*Sacking Of Finance Minister
Nene Shakes South African Confidence
South Africa's rand dropped to historic
lows Thursday after President Jacob Zuma sacked his respected finance minister
in a move that triggered widespread fears about the country's economic outlook.
South Africa has faced
mounting financial problems in recent years, with unemployment at over 25
percent, slowing GDP growth and power cuts hobbling industry.
GRAPHITTI NEWS/AFP report continues:
Zuma
fired Nhlanhla Nene late Wednesday without giving any reason, and replaced him
with David van Rooyen, a little-known lawmaker from the ruling Africa National
Congress (ANC) party.
"We
view this as profoundly negative," Peter Montalto, an analyst at Nomura,
said in a scathing criticism of the president.
"The
removal of a technocratically sound, decent, hardworking, well respected,
fiscally conservative and reform-minded Finance Minister is a serious
blow."
Montalto
said Nene's surprise sacking appeared to be because he publicly slapped down a
move by state-owned South African Airways (SAA) to renegotiate a plane-leasing
deal with Airbus.
Nene,
who was appointed in 2014, has also criticized the affordability of a nuclear
plant building programme.
Both
projects are seen as being controlled by Zuma loyalists, who are regularly
accused of using their influence to benefit from government contracts.
Nene's
removal came less than a week after South African debt was moved closer to
"junk" status by rating companies, which highlighted growth predicted
at a sluggish 1.4 percent this year, and rising interest and inflation rates.
Falling
commodity prices have also added pressure to the country's key mining sector.
"Mine
is a colossal assignment coming at a time when the global economic outlook is
not favourable, especially for emerging markets," Van Rooyen said after
being sworn in.
"All
economic indicators are pointing to the south," he added, vowing to
attract investment "leading to the development of South Africa for all
South Africans, not for the few."
The
rand, which has declined sharply during the year, dropped a further five
percent immediately after Nene's removal, hitting a record low of 15.3857 to
the dollar.
Late
Thursday afternoon, it was trading at 15.31 to the dollar.
- 'In a crisis' -
"We
are in a crisis, and (Zuma) decides to get rid of the finance minister, and
replace him with somebody without any experience," Dawie Roodt, economic
analyst at Efficient Group, told AFP.
"That
is a very irresponsible thing to do.
"It
sounds like a personal decision, not a decision meant for the wellbeing of the
country. We have a president who cares very little about the damage caused by
his actions."
Mmusi
Maimane, leader of the main opposition Democratic Alliance party, told AFP that
Nene's sacking "has everything to do with his criticism of parastatal
companies (like SAA)."
"Zuma
has proven he's a president ready to destroy the economy for his own
game," he said.
Fitch
Ratings issued a statement saying Nene's firing "increases uncertainty
about fiscal policy and contingent liabilities from state-owned
companies."
"The
(personnel) change would be relevant to our sovereign rating assessment if it
led to a loosening of fiscal policy," it added.
Zuma, a
former Robben Island prisoner alongside Nelson Mandela under apartheid, came to
power in 2009 when he was hailed as a charismatic, down-to-earth leader.
But his
rule has been tarnished by corruption scandals and growing anger among young
South Africans that the benefits of the post-apartheid era has only been
enjoyed by small elite within the ANC.
He has
often blamed the country's economic woes on the legacy of white-minority rule
that ended in 1994, and the global decline in prices for platinum, gold, coal
and other mineral resources.
Zuma is
due to stand down in 2019, with deputy president Cyril Ramaphosa and Nkosazana
Dlamini-Zuma, Zuma's former wife and the head of the African Union commission,
leading the field to succeed him.
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