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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Battle for survival

PresZumaBudget-0213b
PresZumaBudget-0213b
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By Sinikka Tarvainen — With a massive cabinet reshuffle late last Thursday that included the sacking of his popular finance minister, South African President Jacob Zuma launched a fierce battle for his own political survival. By defying opposition from part of his cabinet to fire Pravin Gordhan, Zuma was trying to reassert control over his divided African National Congress party and to pre-empt attempts to oust him before his second term ends in 2019, analysts said. Gordhan’s years of experience as finance minister earned him the confidence of investors, who saw him as guaranteeing the stability of Africa’s most industrialised economy.


Reports that Zuma was about to sack him sparked widespread criticism, but the president nevertheless went ahead with the move, motivated by “a tremendous survival instinct, political desperation, but also cunning,” according to Professor Daryl Glaser from the department of political studies at Johannesburg’s Witwatersrand University.


“He has showed again and again that he is capable of cowing his critics,” Glaser said.


But will Zuma’s gamble pay off this time — newly appointed Finance Minister Malusi Gigaba comes into office “at a time of very weak economic performance,” said Frans Cronje, CEO of the think tank South African Institute of Race Relations (IRR).


“Debt levels have increased, the budget deficit remains under pressure, and the government’s tax take as a proportion of gross domestic product is projected to reach a record level,” Cronje said.


A drought, a slump in mineral prices and investor distrust in the government contributed to economic growth slowing to 0.3 per cent in 2016. More than a quarter of the workforce and about half of young people are unemployed. Gigaba is already the third to hold the finance portfolio since December 2015, when Zuma rattled markets by sacking the respected Nhlanhla Nene.


His successor, the little-known Des van Rooyen, only lasted at the post for a few days before Zuma was forced to replace him with Gordhan, who had already held the finance portfolio from 2009 to 2014.


Gordhan’s sacking could prompt ratings agencies to downgrade South Africa to junk status, increase the cost of borrowing and government debt, Ray Hartley, editor at Business LIVE, wrote in a Thursday column.


“The question is if the damage will take the form of an immediate crisis in terms of a collapsing rand, or if it will play out over a longer period,” Witwatersrand University’s Glaser said.


Zuma has weathered scandals both prior to and during his presidency, but South Africa’s economic performance will be key in determining if he will be able to serve a full second term and secure his future after 2019, according to analysts. — DPA


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