Fitch says South Africa's cabinet reshuffle heightens political risk

Fitch says South Africa's cabinet reshuffle heightens political risk

Zuma's decision to fire Pravin Gordhan, with whom he feuded over control of state finances, brought to the open South Africa's biggest political crisis in nearly a decade. "And for the first time, I also want to say to you what I said when I was asked to take this job I said... why me?... and (Zuma) said no you are the man they say can calm the markets", Gordhan said.

South Africa's President, Jacob Zuma used the cabinet shuffle to replace Gordham with Malusi Gigaba.

Zuma said the changes were meant "to improve efficiency and effectiveness".

"There are quite a lot of other colleagues and comrades who are unhappy about the situation, particularly the removal of the minister of finance", said Cyril Ramaphosa, Zuma's deputy.

The currency, the rand, fell five percent - and is set for its biggest weekly drop since 2015, when Zuma fired Nene.

"I told the President so, that I would not agree with him on his reasoning", he said.

"The timing of the axing of Gordhan and the manner in which it has been done couldn't have come at a worse time for our country", said George. He replaced them with personal loyalists, triggering fears that he is handing control of the national treasury to his close business friends, the Gupta family. Gordhan had openly criticized the Guptas' influence over Cabinet appointments and state contracts, and his deputy, Mcebisi Jonas, another casualty in the purge, past year accused the Gupta family of offering him a massive bribe.

Nkosazana Dlamini-Zuma, the president's ex-wife and former African Union chief, is Zuma's preferred candidate to succeed him when he steps down as the country's leader in 2019.

By attending the funeral Dlamini-Zuma clearly wanted to signal that she did not want to be narrowly defined as a leader in Zuma's camp, even though the president and his supporters are actively campaigning for her election.

ANC Secretary-General Gwede Mantashe said there was no consultation between Zuma and the party on cabinet replacements.

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"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.

Frustration has been growing with Zuma after numerous allegations of corruption. South Africa's major banks saw their share prices decrease by more than 5%, recovering later in the day.

"Despite the fraught political situation in which South Africa now finds itself post last night's cabinet reshuffle, we note that dynamics past the immediate horizon favour outperformance in the country's assets".

The dollar surged five percent against the rand after the sacking of Gordhan, who had enjoyed the support of many global investors and had campaigned for budget discipline.

In a statement, the ANC acknowledged "varying opinions" in the party, and urged members and leaders "to focus more on what contributes to unify the nation than what divides us".

"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.

It appears Mr Zuma just steamrolled his appointments through.

South Africa's economy is in a fragile state and the country is trying to appease rating agencies and avert a sub-investment ratings downgrade.

Moody's Investor Service, which rates South Africa's debt at two levels above junk, and with a negative outlook, will publish a review of Pretoria's creditworthiness in April.