ANC wants to attract investors, tones down on populist rhetoric
The drafters of the ANC’s discussion document titled “Economic Transformation” must be alarmed at the policy uncertainty that the recent cabinet reshuffle has created.
Last month, the South African foreign currency-denominated debt was downgraded to junk status by global credit rating agencies Standard & Poor’s Global and Fitch Ratings after the controversial cabinet reshuffle that saw President Jacob Zuma replacing his finance minister Pravin Gordhan with Malusi Gigaba.
Power struggle between BMF and BLSA gave rise to radical policy
In the past few weeks, a three-word catchphrase has spooked investors. “Radical economic transformation” has become the catchphrase for supporters of the recent Cabinet reshuffle, which sent financial markets into a tailspin and led Standard & Poor’s and Fitch to downgrade South Africa’s debt to junk.
President Jacob Zuma said his restructured Cabinet, which affected 10 ministers and 10 deputy ministers in all, will drive radical economic transformation (RET). The rating agencies read this as a signal of a significant shift in South Africa’s economic policies, a prospect that has made investors nervous and raised fears of capital flight, rising interest rates, and the spectre of a recession. Since the Cabinet reshuffle, RET has been hotly debated.