South Africa battered by self-induced crisis

A recent series of unexpected cabinet reshuffles – in which South Africa had three finance ministers in four days – has dented the political and economic credibility of President Jacob Zuma. The rand fell by over 5% when respected finance minister Nhlanhla Nene was replaced by relatively unknown backbench MP David van Rooyen on 9th December. The currency subsequently recovered some of its losses on 13th December after Mr. van Rooyen was himself replaced by Pravin Gordhan, who previously served as finance minister from 2009 to 2014. The president’s credibility, however, may take longer to recover.  Indeed, the fact that the president was forced into such a public climb-down suggests that figures within the African National Congress-led government were able to bring significant pressure to bear on the increasingly unpopular president. While it is too soon to tell what the long-term effect of this self-imposed crisis will be, Mr. Gordhan will face an uphill battle in regaining investors’ confidence.