President Jacob Zuma announced a surprise cabinet reshuffle on 17 October, raising concerns among investors and South Africans. Political instability and state capture have caused tremendous damage to the country, and Zuma’s latest move is seen as not in the interest of SA. The DA described the cabinet reshuffle as “Zuma’s war against anyone who opposes his project of State Capture”.
“This reshuffle has nothing to do with effecting good governance and ensuring the best people serve our country,” said the DA. Instead of showing strong growth because of a recovery in commodity prices and better agricultural outputs, South Africa has experienced virtually no economic growth this year. In fact, South Africa moved into recession earlier this year – with a reported decrease of 0.7% in GDP.
This followed a 0.3% contraction in Q4 2016. This is in contrast to many other emerging economies showing strong growth.
Another finance minister
As part of a previous Zuma cabinet reshuffle, he replaced respected finance minister Pravin Gordhan with Malusi Gigaba – who has no real experience in the department. This became clear when he delivered his maiden Medium Term Budget Policy Statement, which did little to address concerns.
There was no true solution to declining revenues, problems at state-owned enterprises, a ballooning deficit, and soaring debt. The rand plummeted against major currencies following Gigaba’s speech. His alleged links to the Gupta family also do not help, and he is seen to serve the financial interests of Zuma and the Gupta family.
SA vs Germany
Germany also recorded the highest trade surplus in the world in 2016, which made it the biggest capital exporter globally. The country’s strong financial position is partly thanks to the leadership of Chancellor Angela Merkel. Unlike Zuma, Merkel has created a stable cabinet and finance ministry.
She also has a deep understanding of economics, and a doctorate in quantum chemistry – indicating her capacity to learn.
The infographic below provides an overview of the countries’ finance ministries since 2009, and illustrates why education, experience, and stability matters.