Zuma’s TV statement shows how little he understands market psychology

11 January 2016

Congress of the People has long known that President Zuma understands neither economics nor constitutional democracy. His view that "there was an exaggeration in terms of the reaction," to his sacking of Nhlanhla Nene indicates how unfit he is to be president of South Africa. Each time he speaks on the Nene issue, the rand plummets. The next interview he is on the matter will see an exchange rate of R20.00 to the $1.00

Investors and the markets want certainty squared and cubed. The sudden, unexpected and out of the blue firing of the Minister of Finance was guaranteed to create shockwaves in the financial markets and they certainly did. His choice of replacement was so unsound and so reckless that it would have caused the market to crash if he had not been speedily removed.

At a time when South Africa is struggling with a continuing balance of payments deficit and the rand depreciating alarmingly, the sacred duty of government is to promote confidence, not to rattle the markets as President Zuma did. Furthermore, President Zuma’s lack of understanding of constitutional democracy is undermining investor confidence in South Africa. He mistakes success at the polls for majoritarianism. He wants unfettered rule and freedom from accountability and legal challenges when his administration violates rule of law. He has totally ruined the functioning of South Africa's parliament.

Furthermore, President Zuma and his administration have recklessly piled up the national debt to over two trillion rand and this means borrowing as though government bonds had been devalued to junk status. The ruling party, since 2009, has been taking South Africa ever closer to the fiscal cliff. As the huge pile of national debt comes due for payment this year and especially next year, South Africans will face very stormy times. 

In his interview President Zuma was just too blasé for the good of the people. He believes everyone else is wrong and he alone is right. The markets and investors certainly don’t agree with him. That is why those who are sitting on a mountain of cash in South Africa are not willing to take risks and invest that money at home.

For as long as the ANC keeps him as number one, South Africa will slide deeper and deeper into an economic quagmire. Zuma is ice to the fire of South Africa’s economy and prosperity. He has been extinguishing its flame.

Issued by Dennis Bloem, COPE spokesperson, 11 January 2016