Against the advice of allied parties, trade unions, business leaders, investors, and various political leaders, President Jacob Zuma “reshuffled” the South African cabinet on March 30, firing several ministers and deputy ministers without consulting other members of the executive. Zuma ostensibly made the changes to improve efficiency and to bring more women into the National Executive, but it is clear to most observers that Zuma’s reshuffle was actually a strategic move to protect his increasingly unpopular presidency against opponents in the cabinet. Ratings agencies responded to political instability by downgrading South Africa’s credit rating to junk status, which will have dire economic consequences for South Africans. Of all his personal and political scandals, Zuma’s most recent consolidation of political power at the witting expense of South Africa’s development should be the final straw. In the upcoming vote of no confidence, parliament must vote no to further rule by a politician who has defiled the democratic institutions that South Africans fought for decades to build.
The most significant change in Zuma’s unpopular cabinet reshuffle was the axing of his Minister of Finance, Pravin Gordhan. Gordhan has led the crusade against government corruption and spent his term defending the Treasury against alleged looting by Zuma and his cronies, and fighting against a threatened downgrading by ratings agencies. Gordhan became Minister of Finance for a second time after Zuma shockingly fired the previous Minister, Nhlanhla Nene, in December 2015, and replaced him with ANC backbencher David van Rooyen. The sudden removal of Nene, a respected leader, left the South African stock market reeling, with the FTSE/JSE all-share index falling 2.94 percent and the FTSE/JSE banks index dropping 18.54 percent. South Africa’s currency, the rand, fell to the lowest levels in history against major currencies, losing 5.7 percent against the dollar overnight. Under heavy pressure from business and political leaders to reverse his decision, Zuma axed Van Rooyen and re-appointed Gordhan, Nene’s predecessor, giving South Africa its third finance minister in five days.
Gordhan took a hardline stance against corruption from the outset of his second tenure as finance minister, putting him at odds with President Zuma. Zuma is suspected of having a penchant for illegal activity, and has against him 783 charges for fraud, corruption, and racketeering. Like Nene before him, Gordhan blocked exorbitant government expenditure on unprofitable state-owned enterprises run by Zuma’s friends, blocked awards of tenders to Zuma’s patrons, and stalled a $60 billion nuclear deal with Russia that would have likely bankrupted the country while rewarding Zuma handsomely through construction tenders awarded to his family members. In short, Gordhan was incorruptible, and that might have been a fundamental reason for his fall-out with Zuma and subsequent ousting.
Zuma has made many attempts on Gordhan’s political life. Rumors surfaced in May last year that Gordhan would be arrested, and in August, he was asked to submit himself to a special investigation unit of the South African Police, apparently to be charged with setting up a rogue spy unit during his time as head of the South African Revenue Service. Gordhan did not appear before the police, saying the allegations were unfounded. The baseless claims for his arrest led many to speculate that the police were under the influence of Zuma, who was on the warpath against Gordhan. Markets responded to the uncertain future of South Africa’s Minister of Finance, with the rand falling sharply against the dollar and ratings agencies threatening to cut credit ratings.
While both Gordhan and the economy survived last year’s uncertainty, neither could win against Zuma’s most recent show of unchecked power. Zuma’s unilateral decision to remove Gordhan from the cabinet will have myriad implications for the economy, both in the short-term and in the years to come. In the week after Gordhan’s firing, the rand fell 13 percent against the dollar. Standard & Poor’s lowered its credit rating on South African dollar-denominated government debt to “non-investment grade,” which is more commonly referred to as “junk.” Fitch followed suit, with an even more negative outlook that included rand-denominated debt in its downgrade.
A credit downgrade is the major bullet that South Africa has been trying to dodge for over a year; the consequences of a rating cut to junk status will wreak havoc on the economy. Many international funds are not allowed to invest in non-investment grade bonds and will be forced to sell South African government bonds. This will make it harder for the government to spend, as money will be used to pay off guaranteed debt, which is equivalent to 7 percent of national economic output. It will also squeeze the government’s ability to finance its debt in the future, as the high risk of default will raise interest rates on South African government bonds and therefore make it more expensive for South Africa to borrow money on international markets. The downgrade will likely decrease domestic access to credit and raise interest rates in the long run, which will make home loans and vehicle payments more expensive for the middle and upper classes. Furthermore, if the rand stays low or continues to weaken, this will raise the price of imported goods, affecting the poor the most.
‘The president’s decisions are a frightening example of a leader who has continually shown his profound indifference to the economic health of South Africa.’
Worst of all, the pitiable predicament in which South Africa now finds itself could have been avoided. Every time a finance minister has been threatened in the past two years, the rand has dived, investors have pulled out, and ratings agencies have given South Africa a negative outlook. South Africa narrowly avoided having its credit rating downgraded to junk status many times during the the turmoil that ensued with Nene’s firing, thanks largely to the work of Pravin Gordhan, who worked to restore investor and ratings agency confidence in the South African economy. Before Zuma’s cabinet reshuffle, economists widely speculated that any move to jeopardize the treasury’s stability would see South Africa’s credit rating cut below investment grade, but Zuma recklessly continued anyway. Anglican Archbishop Thabo Makgoba responded to the reshuffle pithily, and said, “Ignorance can be educated, but there is no cure for recklessness. The president’s decisions are a frightening example of a leader who has continually shown his profound indifference to the economic health of South Africa. It is telling that he failed to secure agreement to this reckless move even from within his own party and the ruling alliance.”
Zuma is shamelessly frivolous about the effects of his decisions and contemptuous of the rule of law. When South Africa’s highest court found that Zuma’s use of $26 million of state funds on home renovations was a violation of the constitution, Zuma said he welcomed the decision (even though he had staunchly denied any wrongdoing for years), but did not repay any of the money. During an African Union conference held in South Africa in 2015, the high court issued an arrest warrant for Sudanese President Omar Al-Bashir, who is wanted by the International Criminal Court for war crimes. Zuma and top ministers plotted Al-Bashir’s escape, and secured his safe departure from a military base, flouting domestic and international law.
However, it seems that the proverbial chickens are coming home to roost. Zuma’s most recent actions have had significant political implications, and he may not be able to escape broad-based pressure for his removal much longer. COSATU, South Africa’s largest trade union and a historic ally of the ANC, as well as other long term alliance partner the South African Communist Party, have called on Zuma to step down, marking a break from working-class allegiance to the ANC. This signals a rise in popular dissent from working-class South Africans whose frustrations can no longer be smothered with the weight of the ANC’s legacy as the party of liberation and party loyalty. Business Leadership South Africa, a group representing big business, has accused Zuma of “plunging the country into a self-created crisis.” Civil society groups nationwide are organizing protests opposing government’s assault on the treasury and the constitution. Not only have the people mobilized, but top political leaders have criticized Zuma for the reshuffle, including the country’s Deputy President, Cyril Ramaphosa, and Secretary General of the ANC, Gwede Mantashe. Opposition parties, the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF), have tabled a motion for a vote of no confidence in parliament. The vote was meant to be heard on April 18, but has been postponed while the Constitutional Court considers whether the vote can be done by secret ballot.
While Zuma has survived previous votes of no confidence, his cabinet reshuffle has been immensely unpopular among ANC MPs, and it is unclear that they will be whipped to vote in line this time. With the real possibility that Zuma could be ousted, it is time for South Africans to confront the country left to them in his wake. It is not the country that it was in 1994, with hopes high at the dawn of democracy. It is not the country that it was in 2006, with GDP growth at 5.6 percent and by far the continent’s largest economy. Now, it is a country that barely avoided recession last year, whose president unapologetically and routinely violates the constitution, and that has lost the sense that the future will be better than the past.
It is unclear whether President Zuma is ignorant of the principles of constitutionality, or is merely contemptuous of them. Either way he has desecrated the visions of his predecessors, disregarded South Africa’s laws, embarrassed the country internationally, and destroyed its potential for prosperity. It is time for Jacob Zuma to step down, therefore ANC MPs must vote with their consciences rather than their party, and remove him.