First, the African National Congress government in South Africa under President Jacob Zuma summarily dismissed Nhanhla Nene, appointing David van Rooyen in his place. Bond-rating agencies quickly lowered the value of South Africa’s credit worthiness to a level just above junk status. Protests from opponents and allies and a 15 percent drop in the rand’s value to 16 against the U.S. dollar forced Zuma to replace Rooyen with Pravin Gordhan, who had served as finance minister from 2009-14.
This decision comes amid a worsening economic crisis in the country. Africa’s most industrialized state has seen a sharp rise in unemployment, the decline of the rand, reduced energy generation and water shortages. The country has narrowly missed entering a recession with less than 1 percent growth.
The South African economic crisis is a reflection of the downturn among numerous emerging states which experienced substantial growth over the last decade. A decline in commodity prices, including oil and other natural resources, illustrates the continuing dependency on the existing capitalist dominance of the world economic system. What must be recognized is the need for a reorientation from a neoliberal economic policy to one that is focused on the needs of the working people, farmers, youth and jobless.
After Zuma said Gordhan would return as finance minister, the rand rose around 5 percent to 15.10 against the dollar on Dec. 14. Gordhan’s subsequent statements quoted in the international media for the benefit of the global centers of finance capital were designed to rebuild confidence in the ability of South Africa to halt the decline in the economy.
Political response in and outside the ruling alliance
Elements in the Congress of South African Trade Unions, which is commemorating its 30th anniversary in 2015, criticized the decision to terminate finance minister Nene. COSATU, a key ally of the ANC, held its 12th National Congress recently, at which it called for reforms in the national economy.
In a statement issued from its offices in Braamfontein on Dec. 10, the COSATU federation said, “The unemployment rate is going through the roof and the blight of capital flight is back in full swing. To maneuver this economic minefield and smooth transition, we needed the stability, continuity and the experience that Cde Nhlanhla Nene provided. COSATU also feels that what is wrong with treasury is that the mandarins and technocrats have too much power and they are neoliberal hardliners.”
South Africa’s ruling ANC party in its Dec. 14 statement about the finance ministry said, “The ANC further appreciates the explanation provided by President Zuma on the reasons behind the initial reshuffle of Comrade Nhlanhla Nene, who is the country’s nominee to serve as head of the African Regional Center of the New Development Bank/BRICS Bank. The decision underscores the importance of BRICS as a game changer in the world economy. … The ANC commends the public for vocal engagement [with the] government on the appointment of the Minister of Finance.”
The third key ally in the tripartite ruling alliance, the South African Communist Party, spoke favorably about the government’s response to the widespread criticism over the changes in the ministry. A statement issued by the SACP on Dec. 14 noted, “This is very important, and the SACP welcomes it.”
Opposition parties, including the largest, the Democratic Alliance, used the reshuffling and the decline in the currency value and bond ratings as a political wedge against the Zuma government. Nonetheless, no real alternative economic policies are being advanced by these organizations, which occupy the parliament in Cape Town along with the ANC.
Job losses to escalate class struggle
The appointment of successive finance ministers has been met with trepidation by the corporate interests. Meanwhile the Anglo American mining conglomerate announced it would eliminate 85,000 jobs in a major restructuring plan. These developments represent an ongoing process of job losses in the extractive industry, a major source of employment and foreign exchange earnings in South African and regional economies.
Anglo American’s announcement in preparation for shedding some of its assets and downsizing its workforce indicates that similar actions could follow in other coal and gold companies during 2016.
These decisions will intensify the already escalating class struggle in South Africa. For the last four years, there have been numerous strikes in the mining industry, which have impacted the financial crisis emanating from the unresolved necessity for redistribution of wealth during the postapartheid period.
Mamokgheti Molopyane, a labor relations and mining analyst, predicts that the long-term effects of Anglo American’s restructuring plans in the platinum, coal and gold sectors will become clearer during 2016.
“Anglo is not the only company that announced possible job cuts,” said Molopyane. “The gold and coal sectors [will be impacted], so you can rest assured that next year it’s going to be a battle between the employers and the workers.” (Eyewitness News, Dec. 8)