He would like an explanation for the sacking of former finance minister Nhlanhla Nene, former finance minister Trevor Manuel has said.
Speaking at an investor roadshow hosted by Prudential Investment Managers, Manuel said although the president has the prerogative to alter the cabinet in terms of the Constitution, this has to be done on a rational basis.
“Part of what we’ve allowed to happen is nobody asks about why he [Nene] was removed from his position. There’s some talk about Des van Rooyen. I’m not interested in Des van Rooyen. I would like to know why Nhlanhla Nene was fired from his position.”
Nobody has really answered this question, he said.
President Jacob Zuma’s replaced Nene with Des van Rooyen on December 9, a move that spooked investors and wiped roughly R170 billion from the JSE’s market cap in two days.
Former finance minister Pravin Gordhan replaced Van Rooyen four days later.
Manuel said this discussion was not taking place – not even in parliament – and yet it was fundamentally important in a constitutional democracy as the executive was individually and collectively accountable in terms of the Constitution.
“Don’t ever give up on these things,” he urged.
Addressing delegates three days before Standard & Poor’s (S&P) is due to announce its decision on South Africa’s credit rating, Manuel said although rating agencies would consider the political environment, their decisions won’t be driven by panic.
He argued that there was a need for South Africans to consider the context and broader picture “so that we don’t talk ourselves into a panic and create a set of circumstances where all of these become self-fulfilling prophecies”.
S&P and Fitch both have South Africa on the lowest investment-grade rating (BBB-), but since S&P has a negative outlook assigned to the rating, some argue that it is the agency most likely to push the country to junk status.
Manuel likened the task of ratings agencies to that of a fighter pilot sitting in a cockpit. When ordinary passengers stepped into the cockpit they would see numerous dials, but won’t know what their purpose is, but the pilot would be sensitised to movement of each one.
“These people [ratings agencies] relate to their task in pretty much the same way. The way they analyse data, the way they receive data coming out of Stats SA or the Reserve Bank is very different to the way in which even journalists look at data. They are at this thing every day. It is the only task that they are accountable for,” Manuel said.
Key questions they would examine is what South Africa’s growth trajectory was likely to be, if the country would be able to pay and service its debt and whether it was sufficiently conscious about decisions related to its debt to GDP ratio.
Manuel said ratings agencies also “had their behinds kicked” during the subprime crisis when they assigned an AAA rating to high risk collateralised debt obligations (CDO).
“So their consciousness about not wanting to repeat the errors is probably much bigger than ours,” he said.
Manuel said although there were many challenges facing South Africa, there has to be an understanding that it was not only the responsibility of government. What lifted the country out of the dark days leading up to the early 90s was a collaborative effort by business, labour and government.
Current amendments to the B-BBEE legislation and changes to the Mineral and Petroleum Resources Development Act won’t be resolved without discussions between the various stakeholders, Manuel said.
On this front, there was a very positive response from especially business to the events of December 9, when it convened, looked at the issues and offered their assistance. After the February budget, business, labour and government also went out together to present a united front to the world, Manuel said.
Manuel said there had to be an open and on-going discussion about private sector investment in South Africa and what the impediments were while the challenges of the workforce also had to be listened to.
“There’s also the need to recognise the very important role that small and medium enterprises can and should play in our economy.”
There was also a need for on-going reform with regard to state-owned corporations and the need to focus on basic infrastructure issues.
Manuel emphasised though that this should not be done “for effect” but had to become part of the culture of interrelationship that would inform the social compact between business, government and labour.
“I do think that what we need is a social compact. A social compact is actually a detailed expression of trust.”
Ultimately the National Development Plan was a blueprint to reconvene society to focus on pertinent issues, reconstruct trust and create a more stable and certain environment.
Manuel said even if foreign investors exited the country and some South Africans contemplated getting another passport, the reality was that the majority of South Africans would stay in the country, invest and raise their children here and this was the environment that they had to work with.
While there are challenges there are also great opportunities to rebuild the sense of social cohesion, he said.
“We must demonstrate that our constitution binds us in our diversity – recognising that we are different, that we come from different experiences but we have a common future.”
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