JOHANNESBURG (Reuters) – President Jacob Zuma’s midnight sacking of his finance minister shook South African financial markets on Friday, undermining his authority and threatening to split the African National Congress (ANC) that has governed since the end of apartheid.
ANC Secretary General Gwede Mantashe, usually a symbol of unity in the liberation movement, openly criticised the decision to replace finance minister Pravin Gordhan and other cabinet members who opposed Zuma.
“I’m very uncomfortable because areas where ministers do not perform have not been touched. Ministers who have been moved, the majority of them are performing ministers,” Mantashe told Talk Radio 702.
“I felt like this list has been developed somewhere else and was given to us to legitimise it. I cannot say ‘consulted’.”
Rumours Zuma was to replace Gordhan have unsettled markets all week and members of the ANC urged the president to reconsider. His determination to change his cabinet could split the ANC ahead of a vote for a new leader in December, analysts said.
The ANC has been the dominant party in South Africa since sweeping to power under Nelson Mandela at the end of apartheid in 1994.
The rand has fallen 5 percent since its highest point on Thursday prior to the reshuffle. Banking stocks were down more than 5 percent on Friday and bond yields climbed sharply.Opposition parties called for Zuma to resign but analysts mostly predicted Zuma would survive the fallout after picking home affairs minister Malusi Gigaba to replace Gordhan, a more prudent choice than investors had feared.
Gordhan was due to brief the media at 11 a.m. (0900 GMT).
Zuma met with the most senior members of the ANC, known as “The Top Six”, late on Thursday to inform them of the reshuffle but didn’t consult them, putting his neck on the line.
“Jacob Zuma has take a huge political risk, possibly the biggest political risk of his career thus far,” Daniel Silke, director at Political Futures Consultancy said.
“This will put further strain on an already fractures ANC. Zuma will survive but he will survive within an ANC that finds itself unable to accomplish just about anything.”
The ANC will vote for Zuma’s successor in December with Deputy President Cyril Ramaphosa and former African Union Chairwoman Nkosozana Dlamini-Zuma viewed as the front-runners. Dlamini-Zuma is Zuma’s ex-wife and he is expected to support her.
So far the race to replace Zuma has been muted but the divisive reshuffle is likely to split the ANC into two sides, one-aligned to Zuma and the other to Ramaphosa, a former trade union boss turned business tycoon.
“These tensions will barrel into the ANC’s succession debate and here we expect the president’s move has strengthened the support for Mr Ramaphosa,” Simon Freemantle, Senior Political Economist at Standard Bank said.
Business and political leaders condemned Zuma and predicted that South Africa’s sovereign credit rating would be downgraded to “junk” in the coming months.
South Africa’s Banking Association said changing the finance minister and deputy finance minister raised “alarming concerns” over fiscal discipline.
ANC ally the South African Communist Party said the firing of Gordhan, who was respected by investors locally and abroad as a champion of fiscal responsibility, risked triggering the looting of treasury.
Zuma and his allies have been accused by opponents and some senior ANC members of corruption and links with the wealthy Indian Gupta family. A report by a constitutionally-mandated watchdog last year said the Guptas influenced Zuma in choosing government positions.
The Guptas and Zuma deny the allegations.
Last year the Constitutional Court ordered Zuma to repay 7.8 million rand ($579,004) in inappropriate state spending on his sprawling country home.
Business leaders said in a statement that Gordhan’s dismissal would have severe consequences for the economy and was a setback to the work done to avoid a credit ratings downgrade.
Gordhan’s replacement Gigaba is a Zuma-ally who was criticised for extreme tightening of immigration rules while minister of home affairs.
South Africa’s new ministers and deputy ministers will be sworn in at 1600 GMT on Friday, President Jacob Zuma’s office said.