South African President Jacob Zuma asked Finance Minister Pravin Gordhan on Monday to return home “immediately” from an investor roadshow ...
South African President Jacob Zuma asked Finance Minister Pravin Gordhan on Monday to return home “immediately” from an investor roadshow abroad, reviving talk of a cabinet reshuffle and unnerving investors who see Gordhan as an emblem of stability.
The rand fell more than 3 percent against the dollar, its biggest one day fall since Nov. 10, South African bonds tumbled and banking shares slid more than 3 percent after Zuma’s office said Gordhan had been recalled. It did not give a reason, but a government source said the presidency had not given permission for the trip.
The decision comes a day before a court is due to rule on a request by Gordhan for a declaratory judgment that he cannot interfere with decisions by banks to cut ties with businesses owned by the Gupta brothers, who are friends of Zuma.
“Zuma has instructed the Minister of Finance, Mr Pravin Gordhan, and Deputy Minister Mcebisi Jonas to cancel the international investment promotion roadshow to the United Kingdom and the United States and return to South Africa immediately,” a statement from the president’s office said.
Business executives and union leaders had accompanied Gordhan to London to woo potential investors for whom he is a reassuring figure given South Africa’s weak economic growth and tensions within the ruling African National Congress (ANC) that have put its investment-grade credit rating at risk.
Fraud charges brought against Gordhan and then dropped last year, prompting accusations of a political “witch-hunt”, badly rattled financial markets, as did rumors before last month’s budget speech that he might be moved from the Treasury.
Speaking in London, Gordhan — who the Treasury said will return to South Africa on Tuesday — said he was “just asked to come back”. Asked if he expected a cabinet reshuffle, Gordhan said: “That’s the boss’s prerogative.”
Koon Chow, emerging debt strategist at Swiss asset manager UBP, said Gordhan was jovial and relaxed at Monday’s roadshow.
“He knows investors like him and he likes us,” said Chow. Asked why he was being called back to South Africa, “he said ‘I do what my boss tells me'”, Chow added.
The main opposition Democratic Alliance said the decision to recall Gordhan “is so bizarre that it appears, at best, calculated to humiliate the minister or, at worst, to suggest that the minister is about to be fired”.
The ruling ANC meanwhile said the decision had not been discussed at its weekend meeting.
South Africa’s banking industry association said Zuma’s order risked a sovereign credit rating downgrade, while the cost of insuring South African government debt against default hit its highest level in nearly seven weeks.
Jabulane Mabuza, head of Business Unity South Africa and chairman of Telkom, who was with Gordhan in London, said in a text message: “At this point only presidency can give clarity on the why.”