South Africa under Cardiac Arrest

by Michaela Elsbeth Martin

On the evening of 29 March 2017, the South African state took an unexpected turn for the worse. It has been a whirlwind few days in South Africa, with a cabinet reshuffle resulting in what has been described as a complete state capture by opposition parties. The reshuffle of President Zuma’s cabinet included the dismissal of Finance Minister Pravin Gordhan and his Deputy, Mcebi Jonas. This move is set to have far-reaching political consequences as President Zuma and his allies have their hands firmly on the wheel of the National Treasury, with the appointment of former Home Affairs Minister, Malusi Gigaba, in place of Gordhan. The reshuffle comes three days after President Zuma informed the ANC top five that he wanted to get rid of the Minister and Deputy Finance Minister due to an alleged Intelligence Report claiming that the leadership of the Treasury Department wanted to overthrow the Zuma government.

Former Finance Minister Pravin Gordhan in February 2017 (Photo: GCIS)

The dismissal of Gordhan has been a long anticipated move since 2016, in which the South Africa’s National Prosecuting Authority (NPA) head, Shaun Abrahams laid criminal charges against, and announced to prosecute the country’s Finance Minister. The Finance Minister was accused‚ in his previous capacity as head of South African Revenue Services (SARS), of fraudulently approving an early retirement for then Deputy Commissioner Ivan Pillay and re-hiring him as a consultant. Additionally, Minister Gordhan was attacked by the Gupta Family (South Africa’s alleged captors) after he submitted an explosive affidavit at the Pretoria High Court that details a list of allegedly suspicious transactions which led to four major banks closing the family’s accounts in April last year. The National Treasury’s investigations in South African Airways (SAA), Eskom, Denel and the South African Broadcasting Corporation (SABC) as well as the Nuclear Procurement Programme, have become a threat to President’s Zuma’s patronage networks, thus the intense efforts that has eventually led to the recent axing of the Finance Minister. It becomes therefore increasingly evident that President Zuma’s cabinet reshuffle is driven by the ambition to appoint a Zuma-aligned Finance Minister.

The cabinet reshuffle is therefore politically driven and widely regarded as flimsy. This is an attack on the institution of the Treasury and as such has triggered multiple downgrades. While there are some fiscal attacks, what increasingly worrisome is the Treasury’s potential role in procurement, preventing corruption and oversight of state-owned enterprises, including nuclear and banking.
The Secretary General of the African National Congress (ANC), Gwede Mantashe asserted that the cabinet reshuffle plans were not done in consultation with the ANC, but were drawn up “somewhere else” and then handed over to them for their consideration. Further, Mr Mnatashe noted that the matters concerning the Finance Minister and His Deputy were discussed on Monday last week and some changes were effected to initial proposals made by President Zuma, but the rest of the reshuffle was shocking news even to the ANC's top leadership. The reshuffle of the cabinet has intensified the factionalism within the ANC. This point is reiterated by Deputy Minister of the ANC Cyril Ramaphosa, in which he described the phenomenon as a government that wages war with itself. On the one end of the spectrum exists a large rural-based faction of patronage politicians surrounding President Jacob Zuma. The other faction includes with no doubt, the National Treasury, represented by the beleaguered former Finance Minister Pravin Gordhan, ANC stalwarts, the media, nongovernmental organisations and business leaders.

The cabinet reshuffle has similarly exacerbated the economic climate of the country. Just 90 hours after President Zuma axed Mr Gordhan as finance minister, Standard and Poor (S&P), announced that South Africa’s long-term foreign currency sovereign credit rating would be downgraded to sub-investment grade or junk status. The downgrade to junk status came as result of divisions in the ANC-led government that have led to changes in the executive leadership, including the finance minister, that have put policy continuity at risk. Standard and Poor has asserted that South Africa’s political risks will remain evaluated this year and that policy shifts are likely, which could undermine fiscal and economic growth outcomes more than the company currently project. The decision pertaining to the cabinet reshuffle thus created a dire loss of institutional knowledge and raises legitimate and alarming concerns regarding issues of fiscal discipline, the protection of state institutions and the scope of state capture.

The question therefore arises of the criminalisation of the South African state, in which the President has unconstrained and unlimited political power, and where the state is used as a criminal enterprise where those in power abuse state power to loot state resources. This is power is shown by Jacob Zuma’s ability to implement and enforce decisions regarding the future of South Africa without the consultation of the ANC and the society at large. The recent developments in South Africa additionally highlight the notion of state capture in which the South African state has been captured by corrupt government officials. Despite an admirable constitution and vibrant civil society, it appears that South Africa may well be following the path of neighbouring Zimbabwe, where a predatory state enriches the elite, while investors flee, unemployment rises and government institutions collapses.