ROAD TO 2024 ELECTIONS
The EFF’s Floyd Shivambu as finance minister would ‘really spook the markets’
Although it seems highly unlikely that the EFF deputy president will become finance minister, South Africa would take a financial knock if he did.
In typical EFF fashion, politician Julius Malema made the controversial statement recently that the EFF would only consider a coalition with the ANC after the elections if EFF deputy president Floyd Shivambu is appointed finance minister.
In a country where the former president is now standing for election despite numerous charges of corruption and even a reduced jail sentence, little seems impossible any more. Remember, there was once a time when it seemed unthinkable that someone heavily implicated in the arms deal and then accused of rape could become president. But this is South Africa, and stranger things have happened.
DA leader John Steenhuisen did not mince his words at the recent launch of his party’s Western Cape manifesto in Paarl, in the Drakenstein Municipality.
“If you still had any doubt that the doomsday coalition is a clear and present threat to our future, all doubt was removed… when Julius Malema confirmed that the EFF will give its vote to the ANC, subject to one condition: that the ANC make the EFF’s Floyd Shivambu minister of finance,” he said.
Steenhuisen said the “doomsday coalition” that he first warned about in April 2023 from the floor of the DA’s Federal Congress, was now taking shape.
In a somewhat inflammatory address, he went on to allege that, “under the doomsday coalition, with Shivambu as finance minister, the EFF will unleash its destructive economic policies to turn South Africa into the next Venezuela or Zimbabwe. They will expropriate your house and your property. They will nationalise and collapse banks, mines and industry. They will cause the rand to crash, making food, fuel and the cost of living unaffordable, turning South Africa into a wasteland,” Steenhuisen warned.
Read more in Daily Maverick: 2024 elections
Though his words may easily be attributed to the scorn of an opposition political party, Steenhuisen might be on the money, in terms of market reaction at least.
Izak Odendaal, an investment strategist at Old Mutual Wealth, says it is unlikely that Shivambu would take on what is arguably the most important Cabinet position, even in the event of an ANC-EFF coalition.
“Shivambu as finance minister will really spook the markets,” he said, noting that Nenegate was a classic example of what could happen.
Nhlanhla Nene was finance minister from May 2014 until his unceremonious removal from the post on 9 December 2015, when the then president, Jacob Zuma, replaced him with the inadequate Desmond van Rooyen for an entire weekend before the latter was hastily replaced by Pravin Gordhan.
The financial fallout after Nenegate
Reflecting on Nenegate in 2019, Catherine MacLeod, then chief director for macroeconomic policy at National Treasury, said there was a cost in terms of national long-term debt, as the rand tumbled from R14.59 against the US dollar to R15.90 48 hours later on 11 December 2015.
“The change in ministers increased the perception of risk. Investors were also aware of the perceptions of what such changes might mean for the fiscus.”
The Treasury, she said, was trying to caution against unsustainable projects, and the change of minister was seen as an attempt to erode prudent financial management.
Odendaal says that if Shivambu were to take on the role of finance minister, one could expect to see a rand sell-off.
“The question is how much. I think the market has already priced in the possibility of a coalition government post-election. I think it’s safe to say, though, that the initial market reaction to Shivambu or any other EFF representative as finance minister would be very negative,” he says.
The key role of the finance minister, Odendaal points out, is that it should be someone who has political clout and the strength to stand firm and say no when various Cabinet colleagues approach Treasury to fund their projects.
“You can’t have someone relatively junior in that position. The second thing is that anyone new coming into the position of finance minister will hopefully listen to National Treasury officials about the very stark reality that South Africa is at risk of a debt spiral if we don’t take steps to reduce borrowing,” he says.
Shivambu’s take on the matter
Daily Maverick approached Shivambu to give him the right of reply in this article. He seemed particularly put out when Daily Maverick asked him if he thought he was a suitable candidate, in light of his involvement with the collapse of VBS.
Shivambu was found guilty of failing to declare a payment of R180,00o received from his brother, Brian Shivambu, and breaching Parliament’s code of ethical conduct. Nine days of his salary were docked.
A forensic accountant’s report from the South African Reserve Bank found that his brother received more than R16-million from VBS.
Other than referring us to an EFF podcast released on 9 April, he declined to comment.
In the podcast, Shivambu says the EFF will be able to stabilise the electricity supply in South Africa by forming strategic partnerships with capable state-owned companies from China.
The party’s manifesto says it will nationalise the Reserve Bank and create state-owned banks for various sectors. The newly formed state bank will be the conduit for all public sector salaries, invoice payments by the government, revenue from taxpayers and social grant payments.
As per its manifesto, the EFF will “force” the Prudential Authority to offer licences to black-owned insurance companies and will establish a state-owned asset management firm to manage all municipal pensions. DM
This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R35.
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South Africa really is the twilight zone. The mere fact that voters keep on voting for the ANC whose leaders are corrupt and stealing the money is unfathomable. Julius and Floyd have both been implicated in multiple cases of tenderpreneuring and corruption and pillaging finances and yet here they are and even worse, they now want the keys to vault. When South Africa has hyper-inflation like Zimbabwe and supermarket shelves are empty, will that be enough to convince the voters that they probably should not have supported either of then in the first place.
Unfathomable indeed. Former Oxford don, RW Johnson, by far SA’s foremost political commentator, makes an interesting point. The ANC’s vote peaked at above 70% of the vote in the 2000s. Since then, its vote has declined. But, as Johnson points out, if you add the ANC’s evil spawn, the EFF and MK’s, votes to the projected ANC vote, we’re back at similar figures than the ANC got in the 2000.
So SA’s voters clearly don’t or can’t learn. They persist in voting for corrupt and idiotic parties, which indicates they themselves either see nothing wrong with corruption, or are themselves, ahem, idiotic.
Throw in some tribalism and things will never change!
Thats exactly why MK was formed. To allow Zuma and the ProZuma factions more wiggle room at the trough. I still think they may have a chance at a coalition with the ANC. We will be back at square one. I don’t hold out much hope for anything good coming out of the upcoming elections. SA voters, much like Zanu PF voters wont wake up until its far too late to do anything about it.
So sorry for my simple mind, but what’s so different? The current crop are overwhelmingly stupid and incredibly crooked, so it’s just another manipulative fool who thinks Cuba, Venezuela and Hamas are successful, that will be in charge. Get out while you can.
Kevin, whilst I share your sentiments it’s not unfathomable. Whilst you have the knowledge and experience to understand the probable implications of such an appointment, your knowledge is shared by a small minority of people.
One of the things that the EFF / ANC / MK do very well is keep their messaging simple. Essentially ‘you the people’ don’t have, whilst others do, and we want to take from those that have and give it back to you’
Your solutions (my solutions) and arguably the only sustainable solutions centre on ‘growing the economic pie for all’. However, the detail of these solutions are not easily explained and also pose a threat to the beneficiaries of the current non functioning system.
That, I believe is the essence of where we are right now, and it’s human nature. This is why peeps keep on getting conned by ponzi and pyramid schemes cos they think there is such a thing as quick, easy money – and for the same reasons keep falling for politicians who tell them there are quick easy answers.
I hope I am wrong but I don’t see a very positive trajectory here. You are right, unfortunately the voters don’t understand economics and hence Julius’ rhetoric about taking and distributing wealth is rather popular. If the EFF ever gets the keys to the kingdom, it will be Zimbabwe 2.o. Also, the people who have options to leave but haven’t yet, will then be given a nice push and all those tax payers will then also depart and take their tax revenue with them. It doesnt matter for Julius because he will still be rich and able to dip onto the coffers at any point but as for the rest of the South Africa, just look North of South Africa’s borders for the image of what is to come. This idea in South Africa that you get rich through cronyism and corruption instead of through ideas, risk and hard work is going to be the undoing.
Kevin, whilst I share your sentiments it’s not unfathomable. Whilst you have the knowledge and experience to understand the probable implications of such an appointment, your knowledge is shared by a small minority of people.
One of the things that the EFF / ANC / MK do very well is keep their messaging simple. Essentially ‘you the people’ don’t have, whilst others do, and we want to take from those that have and give it back to you’
Your solutions (my solutions) and arguably the only sustainable solutions centre on ‘growing the economic pie for all’. However, the detail of these solutions are not easily explained and also pose a threat to the beneficiaries of the current non functioning system.
That, I believe is the essence of where we are right now, and it’s human nature. This is why peeps keep on getting conned by ponzi and pyramid schemes cos they think there is such a thing as quick, easy money – and for the same reasons keep falling for politicians who tell them there are quick easy answers.
I have just one question: WHY has the NPA not arrested Malema and Shivambu for their part in the VBS saga????
Or a host of Government and ex Government Ministers.
That is the only question to be answered. Should that happen and all other State Capture participants (as per the Zondo report) be charged and locked away, SA will be saved.
Could somebody, anybody please explain to me what need we have for politicians? What EXACTLY do they do, apart from getting paid handsome salaries by the taxpayer? Why can’t we ( a carefully selected panel ), just select the best possible person to do a task or fill an important position and pay them well for their expertise? What need for the lying, greedy and criminal people who seem to think that they are above everybody else while doing very little. They only come alive at election time in order to stay in that lucrative position. As you have guessed, I have a very dim view of ALL politicians. Don’t agree with me? Prove me wrong.
Yes, certainly we have no need at all of politicians. The current understanding of democracy with its political parties vying for ‘power’ is clearly not working and a different system combining management of the country by a selected group of proven specialists on 5 year contracts, subject to oversight by an elected parliament of constituency representatives and sector (business, labour, civil society, academia, legal) representatives is a truly viable option. But getting there from where we are now…?
Would rather have Stephen Hawking’s in my athletic team than this pile of manure in charge of anything!
Its like giving the keys of a Ferrari to a learner driver! Shivambu is a complete and utter thief, idiot and criminal who only knows how to bully, be an outright racist and to steal. If our law enforcement agencies had any backbone and didn’t fall under the control of that other infamous criminal organization, aka anc,
these degenerate scumbags wouldn’t be around in public office.
Of course, Malema and Shivambu, among others, could be prosecuted by the NPA etc, but it’s clear that Government won’t do that…. they are simply too close to the ANC in practice, corruption continues.
This fascination of the EFF fascists and ANC communists with China and Russia is beyond ridiculous. They look to those two countries as our saviours is a dangerous one for all in Africa. African “Chinalisation” is going to be as bad as colonisation and African leaders won’t be thanked by their descendants for the terrible decisions they made. They’re selling their own people to another power from the east as their leaders did to the west. The more things change the more they stay the same.
Shivambu’s appointment of Minister of Finance woud have the same effect on the markets that “Des “weekend special” van Rooyen had during Zumas rape of the country.
The finance minister everywhere in the world should be someone who understands university level economics. Shivambu is a smart guy, but his ability to be a political monster does not in any way transpose to being the right person to manage the economy. He may not be as catastrophic as Liz Truss was for the UK, but on the other, he may easily be. And the markets probably wont wait to find out.
The markets can go to hang. We dont vote for the them.
exactly
The market, or money, always has a vote. What’s more, the less money Govt has (and we got next to none) the more powerful and loud the market vote is.
“Money! Get Back!
I’m alright, Jack, keep your hands off my stack.”
– Pink Floyd
(Also: Red Floyd)
We are at it again… calling voters idiots and all. But the reality is, the noises and arrogance aside, there isn’t really any convincing opposition to topple the ANC with the confidence of the majority. Hence, past May 29th, the reality on the ground is more likely to do with Floyd Shibambu as minister of finance. And in the same light, the markets others dread about will, quicker than one can imagine, stabilize and things will be back to normal – the South African normal. It won’t be the first time. We’ve seen it before.