The Republic of South Africa’s economy is in free-fall after the sacking of Finance Minister Pravin Gordhan on Thursday 30th March 2017, which has given way to Malusi Gigaba. So the Republic and Cabinet has gone away from a man with financial experience to an inexperienced minister. After the decision of the sacking the rand has fallen in value and the response on the stock exchange as also been reported less sale.
Today the international response to the sacking happen, but the junk-status has to be explained and I will do so by the words of InvestigationAnswers: “If a bond is downgraded to a level below investment grade (aka, “junk”), there is often a serious sell off of those bonds, because most institutional investors are forbidden from owning junk bonds” (http://www.investinganswers.com/financial-dictionary/investing/downgrade-96).
So the bond-status will lead to currency funds trading away the South African Rand and the Republic’s bonds that are traded internationally on the Financial Markets, as the Republic’s traded bonds to fill the budget will be downgraded, means the amounts of investment and interest will drop. That is a circle of trouble for the economy. The lack of international trade of the needed currency exchange will give less circulation and also stagnate the economy.
Here is the terrible news:
“S&P on Monday placed South Africa’s credit rating to speculative grade (commonly referred to as “junk”), a one-notch reduction to BB, and the ratings agency said “the economic crises President Jacob Zuma plunged the country into with his midnight cabinet reshuffle” prompted it to hold an emergency review at the weekend instead of June 2, as was scheduled, according to Business Day” (Mail & Guardian, 2017).
So the Standard and Poor’s rating will really make changes and reactions to the change of the steady hands of Pravin Gordhan, instead of the rookie and cookie Gigaba, a loyalist to Zuma and his presidency. Certainly Gigaba as a Finance Minister will not stop a nuclear trade involving the Gupta Empire, that would Gordhan if he didn’t believe it was for the good of the economy. Therefore, the financial instruments of S&P says something of the current state.
Parts of the Official Statement from S&P:
“The downgrade reflects our view that the divisions in the ANC-led government that have led to changes in the executive leadership, including the finance minister, have put policy continuity at risk. This has increased the likelihood that economic growth and fiscal outcomes could suffer. The rating action also reflects our view that contingent liabilities to the state, particularly in the energy sector, are on the rise, and that previous plans to improve the underlying financial position of Eskom may not be implemented in a comprehensive and timely manner. In our view, higher risks of budgetary slippage will also put upward pressure on South Africa’s cost of capital, further dampening already-modest growth” (…) “The negative outlook reflects our view that political risks will remain elevated this year, and that policy shifts are likely which could undermine fiscal and growth outcomes more than we currently project. If fiscal and macroeconomic performance deteriorates substantially from our baseline forecasts, we could consider lowering the ratings. We could revise the outlook to stable if we see political risks reduce and economic growth and/or fiscal outcomes strengthen compared to our baseline projections” (Fin24, 2017).
So the Capture of State report has together with the all the Financial market, Economic analysis and the forecasts has been overshadowed by the reaction to the decisions of President Zuma and the ANC. That the government changed the cabinet and the deficits of the budget. When the volatile economy needs strong leadership, instead the Finance Minister is a newbie who the international business world doesn’t seem to trust. That is a key thing to the matter, the businesses and financial market needs trust to the leaders, that is not in the ANC and Zuma crony.
The trust in the Financial Market is dwindling, they are not seeing signs of trust to President Zuma and his cabinet. The ANC does not have the stability or credibility to be trusted by one of the world most famous ratings systems of the financial market. When it is like this, that should be motivation to change, as the South African values and currency loses value. The price of the reckless acts of power shows what the price for the change of ministers can do. President Zuma has work to do! Zuma needs to change, though I doubt he care, he eats no matter what happens and seems like he thinks he can get get away with everything, even getting his economic policies called JUNK! Peace.
Fin24 – ‘FULL STATEMENT: S&P cuts SA to junk status, fears political risks’ (03.04.2017) link:http://www.fin24.com/Economy/full-statement-sp-cuts-sa-to-junk-status-fears-political-risks-20170403
Mail & Guardian – ‘S&P downgrades South Africa’s credit rating to junk status’ (03.04.2017) link: https://mg.co.za/article/2017-04-03-sp-downgrades-south-africas-credit-rating-to-junk-status
Mullen, Jethro & Petroff, Alanna – ‘South Africa’s currency plummets after finance minister fired’ (01.04.2017) link: http://money.cnn.com/2017/03/30/investing/south-africa-finance-minister-pravin-gordhan-ousted/
“It becomes more necessary to see the truth as it is if you realise that the only vehicle for change are these people who have lost their personality. The first step therefore is to make the black man come to himself; to pump back life into his empty shell; to infuse him with pride and dignity, to remind him of his complicity in the crime of allowing himself to be misused and therefore letting evil reign supreme in the country of his birth” – Steven Biko
Henceforth the tries to silence and stop President Jacob Zuma will either be futile or be for show, as the first time to vote “No Confidence” failed in November 2016. This after the failing show in the National Assembly as the Capture of State Report revealed the knitted connection between the investor family of Gupta and the Zuma Administration. Still, the African National Congress stood by like gullible stooges to the charade of progress. ANC have played a fool by the Zuma clan and the Gupta empire. This to a stage where the involvements of Gupta in changes of government really occurred this week.
Yet after the State of Caputre report and of all the cases involved corruption, together with the questionable back-payment on the Nkandla Village Project. There been enough to impeach the South African President. Not like he has tried to be innocent, the cases has been pilled up and the connections to the Oakbay Resources and other enterprises of the Gupta Empire is evident. It is like he stopped caring, because in his heart. He believes he can get away. But first, take a look!
DA’s New Motion against President Zuma:
“That the House resolves, in terms of section 102(2) of the Constitution of South Africa, 1996, that it has no confidence in Mr Jacob G Zuma as President of the Republic of South Africa on the grounds of his continued irrational, irresponsible and reckless leadership. President Zuma’s decision to recall Minister of Finance Pravin Gordhan and his deputy, Mcebisi Jonas from an international roadshow aimed at increasing investor confidence, had the exact opposite effect which was seen in the plummeting of the rand. Furthermore, the President’s continued reckless and irrational behavior surrounding the position of the Minister of Finance has resulted in an economic crisis. Such a crisis was seen previously when Minister Nene was summarily fired from the same position in December 2015. That President Zuma has chosen to deliberately repeat his actions is evidence that he has lost all sense of rationality and sound judgement. These actions will result directly in job losses and will thus be most profoundly felt by the poor and most vulnerable citizens in South Africa. President Zuma’s derelict leadership has resulted in a collapse of public confidence in the President of the Republic of South Africa, has created a government at war with itself and ultimately has undermined efforts to restore confidence in the South African economy. There can be no confidence in such a President” (DA, 30.03.2017).
That the President uses an Intelligence reports for his actions to fire all of the ministers and reshuffle the cabinet, without any for-warning. That the Finance Minister had a ploy called ‘Operation Check Mate’ that was already in the works, like a John Grisham spy-novels. There haven’t been any clues or evidence of it, it is just as if the President needed a final nail in coffin to sack Pravin Gordhan. As he again, questioned the certain investment that would in effect give a massive bonus to one of the Gupta companies. So that a Bank owned by Gupta’s could get sold and the profits made quickly. The same efforts as the revealed nuclear energy deal in 2015. So the pattern is crystal clear.
The Constitution is just a doormat to the Zuma Presidency, he couldn’t care less, unless he and his cronies get paid or hired. What matter isn’t the delivery to the commoners, neither is the service due diligence, as long as the Gupta Companies get wealthy. Because the profits of Gupta’s will benefit the Zuma administration.
IT doesn’t matter if the Democratic Alliance with Mmusi Maimane or Economic Freedom Fighters with Julius Malema wants to vote on ‘No Confidence’ motion again. The ANC who benefits from the inside trading and co-operative efforts with Gupta’s. If so the ANC wouldn’t give way and give in to the President. The favors tend to happen in collected effort, as the loyalty of the ANC cronies and the leadership shelved the cases and has distorted the works to get rid of Zuma. Therefore, the run to stop his Executive role has stopped.
The North Gauteng Court and Constitutional Court cases has clearly not played the way of law should do, as the guilty of crimes and use of power to gain personal wealth is walking the streets. The misuse of public funds is clearly evident. The massive amount of counts of misconduct on the Zuma Presidency shouldn’t be possible, but it has been. Therefore, the “No Confidence” vote is needed. Even if it fails again. Because if it fails, it proves that the State is really captured by men with ill-intent. That the ANC under Zuma has become iconic in the sense of belligerent statutes of justice. The sense of commoner and citizens towards the ANC and Zuma must be strange.
Zuma acts as if the National Assembly, the Constitution and the Republic is beneath him. That he is above it and cannot be touched. It is not strange he believes it, he has run a nation and crossed the courts so many times, had so many affidavits and minutes explaining his position concerning bad behavior. So, there are enough times he could have seen it as baseless character assassination, instead it has proven as his Modus Operandi. Where the crimes and collective corrupt acts has transpired in a fashion of business as usual and if they get caught, who cares? None will serve for the crime anyway.
The reality is that the first step of falling from the pedestal will be damaging and hurtful. The need for the wisdom of Steven Biko is more potent than ever. The silent words: “The first step therefore is to make the black man come to himself; to pump back life into his empty shell; to infuse him with pride and dignity, to remind him of his complicity in the crime of allowing himself to be misused and therefore letting evil reign supreme in the country of his birth”.
TO not ‘letting evil reign supreme in the country of his birth’, the evil letting the powers and the representatives, under the banner of the liberation party, the ANC steal the nation as a service for foreign investors. That the Republic of South Africa, not taken for granted and used by the former liberators, as they drive flashy cars through the townships and ghettos without care for the citizens who is not taken care of. That the newly rich on the investors and the misuse of state coffers can be contributed to the ANC elite and the clientele getting licensed to operate businesses.
The ANC need ‘to pump back life into his empty shell’, they have forgot to pump it into the citizens for while, they forgotten their mission and the reasons it was created. The ANC and Zuma doesn’t care about the proud legacy, but using it as tools of oppressive business enterprises into wealth. Not caring for service delivery. ANC under Zuma isn’t the people’s party or the liberation party, but instead the ruling elite who only care about keeping power.
We could wish that the “No Confidence” of the DA works, but don’t expect it. The ANC has sold it’s past and the present isn’t what it should be. They have forgotten where they came from and the purpose of their liberation. Zuma has traded and doesn’t care, he uses all sorts of manipulation to stay. It starts with thieving something small, than stealing medium and later running away with the whole bank reserves. Peace.
Claymore, Ezra – ‘DA tables new motion of no confidence as ANC breaks ranks with Zuma’ (30.03.2017) link: https://www.thesouthafrican.com/da-tables-new-motion-of-no-confidence-as-anc-breaks-ranks-with-zuma/
President Jacob Zuma of the African National Congress doesn’t like making things easy or to say the proper way. His affairs and his acts as a leader is Stalinisque and authoritarian, not acting as a democratic leader. That can be said the way he stifled the courts, used private business connections and used his role as President to get-a-jail-free-card. That is just the way of Zuma and his close friends. They buy and trade on government contracts and get favors. Certainly been the way since the Anglo-Leasing scandal and that one should still hunt President Zuma, but the cases that has followed it since, it must seem like a life-time ago.
In December 2015, there was enough chaos within the Finance Ministry as Nhlanhla Nene we’re fired and for a few days David Van Rooyen was appointed, that lead to a melt-down and shock of the economy. Therefore the President was forced to let it go and he hired Pravin Gordhan. That happen within a week in December in 2015. So Finance Minister Gordhan has been in position for 16 months. Other candidates for the position came forward to the media and said they had been at the Gupta family estate and we’re offered the Ministry at the time, before Gordhan was appointed. Therefore, the Gupta family control of Zuma Administration is easy to see.
The scandals involving companies run and owned by the Gupta family is happening frequently, as Eskom contracts and Tegeta agreements that overpays for bad coal-quality and empties the state coffers. This is sort of arrangements that the RSA government have accepted when doing business with Gupta associates. Therefore, that the Finance Minister get into hot water.
This can be said with the sudden axing when the Ministry of Finance didn’t accept the takeover of Habib Overseas Bank from the Vardospan Bank. Today the South African Reserve Bank (SARB) and Finance Minister said to the purchase today and the bank buying the other is by all means connected to the businesses of the Gupta. Therefore, the Zuma Administration wants to facilitate it. Just like they have done with Energy businesses and all the other Gupta involved scandals following the ANC and Zuma.
Zuma has enforced and ensured transactions that is profitable and traded so he could get cuts and jobs for family members through the Gupta businesses. Not through merit, but by the knowledge that Zuma will be payed off if he gets a grand deal to the Gupta Empire. That is now the Modus Operandi of his government to facilitate the Gupta Family. If not, why would Ministers fall for acting against Gupta owned property?
That has happen before and the reasons for stopping Nene Nhlanhla hand in the Finance Ministry was for his act to stop another financial transaction of a nuclear deal between Gupta companies, South African Companies and the Russian counterparts. That wasn’t something the then Finance Minister Nhlanhla wanted to see or believed would be plausible to happen without corrupt behavior.
Now today, the third Finance Minister of December 2015 Pravin Gordhan has also faced the axe and it follows a pattern. When the Ministry question Financial Transactions and Contracts involving the Gupta Empire and Gupta Family, than it should just nod and wave; not stop and say “no”. If you say no than the Zuma administration will replace you, their loyalty isn’t to accountability or transparency, it is to the Gupta’s. That is the State of Capture in South Africa. That the South African President is so weak that he has traded his soul for silvers from investors instead of good governance and due diligence.
That is why this is happening now:
“Johannesburg – President Jacob Zuma fired Finance Minister Pravin Gordhan and eight other cabinet members in a high-stakes power play that may threaten his own presidency and place the nation’s investment grade credit rating at risk. Gordhan was replaced by Home Affairs Minister Malusi Gigaba, who has no financial or business experience, while ANC MP Sfiso Buthelezi takes over from Mcebisi Jonas as deputy finance minister” (CPR Worldwide Media – SA, 30.03.2017).
So if you wonder what South African government is passing through, they are going through the 2015 on rewind, as the Zuma Administration put another Gupta stooge as Finance Minister; instead of David Van Rooyen, it is now Malusi Gigaba. Hon. Gigaba would never question any deal that the Gupta’s need or Zuma orders. He will follow the orders and acts upon the trust he got by Zuma. Therefore, don’t expect that the RSA government will be accountable or have stable economy for a while. Especially when a they finally got their Gupta stooge as a Finance Minister. It took 16 months, but is now achieved and the Oakbay Resources execs must feel like their high. Peace.
South African citizens across the land are speaking out and taking action to express their dissatisfaction. The Nelson Mandela Foundation supports the demand to hold to account those responsible for compromising our democratic state and looting its resources.
Twenty years since Nelson Mandela signed South Africa’s Constitution into law and as the third anniversary of his passing approaches, it is painful for us at the Nelson Mandela Foundation to bear witness to the wheels coming off the vehicle of our state.
We have seen a weakening of critical institutions such as the South African Revenue Service, the National Prosecuting Authority and law enforcement bodies due to political meddling for private interests.
We are reaping the results of a political trend of personalising matters of state around a single individual leader. This in a constitutional democracy is to be deplored.
The ability and commitment of the Head of State to be a ‘constitutional being’, is one of the wheels of our state. The unanimous judgment of the Constitutional Court of the Republic in the matter of President Zuma and the use of state resources on a private residence was one such test. It is increasingly a national consensus that he has failed the test.
As this particular wheel rolls away, other critical institutions of state break off to follow it. The legislative, business, and public service sectors of the country are severely affected, compromising the ability of the state to serve the people. A battle now rages to keep SARS attached to the vehicle of state. What public discourse has described as ‘state capture’ by private and political interests is, we believe, a real threat to the Republic.
Another wheel is an accessible and well-functioning education system. Arguably this wheel has never been fully attached, but the failures of the last two decades threaten that it rolls away. Schools, in our view, particularly those in townships and rural areas, have largely been captured to political interests and have deteriorated to unimaginable levels. And now universities are being brought to their knees as they lurch from crisis to crisis while a semblance of normality is enforced under what are effectively states of emergency. This is not sustainable for any education system. The potential collapse of universities will damage our democracy to its core.
We call on the governing party to take the steps necessary to ensure that the vehicle of state be protected and placed in safe and capable hands. And we join the call for a national convention of stakeholders to begin to reimagine South Africa’s future beyond the unsustainable stresses of the moment.
Written Press Statement by the Nelson Mandela Foundation
JOHANNESBURG, South Africa, October 19, 2016 – Yesterday afternoon, van Der Merwe Associates (“VDMA”) notified the Minister of Finance’s attorneys of their client’s (the Oakbay Group of companies) (www.OakbayInvestments.co.za) intention to oppose the application issued under case number 80978/16 on 14 October 2016 – unless the Minister of Finance withdraws the application and tenders costs by this afternoon – Wednesday 19 October.
VDMA’s letter noted that the Minister of Finance’s affidavit implicated its clients in inappropriate and unlawful conduct. The affidavit also insinuated that VDMA’s clients would “expose the fiscus not only to loss of tax revenue but also put the burden of mining rehabilitation on the fiscus.” which VDMA noted was “uncalled for, malicious and nothing but vexatious.”
VDMA’s client disproved this earlier this week with evidence of the transfer of the Optimum Rehabilitation Trust Fund from Standard Bank to Bank of Baroda, which followed a request by Advocate Thuli Madonsela on 4 October 2016.
VDMA advised its client to oppose the Minister of Finance’s application, obtain all the necessary information from the relevant role players and ask for punitive costs order against dismissal of the application.
VDMA’s letter also stated that the Minister of Finance’s letter has been launched with the financial resources of the tax payer. VDMA’s client does not dispute that Minister of Finance’s is not by law compelled or obliged to intervene in the relationship between VDMA’s clients and the commercial banks. However, VDMA noted that to spend tax payers’ money in “a reckless and inappropriate manner” would constitute a contravention of the provisions of the Public Management Act, No.1 of 1999 – which would warrant “further action against those officials responsible for same.”
Furthermore, VDMA noted that:
“In order that we do not expose the fiscus unnecessarily to costs we propose that the application be withdrawn” – that the Minister of Finance’s application is withdrawn and that the Minister of Finance’s tenders VDMA’s client’s costs, before close of business on 19 October 2016.
VDMA reiterated that the purpose of its letter was to offer the Minister of Finance the opportunity to save taxpayers money.
VDMA also noted that its clients “would like” to put their formal version before court since the Minister of Finance has chosen that forum, so if the application is not withdrawn then “the matter must proceed and we will gladly do the necessary in order to restore the misrepresentation created by the papers.”
VDMA concluded its letter by noting that the Minister of Finance had made “defamatory and untrue remarks towards members of the Gupta Family by insinuating that they have been involved in inappropriate conduct” and that “their rights remain strictly reserved.”
This morning, attorneys for the Minister of Finance declined the offer to withdraw the application and tender COSTs.