10 December 2015
The sudden Cabinet reshuffle announced by President Zuma last night, removing Minister Nene as Finance Minister is very concerning. SA has just been downgraded by Fitch and is on a negative watch by S&P, both rating agencies rating the country just one notch above “junk rating.
“The economy is not growing anywhere close to the growth rate we need to address poverty, unemployment and inequality. The rating agencies cited the performance of Treasury as a positive factor, particularly Treasury’s efforts to curb public sector spending and manage the budget deficit. They also cited the intervention by Treasury in the SAA saga. In the midst of these problems and uncertainty, the Minister is fired, and replaced by somebody who is not known by the markets, business or any other sector. The replacement has no experience in the area of finance, economics and global financial dynamics”, said Cas Coovadia, Managing Director: The Banking Association South Africa.
The markets have reacted negatively to this move and the removal of Minister Nene sends out a very concerning message to potential investors and investors already investing in SA, at a time when we desperately need job-creating investment. We are obviously not privy to the reasons for removing Minister Nene, but we urge his replacement, David van Rooyen, to keep to the course Minister Nene forged, under very difficult circumstances. Our country, and international investors, needs a degree of certainty that Minister Nene’s policy trajectory and actions will continue.