South Africa’s currency, the rand, is prone to sharp drops when the country’s finance minister, Pravin Gordhan, comes under fire from President Jacob Zuma or his cronies, says The Economist. It has tanked in the past few days on the news that Gordhan has been issued with a summons to appear in court early next month.
He is to face fraud charges for authorising a colleague’s pension payout. These “dubious charges” are the “latest twist in a protracted struggle over control of the Treasury”. Gordhan has tried to keep a lid on spending in order to preserve South Africa’s credit rating; it is in danger of being downgraded to junk status.
Zuma and his allies, however, appear to want “a more pliant” Treasury, as Mike Cohen and Thembisile Augustine Dzonzi put it on Bloomberg.com. Gordhan upped the ante this week by filing papers with the high court implicating the Gupta family, friends and business partners of Zuma, in “suspicious transactions” worth $475m.
Zuma is already under fire after violating the constitution by refusing to repay taxpayers’ money spent on upgrading his own home. Deputy President Cyril Ramaphosa has sided with Gordhan.
The next few weeks may show whether the governing African National Congress can ditch Zuma and his shambolic, corrupt regime – there have been calls for him to go before his term finishes in 2019 – and chart a more business-friendly course guided by Ramaphosa and other pragmatists. The rand is in for an especially volatile few months.