy generally is under pressure. Unemployment currently stands at more than 25 percent. The country narrowly avoided slipping into a technical recession in the third quarter of this year, growing by just 0.7 percent after contracting in the second quarter.

"Instability in the finance ministry and the lack of policy clarity that this clearly represents doesn't bode well for remaining above junk bond status," Silke said.

How the new minister tackles the wealth of problems and which initial measures he takes will show whether he is a political lackey or an independent thinker, Silke told DW, adding that at this stage, it looks as if Van Rooyen "will rather bow down to official policy."

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