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South African troubles mount as rand collapses

By AFP
11 December 2015   |   2:34 pm
South Africa's rand slumped to a record low on Friday as the country's economic prospects darkened over President Jacob Zuma's unexplained firing of the respected finance minister. The rand breached 16 to the US dollar for the first time, government bond yields rose and bank stocks dived further in reaction to Nhlanhla Nene being dismissed…

SA-RANDSouth Africa’s rand slumped to a record low on Friday as the country’s economic prospects darkened over President Jacob Zuma’s unexplained firing of the respected finance minister.

The rand breached 16 to the US dollar for the first time, government bond yields rose and bank stocks dived further in reaction to Nhlanhla Nene being dismissed late Wednesday.

Nene was replaced by David van Rooyen, a little-known figure from the ruling African National Congress (ANC) party, in a move greeted with dismay by many investors and financial analysts.

“Nene was not prepared to be used as Mr Zuma’s own petty cashbox,” Ian Cruickshanks, chief economist with the South African Institute of Race Relations, told AFP.

“Foreigners are getting assets out. There are lots of uncertainty, the only solution to protect the exchange rate of the rand is an intervention by the Reserve Bank (raising interest rates),” he said.

South Africa, the continent’s second largest economy, is struggling with unemployment stubbornly high at over 25 percent, low growth and the threat of a credit rating downgrade to “junk” status.

The rand has lost about 30 percent of its value against the dollar this year — falling 8.0 percent alone since Nene was removed.

His fate and the market reaction unleashed a bout of deep pessimism in South Africa over ANC rule which has dominated politics since Nelson Mandela won the first post-apartheid elections in 1994.

Van Rooyen is seen as likely to back huge outlays on a nuclear station building programme and the troubled state airline as well as public spending ahead of local elections next year.

Nene’s “ouster will now go down in history as one of the costliest blunders ever made by the current administration,” said Ellis Mnyandu, editor of Business Report newspaper.

“The shock announcement… was devoid of any logic and justification, especially when (Zuma’s) government is meant to be doing everything possible to restore confidence and growth.

“His successor, David Douglas Des van Rooyen, is a big unknown.”

Van Rooyen, 47, was a member of the ANC’s armed wing in the last years of its struggle against apartheid, and has recently been a low-key member of parliament’s finance committee.

His time as a small-town mayor of Merafong is primarily remembered for when his house was burnt down by a mob over provincial boundary changes that local people thought would disadvantage them

He resigned the post in 2009, according to local media.

Zuma, who led the ANC to an easy general election victory last year, holds the presidency until 2019.

7 Comments

  • Author’s gravatar

    african when do we learn and start creating jobs and industries and stop depending on international ready made goods and money

  • Author’s gravatar

    Africa my Africa. The best brains are always fought by the political strongmen. OkonjoIweala in Nigeria, Nhlanhla Nene in SA. Shame on Africa’s political leaders. Little wonder that the best brains prefer to remain in the international sphere where intelligence and competence are valued above bigotry – ethnic, political, religious.

  • Author’s gravatar

    it WOULD HAVE BEEN BETTER FOR WHITE TO RULE AND THERE WILL BE GOOD ECONOMY THAN FOR BACKS TO BE IN POWER TO DESTROY THE ECONOMY. BRING BACK THE WHITES NOW. SOUTH AFRICA WILL REGRET EXIT OF WHITES FROM POWER AS ZIMBAWEANS ARE REGRETTING THEIRS. AFRICAN MAN IS A POOR MANAGER ANYWHERE ANYTIME.

    • Author’s gravatar

      Mbeki was intelligent and managed well, mandela was intelligent but the dark horse zuma defies all the parameters of sound judgement. How do you rate or judge that epithet that lacks even a criterion of judgement? It is odious and if you are white or black you will evaluate south africa on this unfortunate basis not on racial generalizations

      • Author’s gravatar

        I AM BLACK AFRICAN LIVING IN AFRICA. AFRICANS ARE NOT GOOD MANAGERS PERIOD. WHEN APARTHEID IS THERE IT IS 1 US DIOLLARS TO 2 RANDS AND ECONOMY WAS VERY STRONG. WHAT HAPPENED NOW.

  • Author’s gravatar

    The zuma phenomenon is a monumental misadventure in south african politics, its symbolism is fundamentally derogatory, its economic implications devastastating in its ramifications

  • Author’s gravatar

    Zuma is a moron like his PDP brothers in Nigeria