Last week South African President Jacob Zuma sacked Finance Minister Nhlanhla Nene in a widely-criticised move that sent the rand to record lows and caused the stock market to tumble. Mr. Nene was replaced by David van Rooyen, who will now be replaced by Pravin Gordhan. Mr. Van Rooyen was in the role for less than a week and had no previous experience in any kind of national government role. Mr Gordhan previously worked as Finance Minister from 2009 to 2014 and will now return to his role.
The re-appointment new of Mr. Gordhan appears to have caused a slight improvement to figures with the rand recovering slightly from 16 rand to the dollar to 15. The Johannesburg stock exchange also recovered some of last week’s losses as a result of the first change in Finance Minister.
The South African treasury was previously known as one of the best run governmental programs in South Africa, bolstering the country’s reputation as one of the best economies on the continent. If rumours are true that Mr. Nene was removed from his position due to unwillingness to allocate national resources in a careless manner, this suggests to the outside world that there is meddling apparent within the South African government, further lowering the public – and investors’ – confidence.
The developments come amid concern over South Africa’s struggling economy. Unemployment is currently above 25% in South Africa in one of the new Finance Minister’s most pressing topics to address. Days before Mr Nene’s surprising dismissal as Finance Minister, Fitch downgraded South Africa’s credit rating to triple B minus, while Standard & Poor’s cut its outlook from stable to negative, heightening the risk that the country could be downgraded to junk status for the first time since 2000.