Departure of 2 Key Economic Figureheads Shows Lack of Confidence in Government

The second tenure of President Jacob Zuma has just begun and already South Africans are left wondering about the departure of two influential policymakers from their offices.  Pravin Gordhan was moved from his post of Finance Minister after elections had taken place with much speculation leading up to the elections on whether he was willing to stand for a second term and most recently Gill Marcus, South African Central Bank Governor has expressed her intentions not to renew her contract when it comes up for renewal in November this year.

 Pravin Gordhan exit comes as a grieve warning to current cabinet. Gordhan drove a hard line and came to office in economic times of vulnerability. He was able to steer government budget in the right direction and ensure stable government revenue with his previous work as SARS commissioner. However Gordhan’s integrity has come into question when he openly appealed to government officials to tighten their belts, an appeal which seems to have fallen on deaf ears within the ruling party where government departments is rife with overspending and tender irregularities. One needs only to look at the recent Nkandla scandal which has implicated President Zuma in upgrades to his private residence to the worth of over R200 million to see the extent of these uncontrolled actions of extravagant spending.

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This had to be the last straw for Gordhan who has somehow tried to save his own reputational damage by agreeing to work within another department in government.  He now heads up the Ministry of Cooperative Governance, a department which objectives are to ensure that officials abide properly by the rules set out and maintain a steady hand on their spending; something the previous minister was unable to do.

Gill Marcus has been an outspoken advocate of the dire economic situation which is currently playing itself out in South Africa.  The monetary world of economics has seen an abrupt stop to norms with prolonged periods of quantitative easing in the US. The mass amount of money created to halt the rot of the world financial system is dismal but Marcus has been able to adapt well to the new environment.

Given the problematic circumstances faced from externalities from the outside world, Marcus has on several occasions warned government of the dangerous precedent it is setting by not acting swiftly to economic disruptions such as the Marikana Massacre in 2011 and most recently the Platinum sector strike which lasted 5 months. In both cases labour has been unwilling to reasonably negotiate and sacrificed the wages of workers to secure higher wage demands at the cost of thousands of jobs and at the same time business has suffered a barrage of attack on its confidence levels in doing business in South Africa which has led to a ripple effect of mass closure of many businesses and job losses.

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While sitting idly by, the government has watched from the side lines as this economic tragedy has made a mockery of a sound and stable economic environment. As these events continued to rear their ugly heads Marcus has been forced to drop growth forecasts quarter after quarter leading to further downgrades from rating agencies and outcries from the same government officials who claim to have all citizens’ interest at heart while at the same time continue to lavishly spend on luxury houses and cars.  

One does seem to question the health of the economy knowing that both fiscal and monetary policies are essential to the functioning of any economy and the exodus of two of the most important persons within those policy frameworks is a major blow to confidence in the current government.  

The continual denial by top leadership within the ruling party of disruptions within the economy is tantamount to unclaimed responsibilities entrusted to them by the electorate. If these responsibilities are further ignored it may only lead to a worse situation than what we see and damage which can be irreversible.  Maybe it’s time for the ruling party to gaze into the mirror of possibilities and see the true reflection of what really is happening.

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