South Africans are feeling better without really knowing why. The positive sentiment is probably linked to the stronger rand, which is being driven by the stabilization of commodity prices and a renewed investor appetite for emerging markets; but mostly I think it is because the war between our finance minister Pravin Gordhan and President Zuma seemed to have died down. Well that was until yesterday, Oct 11 for the record.
Our “independent” NPA led by Shaun Abrahams, fondly known as Shaun Sheep, instituted fraud charges against Mr. Gordhan on a labour matter, which took place when he was Commissioner of SARS allegedly costing SARS R 1.1 mil in wasteful expenditure. The announcement resulted in single day losses of R 50 billion in the markets. That is billion not million in case you were wondering. This is the same Shaun Abrahams who appealed a high court ruling, which found the NPA remiss in not instituting over 783 corruption charges against President Zuma. You have got to be kidding!
I must admit to feeling hopelessly despondent to say the least. I wrote a few weeks back that a rating downgrade was most likely already in the price, meaning that there should be no shock to system if S&P did decide to downgrade our foreign denominated debt. Let me be clear on this, if Pravin Gordhan is removed under the guise of a cabinet reshuffle and the trumped up charges, we will be the downgraded, but this is not reflected in the price. Should the final bastion of our institutional credibility fall we will be in crisis and all bets are off! Banana Republic here we come.
The only silver lining and it is very hard to see a silver lining is that the resultant economic crisis will ultimately bring about political change. We can only hope that the ANC party wakes-up to this reality and does something about the current state of affairs, although I fear it will get a lot worse before change will come.
Mcomm, CFP®, HdipTax
T. 021-851 3746