Economists have labelled the shock move to replace finance minister Nhlanhla Nene with the relatively unknown ANC stalwart David van Rooyen as an attack on South Africa’s economy, noting that it could lead to another recession as investors scurry to make sense of the news.
Economist Mike Shchussler told FTW Online (FTWO) that such an abrupt dismissal of a well-respected minister did not bode well for South Africa’s fight against corruption and over -expenditure. “It is South Africa’s 9/11,” he said, adding that this had set a very bad precedent and was sure to deter foreign investment.
According to Schussler, Nene’s rejection of the SAA board’s proposal to restructure a transaction with Airbus raised concerns that his hasty dismissal was politically driven, “especially considering that David Van Rooyen is relatively unknown and the Ministry of Finance has been performing well”.
“It is an attack on the economy and will have a big impact, one that South Africa cannot afford,” he said.
Economist Dawie Roodt told FTWO that president Jacob Zuma’s decision was “unbelievable” and “irresponsible” noting that it could be the straw that broke the president’s back before the year was over. “This decision could result in a recession that hits the poor and unemployed hardest,” he added, pointing out that, in his opinion, Zuma treated South Africa as his kingdom and the National Treasury as his personal piggy bank.
Other economists have been just as vocal in their scepticism. “In my view, Nene was clearly axed because he failed to do Zuma’s bidding when it came to managing SAA and funding proposed new nuclear plants,” Peter Attard Montalto, an economist at Nomura International Plc, was cited by Bloomberg news as saying.
He commented that Van Rooyen’s appointment was purely political. “We are worried about the fact he has no central or provincial government experience.”
Political analyst, Daniel Silke, was quoted by business news site, Fin24, as saying that the removal of Nene sent the wrong signals about South Africa’s already ailing economy, pointing out that the replacement of Nene would be questioned by anxious domestic and foreign investors alike on issues of fiscal prudence going forward.
Slke said: "This is the shortest reign of a finance minister and will create further doubts about cohesiveness of South Africa's economic policy. Questions will be asked of Mr Nene’s replacement. Will he for example apply continuity of policy?"
Twitter comments
These were some of the Twitter comments in reaction to the move to oust Nene and bring in the relatively unknown van Rooyen:
- “At a time of significant investor concern, the inexperienced David van Rooyen is a poor choice.”
- “Another Zuma yes-man. God save us all.”
- “Who is David van Rooyen and what will he do to our country?”
- “The implication of Nene’s removal is that investors now see the country as unstable.”
