President Jacob Zuma. Picture: GCIS
President Jacob Zuma. Picture: GCIS

THE sacking of finance minister Nhlanhla Nene less than a week after the Treasury’s refusal to rubber-stamp the controversial restructuring of a deal between South African Airways (SAA) and European aircraft manufacturer Airbus sent the rand plummeting. It also shows how little the president regards formerly sacrosanct South African institutions such as the Treasury, and how little he understands of the economy.

If there is one thing international investors dislike, it is policy uncertainty. The Treasury has a reputation for being among SA’s finest institutions. It needs this reputation to manage market expectations credibly and steer the South African economy successfully.

With his decision to oust Nene, President Jacob Zuma has put the Treasury’s hard-earned reputation at risk. Not only because the new finance minister designate, Desmond van Rooyen, has nothing like the experience his predecessor had. But because it is apparent that Nene’s removal was driven by petty politics and nothing else.

Under normal circumstances, a power struggle between the finance minister and the chairperson of a state-owned enterprise would be a fairly dull affair, resulting in a new chairperson for the parastatal. Not so in SA. Here, an incompetent but politically well connected chairperson can welcome a new finance minister into office.

Unfortunately, the haphazard move to replace the minister is no isolated incident, but part of a pattern. It is the pattern of a president who puts himself and a select group of cronies over his people and his country. It is the pattern of a president who builds himself a R247m home when so many have to live in shacks, and who wants to buy a R2bn VIP jet when the country’s students take to the streets because government has been starving the universities and students cannot pick up the bill any longer.

When Zuma says "African National Congress (ANC) first" what he really means is "my ANC first".

The Airbus deal SAA chairwoman Dudu Myeni proposes would put SAA at acute risk of default. And, thanks to the generous government guarantees, put taxpayers at an acute risk of having to bail them out. Such a risk might be worth taking in an open and transparent process, where taxpayers could form an opinion about whether they really want to shoulder this risk. But the Airbus deal is by no means open and transparent. Most of the details that are known are only known because of the tireless efforts of investigative journalists. The whole deal stinks, badly. It smells as if someone could privately benefit from an agreement that puts taxpayers at risk.

But SAA is not the only thing that stinks up the presidential rose bushes. Of even greater concern is SA’s nuclear bid. The president pushes SA silently and in secret towards a massive nuclear programme with unforeseeable consequences for our environment and our economy. The details about whether or not nuclear is the cheapest option are rather gory, but there are excellent reasons to believe that a country drenched in sunshine but with an outdated power grid will be much better off with decentralised energy from solar power.

However, the real worry about the nuclear programme is the secrecy it is shrouded in. Where is the public consultation process? Where is the debate within our society over whether we really want to produce toxic waste that will pollute the earth for millennia? Where are the scientific studies that would inform such a debate? Nene reportedly "dragged his feet" with regard to the nuclear programme, which might well have accelerated Zuma’s decision to replace him.

SA is in a precarious situation. Political capture of key state institutions, including the Treasury, the Reserve Bank and the judicial system, are arguably among the biggest risks looming on the horizon. The good thing about this situation is that there are remedies. Governments need checks and balances, and the most powerful of these is the risk of losing power, to either the opposition or a coalition of parties.

The markets would certainly be grateful if South Africans remember this lesson during the next elections.

Georg is a senior lecturer in financial economics at the University of Cape Town