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S Africa: pressure for Zuma after Gordhan sacking

Friday, March 31, 2017 - 01:51

South African finance minister Pravin Gordhan's sacking by President Jacob Zuma shakes financial markets, and opens up new questions over whether Zuma's own position is now undermined.

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(SOUNDBITE) (English) SOUTH AFRICAN PRESIDENT JACOB ZUMA, SAYING: "I've decided to make changes to the national executive in order to improve efficiency and effectiveness." It's the reshuffle that's rocked South Africa's markets and currency. The most talked about being the sacking of finance minister Pravin Gordhan. Zuma shrugged off pressure from within his own party as well as business circles to keep Gordhan. The former minister has dismissed an intelligence report Zuma allegedly used as justification to fire him. (SOUNDBITE) (English) FORMER FINANCE MINISTER, PRAVIN GORDHAN, SAYING: "This is the so-called intelligence report which said that amongst others, the two of us and the director-general are involved in this massive conspiracy to undermine the economy of this country. And if you read this, this is absolute nonsense." As news broke of the sacking, some Johannesburg residents questioned the move. (SOUNDBITE) (English) LOCAL RESIDENT, BUHLE MADULENI, SAYING: "It doesn't bode well for the country, it doesn't bode well for the economy. Everyone is frustrated at it." The rand and banking stocks both fell 5 percent on the reshuffle with bond yields climbing sharply. But some say markets are used to Zuma and Gordhan's tricky relationship. (SOUNDBITE) (English) CMC MARKETS, MARKET ANALYST, MICHAEL HEWSON, SAYING: "If you actually look at what the South African rand has done, it's actually coming off it's highest levels in around one year. Yes we have seen a negative reaction today. Ultimately political instability is nothing new in South Africa. I think what we want to see is a quick resolution and hopefully not too much political in-fighting." But many feel Gordhan's exit could be a blow to investors. He had plans to tackle the size of the South Africa's debt pile, and control the cost of borrowing. Those reassurances are in the balance. South Africa's debt is around 50 percent of GDP and a quarter of South Africa's potential workforce is unemployed.