Another financial house looking to move out South Africa

A new week another dent in the South African government's plan to inject confidence in its financial and banking system as news overnight reported that insurer Old Mutual Plc is considering splitting its entities into separate companies leaving investors wondering if the longer term implications of President Jacob Zuma decision to fired Nhlanhla Nene in December, after a fallout between the pair, could be setting in motion a deafening vote of no confidence in his or his cabinets capability in keeping foreign investors at ease with reckless actions that potentially open up avenues to tougher economic conditions.

Actions taken by Zuma in early December 2015 caused gyrations throughout the South African financial system calling into question the independence of Treasury and sending the local currency, the Rand to all time lows of R18 to one US Dollar. The Top 4 Banks suffered major devaluations following the announcement in concern that Zuma might be wrestling over control of Treasury for his own gains, inherently implying a much greater risk when considering the height of bribery and corruption charges that were levelled against him before his tenure as president.

This is the second financial institution in less than a week to make such a move with many expecting more to knock at government's lack of trustworthiness. Barclays Plc announced last week that it intended selling down its 62% stake in local and African exposed Barclays Africa Group but at the same time not giving away too many reasons why it planned such a move.

As Barclays exits Africa; Old Mutual considers splitting operations https://t.co/UfD7aGr5eY Watch @cnbcafrica's interview on Friday with CEO

— CNBC Africa (@cnbcafrica) March 7, 2016

Old Mutual is said to be looking at unbundling Nedbank Group, the asset that strikes the most interest at present as well as its wealth management in the UK and surprisingly its emerging markets business that resides in South Africa.

We have seen a steady decline in sentiment favouring investment into emerging markets over the last year after the interconnectedness of world economies to the activity of China has caused a knock-on effect that has seen a slowdown in global growth but more specifically these nations as they have geared themselves up towards driving Chinese growth.

However we should not be led astray by international economic issues affecting the world although they play a significant part in the whole equation, we should scale down into the country specific factors that have contributed to the sell off and resultant capital flight as there are wider implications that lie ahead for the health of South African financial markets instead of falling in the trap of believing that the country has been simply placed in the same basket with other poor performing economies.

The ruling party's hastened reaction to the decision made by Zuma and subsequent about turn stance of support for Zuma or rather lack of after affording him sufficient space to sow the seeds of discontent in South Africa shows a lack of interest in segments of the economy that do not translate immediately into severe financial market volatility that sparks the interest of the international media.

Profound support of controversies such as the Nkandla debacle, nepotism in government departments and blatant spending abuse from officials have propped up Zuma's political strength that meant the decision he took was based on his confidence of overall support from the party up until now. The party only has themselves to blame for what has transpired and any measure put in place to try undo the negative externalities caused by such event will ultimately fail because investors have lost their faith in the government and ruling parties ability to govern South Africa.

In stark contrast to the daily protests we see on the streets filled with millions of dissatisfied voters, the silent yet disastrous move by foreign investors to leave the country indicates the steering force money has over those in power.