Last week, at about lunchtime on Wednesday, my iPhone quietly dropped out of cellphone data signal – and it didn’t get it back until mid-morning yesterday. While the rest of South Africa had a sheer roller-coaster ride of a week, dicing close to the edge with soaring bond yields, crashing currencies, and rumours of a Ramaphosa resignation, I had a quiet weekend of fishing, game-watching and G&Ts. Oblivious.
And in the meantime:
Just to orientate myself, here is the rough timeline of events:
- On Wednesday evening, President Zuma came out and declared “I have decided to remove Mr Nhlanhla Nene as Minister of Finance, ahead of his deployment to another strategic position. … I have decided to appoint a member of parliament, Mr David van Rooyen, as the new Minister of Finance. … The new deployment of Mr Nene will be announced in due course.“
- That is:
- The Rand tumbled 18 percent; the ratings agencies downgraded the banks; banking shares lost 25% of their value; and the markets engaged in a little blood-letting.
- On Thursday, Mr Zuma told an audience of business people that he does not believe in the laws of supply and demand.
- <insert pause here for that to sink in>
- And instead, he believes that the value of a good is rather determined by the total amount of labour required to produce it #MarxianLabourTheoryofValue
- <insert long pause for sigh of disbelief>
- Rumours of a full cabinet reshuffle started circulating.
- President Zuma’s office released an official statement declaring: “Misguided speculation of this nature is mischievous and misleading. We urge that Cabinet be afforded the necessary respect and space to work.”
- Clearly at this point, the Office of the Presidency decided that they should address all the rumours.
- Jeff Radebe had confirmed that Cabinet did not know about Mr Nene’s “redeployment” prior to the announcement.
- So the President’s Office released another statement about cabinet reshuffles:
- Then there was the rumour that went something along the lines of “President Zuma is romantically involved with SAA Chairwoman, Dudu Myeni. And because Mr Nene was refusing her an SAA bailout due to all the no public money, he got booted. #ModernRomance”
- So a fresh public statement was released to explain Mr Nene’s removal: “The urgency of the changes in the leadership of the National Treasury was occasioned by the need to send nominations to Shanghai, of the head of the African Regional Centre of the New Development Bank/BRICS Bank, to be based in Johannesburg. Mr Nene is our candidate for this position. We are fully backing his candidature, knowing full well that he will excel and make the nation proud in his next assignment.”
- Then someone in the Office decided that the rumour mill still had too much grist, so yet another statement was released with the saucy title “Presidency corrects malicious rumours about SAA, National Treasury and Ministerial deployments”
- Over the weekend, rumours of a Ramaphosa resignation started circulating. People commented on the seeming lack of support for President Zuma from COSATU and the SACP.
- Julius Malema got involved: “No one in the world will trust a political leadership that changes cabinet and finance ministers like underwear.”
- The #ZumaMustFall campaign built up momentum on social media (naturally – I mean, talk about poor timing).
- Apparently, the pressure was really hot behind the scenes. Because then, Sunday, yet another new statement from the President’s Office:
- #SighsofRelief as the Rand recovered and the market stabilised.
So I have a silver lining here.
There has been a lot of chaos in the last week. And it has been damaging – even if the Rand has recovered some, the point is that the currency is now weakened just as the Federal Reserve is expected to announce a rate hike, and in the same weak that the ratings agencies are basically announcing their intention to downgrade South Africa to junk status. I mean, the timing almost could not have been more terrible.
However. For all that, and possibly even because of that, the Office of the President has been firmly checked – if not initially from within his own party, certainly by public protest. And now, Pravin has quite a strong mandate to continue with the public finance discipline that both he and Nene started – while Mr Zuma has been left apparently vulnerable.
And I think that has to count for something. The time period between the start of public protest and the political concession to it is shortening. With #FeesMustFall, it was a matter of weeks. With #ZumaMustFall, it was a matter of days.
It’s just a hope.
For more, I recommend these articles:
And, as always, the great ZAR podcast, with this episode: The Sacking of Nene.
Rolling Alpha posts about finance, economics, and sometimes stuff that is only quite loosely related. Follow me on Twitter @RollingAlpha, or like my page on Facebook at www.facebook.com/rollingalpha. Or both.