President Jacob Zuma and Finance Minister Pravin Gordhan
Photo by: Duane Daws
Business Leadership South Africa (BLSA) has cautioned on the consequences of the ill-advised, “unexpected and unexplained” request by President Jacob Zuma for Finance Minister Pravin Gordhan to return to South Africa midway through an international investor roadshow to the UK and the US.
The damage to investor sentiment as a result of the roadshow cancellation should not be underestimated, the organisation commented in a statement, pointing out that the move had pulled the “rug from under our feet”.
South Africa’s rand fell sharply on Monday, reversing the strongest growth trend it has had in two years, following a directive from Zuma that Gordhan return from the UK immediately.
Deputy Minister Mcebisi Jonas will also no longer travel to the US as part of the roadshow, as originally scheduled.
“The finance ministry, alongside business and labour who are accompanying the National Treasury on this roadshow, have worked hard to maintain South Africa’s investment grade credit rating,” BLSA said.
Interrupting meetings that had the aim of “making a case” for South Africa and to assure of stability, certainty and evidence of progress, had sent “exactly the opposite message”.
“Business calls for cool heads and sound leadership to prevail in the context of certain damage to the economy should decisions be made which cause institutional instability, and associated negative impact on asset prices as seen in the collapse of confidence, currency and equity prices following ‘Nenegate’ in December 2015,” it concluded.