South Africa Update #2 | Article | Strategic Communications

South Africa Update Vol 1, #2

South Africa Politics 2016: Q1 Wrap-Up and Way Forward

Strategic Communications

May 5, 2016

As quarter one of 2016 came to a close, the South African rand gained around 5.5% to the US Dollar on delivery of a unanimous judgement by the country’s Constitutional Court that President Jacob Zuma failed to “uphold, defend and respect” the Constitution. It related to the President’s failure to comply with the constitutionally empowered Public Protector’s finding that, amongst others, he was liable for non-security upgrades made by the state to his private homestead at Nkandla.

The market reaction can be attributed to the judgement addressing accountability in managing of the fiscus and, by extension, of the economy. This has become a serious concern to investors following what has become known as Nenegate or 9/12: when President Zuma ejected former respected Finance Minister Nhlanhla Nene in favour of unknown backbencher, Minister Des van Rooyen on 9 December of last year. Then, the markets, which in times of macro-economic stability have tended rather to react to labour strife than any corrupt practises, stripped R500bn in value off South African assets in response. Within five days, the President was forced to capitulate and reappoint to Treasury Minister Nene’s respected predecessor, Minister Pravin Gordhan.

The conclusion is inescapable: Minister Nene’s removal was interpreted to expose in sharp relief the President’s perceived agenda of undue intervention in the procurement decisions of state-owned entities for the benefit of third parties close to him. Reappointing Minister Gordhan was also not the first surrender, but gave dynamic impetus to what preceded and followed it. In October, he conceded to no fee increases for 2016 at the country’s public universities, after students of all races united in the nine day #FeesMustFall protest, which was heavily critical of the President and his government. In February followed the Nkandla U-turn: in apparent anticipation of the Constitutional Court finding him in contravention of the Constitution, the President declared himself willing to pay reasonable costs for non-security upgrades to his homestead, thereby embarrassing the Speaker of Parliament, numerous ministers and members of the ruling African National Congress (ANC) caucus who have risked their reputations to protect him.

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