By Mfuneko Toyana and Sujata Rao
JOHANNESBURG/LONDON South African President Jacob Zuma asked Finance Minister Pravin Gordhan on Monday to return home "immediately" from an investor roadshow abroad, reviving talk of a cabinet reshuffle and unnerving investors who see Gordhan as a emblem of stability.The rand fell more than 3 percent against the U.S. dollar, bonds tumbled and banking shares slid more than 3 percent after Zuma's office said Gordhan had been recalled. It did not give a reason, but a government source said: "The presidency did not give permission for the trip."The decision comes a day before a court is due to rule on a request by Gordhan for a declaratory judgment that he cannot interfere with decisions by banks to cut ties with businesses owned by the Gupta brothers, who are friends of Zuma. "Zuma has instructed the Minister of Finance, Mr Pravin Gordhan, and Deputy Minister Mcebisi Jonas to cancel the international investment promotion roadshow to the United Kingdom and the United States and return to South Africa immediately," the statement from the president's office said.Business executives and union leaders had also accompanied Gordhan to London to woo potential investors for whom he is a reassuring figure given weak economic growth and tensions within the ruling African National Congress (ANC) that have put South Africa's investment-grade credit rating at risk.Fraud charges brought against Gordhan and then dropped last year, prompting accusations of a political "witch-hunt", badly rattled financial markets, as did rumours before last month's budget speech that he might be moved from the Treasury.Speaking in London, Gordhan said he was "just asked to come back", adding that he had planned to skip the U.S. leg of the roadshow and return home anyway.Asked if he expected a cabinet reshuffle, Gordhan said: "That's the boss's prerogative."Gordhan will return to South Africa on Tuesday morning, the Treasury said.
The main opposition Democratic Alliance said in a statement the decision to call back Gordhan "is so bizarre that it appears, at best, calculated to humiliate the minister or, at worst, to suggest that the minister is about to be fired".The ruling ANC said the decision had not been discussed at its weekend meeting.Jabulane Mabuza, head of Business Unity South Africa and chairman of Telkom, who was with Gordhan in London, said in a text message: "It's true, minister has been called back home - at this point only presidency can give clarity on the why." Analysts said Zuma's move could spell another bout of political uncertainty and possibly a cabinet reshuffle. South African media reports suggest Zuma and Gordhan have an uneasy relationship, though the president has denied suggestions he is "at war" with his finance minister.
"I believe today could be a test of the water to undertake a reshuffle," said Peter Attard Montalto, an emerging markets analyst at Nomura in London. Political pundits say Gordhan is the target of political pressure from a faction allied to Zuma, which has criticised his plans to rein in government spending as the economy stagnates and also rapped his running of the tax agency. Gordhan has wrangled for months with the head of the agency.But "any suggestion Zuma is interfering with Gordhan's business dealings will be a concern for investors and could signal political instability on the horizon," political analyst Daniel Silke said.MARKET MOVES
A Pretoria court is due to hear on Tuesday Gordhan's request for a declaratory judgment that he cannot interfere with decisions by South Africa's major banks to cut their ties with businesses owned by the three Indian-born Gupta brothers. Gordhan has said the brothers have repeatedly asked him to intervene to have their accounts reopened.Allegations that the Guptas wielded undue influence over Zuma were investigated last year by the Public Protector, a constitutionally mandated anti-corruption watchdog. Zuma has said the Guptas are his friends, but denies anything improper about the relationship.Gordhan first served as finance minister from 2009 to 2014 and was reappointed by Zuma in December 2015 to calm markets spooked by the president's decision to replace respected finance minister Nhlanhla Nene with a little-known politician. Currently rated investment-grade, Africa's most industrialised economy is seen at risk of slipping into "junk" territory this year because of sluggish growth and political uncertainty. Moody's is due to review its Baa2 rating on April 7, while Standard & Poor's will review its BBB- grade - one notch above "junk" the beginning of June."Today’s market moves underline the importance of Mr. Gordhan to investor confidence in South Africa," Capital Economics Africa economist John Ashbourne said in a note."And even if the minister is not removed, today's events show that President Zuma is totally unconcerned with the effect that his often erratic policymaking style has on markets." (Additional reporting by Ed Cropley, Ed Stoddard, Olivia Kumwenda-Mtambo, Joe Brock in Johannesburg, Wendell Roelf in Cape Town and Marc Jones in London; Writing by James Macharia; Editing by Catherine Evans)
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Published Date: Mar 27, 2017 05:16 pm | Updated Date: Mar 27, 2017 05:16 pm