Reuters logo
South Africa's Gordhan breaks off roadshow, says he's still finance minister
March 28, 2017 / 9:56 AM / 6 months ago

South Africa's Gordhan breaks off roadshow, says he's still finance minister

JOHANNESBURG/PRETORIA (Reuters) - South African Finance Minister Pravin Gordhan abandoned an investor roadshow and flew home on Tuesday on the orders of President Jacob Zuma, triggering speculation about his future that weakened the country’s currency and bonds.

Gordhan, widely seen in financial markets as a guarantor of stability, said “yes” when asked by a reporter if he was still the finance minister - a comment that helped trim the rand’s losses to 1 percent against the dollar.

“I think ask the presidency,” he said when asked if he knew why he had been summoned home.

Zuma’s sudden recall cut short Gordhan’s roadshow in Britain and the United States, triggering jitters that a long-running power struggle between the two men was coming to a head and might threaten more turmoil for Africa’s most developed economy.

Talk Radio 702 said Gordhan’s dismissal had been discussed on Monday at talks between Zuma and the South African Communist Party, allies of the ruling African National Congress (ANC).

ANN7 television said the six most senior members of the ANC had approved Gordhan’s removal, citing unnamed sources. ANC Secretary-General Gwede Mantashe, one of the six, told Reuters he could not comment on the report.

On arrival, Gordhan went to the ANC’s Luthuli House headquarters in downtown Johannesburg. He then went to a court in the capital Pretoria where he attended a hearing of a case concerning the closure of bank accounts belonging to friends of the president, the Gupta brothers. The case has long been a bone of contention between Zuma and his finance minister.

“The president is my boss so if he asks us to come back, we come back,” Gordhan said.

“There are many in government who want to do the right thing and make sure we keep our economy on track and keep our development moving in the right direction,” he added, without elaborating.

The National Treasury said in a statement that investors at the roadshow, whose U.S. leg was cancelled on Zuma’s orders, were concerned about the political environment at home.

“Investors expressed concerns about the political environment and the risk that it could divert attention from setting policies aimed at accelerating growth and creating more work opportunities,” the Treasury said.

South Africa's Finance Minister Pravin Gordhan walks with his deputy, Mcebisi Jonas as they walk from their offices to a court hearing in Pretoria, South Africa, March 28, 2017. REUTERS/Siphiwe Sibeko

POINT OF NO RETURN?

Some pundits say Gordhan is being pressured by a faction allied to Zuma, which has criticised his plans to rein in government spending as the economy stagnates and rapped his running of the tax agency. Gordhan has wrangled for months with the head of the agency, a Zuma ally.

“We now believe Mr Zuma has reached his own point of no return and will now push his agenda to get rid of Mr Gordhan without regard for the cost or consequences,” said political analyst Gary van Staden of NKC African Economics.

Slideshow (2 Images)

Capital Economics Africa economist John Ashbourne said in a note: “Were Pravin Gordhan to actually be removed, we think that the rand could fall by another 5 percent against the USD.”

The main opposition Democratic Alliance party asked Zuma to explain why he had ordered the minister home. “Why does he simply not tell South Africa?”, it said in a statement.

Gordhan first served as finance minister from 2009 to 2014 and was brought back by Zuma in December 2015 to calm markets spooked by the president’s decision to replace his respected successor, Nhlanhla Nene, with a little-known politician.

South African media reports suggest Zuma and Gordhan have an uneasy relationship, though the president has denied they are “at war”.

Zuma has come under mounting political pressure since South Africa’s anti-graft watchdog called last year for a judge to investigate allegations of influence-peddling in his government, in particular allegations that brothers Ajay, Atul and Rajesh Gupta wielded undue influence over the president.

Zuma says the Guptas are his friends and denies there is anything improper about the relationship. The brothers have denied any wrongdoing.

The court case Gordhan attended on Tuesday concerns repeated requests by the Guptas that he intervene to help reverse a decision by major banks to close some of the business accounts of the brothers’ Oakbay Investments.

Gordhan argues it is inappropriate for the finance minister to get involved between a bank and its clients and has asked the High Court to rule that he has no power to interfere in the banks’ decisions.

Additional reporting by Olivia Kumwenda-Mtambo, Olwethu Boso, TJ Strydom, Tanisha Heiberg and Joe Brock in Johannesburg and Siyabonga Sishi in Pretoria; Writing by James Macharia; Editing by Jon Boyle and Mark Trevelyan

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below