A power struggle between South African President Jacob Zuma and Finance Minister Pravin Gordhan over control of the National Treasury is approaching a tipping point, unnerving investors and weighing on the rand.
Gordhan, 67, on Tuesday accused government officials of conspiring to harass him and his family and described allegations that he had spied on taxpayers when he ran the national revenue service as “malicious rumors” that were “manufactured for other motives.” His statement followed a Sunday Times report that he’s at risk of being charged with espionage and fired. The rand fell to a two-month low on Wednesday, weakening as much as 2 percent against the dollar.
The worsening dispute comes as South Africa faces the threat of a recession and a credit rating downgrade to junk. Since Gordhan assumed his post in December, after Zuma backtracked on the appointment of a little-known lawmaker as finance minister that sent the rand and the nation’s bonds plunging, he’s struggled to restore investor confidence in Africa’s most-industrialized economy. His biggest liability has been Zuma, who’s suffered a series of scandals that’s rattled business confidence.
“We are approaching high noon at the O.K. Corral,” Theo Venter, a political analyst at North-West University in Potchefstroom, near Johannesburg, said by phone on Wednesday. “What worries me is that the Zuma side is willing to play Russian roulette with the economy.”
While Zuma’s office issued a statement refuting the report that Gordhan’s arrest was imminent, it didn’t come to his defense or deny he was being investigated. Hangwani Mulaudzi, a spokesman for the special police unit known as the Hawks which the Sunday Times said was probing Gordhan, said he knew nothing about a docket implicating the finance minister. Reports of an imminent arrest were false, Shaun Abrahams, the head of the National Prosecuting Authority, told Cape Talk radio.
“The Hawks have an image and credibility problem already, and even if they cannot prove a case against the finance minister they will do incredible damage to the minister and the National Treasury,” Aubrey Matshiqi, a political analyst at the Helen Suzman Foundation, said by phone from Johannesburg.
Bongani Ngqulunga, Zuma’s spokesman, didn’t answer his mobile phone. Zuma was in Qatar Wednesday for a state visit.
In his statement, Gordhan appealed to South Africans to protect the treasury staff who are serving the national interest and said the country would pay a severe price if what he described as the subversion of democracy was allowed to continue unchallenged.
While Gordhan’s statement was confirmation of a serious schism in the ruling African National Congress, the party will probably to try to contain the fallout until after local government elections in August, according to Gary van Staden, an analyst at NKC African Economics in Paarl, near Cape Town.
“Some of Gordhan’s comments have been really hard-hitting and show that he is tired of state institutions being used to pursue a political agenda,” Van Staden said by phone. “The gloves are clearly off now and it is semi-open warfare.”