Nhlanhla Nene is not a Financial God

Chelsea Lotz says the reaction of the markets has been overblown, as it was when Trevor Manuel was appointed finance minister

Nhlanhla Nene is not a Financial God

Thursday morning was characterized by the usual hype of South African society, in which any move made by Zuma is met by commonplace outrage, matched with rhetoric of shock irrespective of why Zuma made the decision. It’s slightly amusing how Nene quite literally became an overnight sensation because he suddenly provided civil society with another reason to blame Zuma.

Twitter roared and newspapers flew off the shelves, with my local Indian shop being sold out of the Cape Times by 9am. I wondered what on earth happened and most of all why everyone was so over-dramatically upset. Sure, the rand just sunk to an all time low but as I looked around me, ISIS wasn’t in town, children weren’t dying (as they are in Palestine) and a Tsunami certainly had not happened.

Never being one to blindly jump on the bandwagon of popular opinion, I decided to look at the bigger picture and what it means for the future of South Africa. Apparently people are upset because of some cooked up story that Nene was fired for refusing Zuma a $4 Billion private jet and some SAA saga. However, let’s please look at the facts and not grapevine fallacies because this whole situation will benefit South Africa in the long run.

Understandably, people are upset that the rand has fallen because it means that imports from the USA will cost more. Whilst I personally cannot understand why anyone would actually want to support the US economy (you know with their tendencies towards war, genocide, theft of oil, Guantanamo Bay, Donald Trump etc), it is clear that there is a large discontent and concern about the impact that the costs of imports will have on the economy.

Upon the news being released and the public uproar, local investors immediately withdrew by shifting their investments abroad whilst foreign investors also withdrew. It is well known, that investors are highly influenced by public hype and opinion. However, before I blame everyone for the rand falling, I will just say “let’s leave that angle for another time”.

Why does everyone think that Nene was some kind of ‘Saviour of the Rand’? Are people oblivious to the fact that under Nene, the rand went from 8 ZAR to 14 ZAR per a dollar? He almost doubled the downfall of the rand, yet people think he is a hero and want to blame Zuma. Of course with the way South Africa is, any reason to blame Zuma gets the public excited, irrespective of the merit Zuma holds in his decision.

If I was in Zuma’s shoes and my Finance Minister had caused the rand to go from 8 ZAR to 14 ZAR per a dollar then I would fire him too! Furthermore, the cabinet themselves had no idea that Nene would be fired and it was made clear that Nene was not sacked from Government, he’s simply being shuffled to another position. On that note, Nene would do very well in the position as Minister of Energy- especially as he allegedly opposed the nuclear budget, and nuclear energy is destructive to the economy and environment.

However, as the tide of South African finance rises and falls so do I have faith that it will rise again. South Africa is largely reliant on imports, which is harmful to the economy of South Africa. The reason being is that we are failing to produce our own commodities. Producing our own commodities locally creates a self-sustainable and independent economy. The ANC attempted to help people refrain from importing foreign commodities by adding hefty taxes on imported goods so that people would be forced to shop and manufacture locally.

Global trade and investment might seem critical to the financial health of South Africa, but it places immeasurable pressure on local manufacturers and businesses that cannot keep up with the made-in-Indonesia-by-a-slave-child products, not to mention that it keeps us locked in a cycle of debt.  South Africa cannot attain true economic stability by enriching other nations through imports. As stated in the National Development Plan, SMME’s are crucial to restoring the economy of South Africa.

In other words, why buy masses of hangers from China when hangers can be produced locally, therefore boosting the local economy through job creation. To this day there are no South African hanger manufacturers, and thus we enrich China through imports. At the Industrial Development Corporation and National African Federation Chamber of Commerce summit in 2014, Joe Hlongwane stated, “Currently there is a lack of enforcement on economic framework, there is no champion for SMME’s. We need a minister with a separate budget who knows what to do”.

Hlongwane stated the example of Indonesia and how their SMME ministry has resulted in a massive increase in the GDP and that 60% of the GDP came from the SMME’s. SME’s (Small and Medium Enterprises) are crucial to the GDP increasing and having a prosperous economy. The National Development Plan states that for the GDP to increase and for South Africa to get into a high-growth trajectory, SME’s and cooperatives need to be on the forefront of the agenda.

South Africa should not be economically reliant on other countries because it leaves the country enslaved and indebted. Furthermore, if South Africa is economically reliant on the USA, then South Africa will be hit the hardest when the USA falls and thus the best thing is for the government to release South Africa from the grip of the USA. Mark my words - America will fall. If anything, Zuma has been protecting the nation from the sliding US economy that is soon to be on a downward spiral (which the Chinese are well aware of). The only way to break the cycle of debt is to force South Africans to become creative, by compelling people towards entrepreneurship and SME’s as stated in the National Development Plan.

The firing of Nene is certainly not doom and gloom, and as aptly stated by the brilliantly studious ANCYL researcher Justin de Swardt, “When Trevor Manuel was appointed in 1996, the Rand fell by 22% and the IMF predicted the economic collapse of South Africa”. Therefore, history shows us that hope is not lost.

As for Nene, his career has not come to a halt as everyone thinks, yesterday Zuma formally announced that Nene will be taking a position in the BRICS financial sector. If anything, what has happened might just be a very positive thing. After all, what goes up must come down, and what goes down must go up.