News / South Africa / State Capture

Makhosandile Zulu
2 minute read
19 Feb 2019
11:21 am

Treasury economist gives testimony on Nenegate’s impact on SA economy

Makhosandile Zulu

The economist says Nhlanhla Nene's axing and replacement by Des Van Rooyen in 2015 had an immediate impact on the rand-dollar exchange rate.

Then Minister of Cooperative Governance and Traditional Affairs Des van Rooyen during a press briefing at the GCIS offices in Pretoria, 5 April 2017. Picture: Jacques Nelles

National Treasury economist Catherine MacLeod gave testimony at the commission of inquiry into state capture on Tuesday to corroborate Treasury director-general Dondo Mogajane’s testimony to the commission.

Mogajane appeared before the commission on November 23 last year, recalling the arrival of Des Van Rooyen who replaced Nhlanhla Nene in December 2015.

ALSO READ: ‘Things are going to change’ – Mogajane recalls Van Rooyen’s arrival at Treasury

Former president Jacob Zuma fired Nene in December 2015, and replaced him with backbencher member of parliament (MP) Van Rooyen, leading to the plummeting of the rand.

Van Rooyen was in turn replaced by Pravin Gordhan just after a few days in office. The incident has been dubbed Nenegate.

MacLeod’s testimony provided “quantification” of the impact Nenegate had on the country’s economy, more specifically, the impact it had on the country’s national debt.

MacLeod told the commission that Nenegate had an immediate impact on the rand-dollar exchange rate, with the rand R14.59 to the dollar on December 9, 2015; R15.27 to the rand on December 10, 2015; and reaching R15.90 to the dollar on December 11, 2015.

She added that the “price of bonds fell sharply” following the Nenegate incident.

MacLeod said the change of ministers at the time was a concern for investors and the impact the change would have on the country’s fiscus.

At the time, MacLeod added, National Treasury was cautioning and blocking certain projects which the presidency at the time sought to implement – including the nuclear build project.

Investors were concerned that a change of the finance minister would weaken Treasury and its ability to block unsustainable projects like nuclear build.

MacLeod said ordinarily the change in finance ministers would not be any negative reaction by the market, but what made Nenegate different was the way in which it was done and the unknown person introduced was perceived as a risk to investors.

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