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South Africa's economic performance under Nhlanhla Nene
Date: 8 October 2018 Category: Economics |
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In this article we focus on the economic performance of South Africa under the current embattled finance minister Nhlanlha Nene, who after revelations at the Zondo commission of inquiry into State Capture in which Minister Nene admitted to visiting the controversial Gupta family at their compound in Saxonwold as well as their business offices in Midrand while being the deputy and actual Minister of Finance, is under intense scrutiny and has reportedly asked President Cyril Ramphosa to relieve him of his duties as finance minister.
So how has South Africa's economy performed under the leadership of Finance Minster Nene? |
Nhlanhla Nene Caricature
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South Africa's economy under Minister Nene
Finance Minister Nhlanlha Nene was appointed to take over from then finance minister, Pravin Gordhan. He was appointed in May 2014, and held the position until President Jacob Zuma fired him in a moved that shocked the markets and show back bencher David "Des" Van Rooyen being appointed in the position of finance minister, but that only lasted the weekend as financial market pressures saw President Zuma cave in his plan to capture the Treasury when he reappointed minister Pravin Gordhan to the finance ministry. Thus current Finance Minister Nene is not new to controversy and shake ups at the Finance Ministry. But after admitting at the commission of inquiry into State Capture that he visited the Gupta's on more than one occasion pressure is mounting in the Minister, and the President to explain exactly what happened at these meetings and whether the current President, President Ramphosa still has confidence in Minister Nene to run this minstry.
Quarterly GDP
The graphic below shows the quarter on quarter annualised seasonally adjusted GDP growth rates and the different colours represents the different finance ministers that presided over South Africa's economy since 1994. And as the graphic shows, the light blue represents Minister Nene, who is currently serving in his second stint as finance minster after his shocking removal from office by then President Jacob Zuma, That move highlighted just how compromised the President and the country is, and showed a shadow state was pulling the levers of government, and not the party who was elected to govern,
Over the period that Minister Nene has been in charge of South Africa's economy, the summary below shows the average economic growth rate, inflation rate, unemployment rate and the average Rand/US Dollar exchange rate under his leadership:
- GDP quarter on quarter annualised growth rate: 1%
- Inflation Rate: 5%
- Unemployment Rate: 25.6%
- Rand/Dollar exchange Rate: R12.20/$1
- GDP per capita: R55 357
While the numbers above do not flatter Minister Nene, it has to be said that he has been in charge as minister of finance during very trying times in South Africa's economic history, and in his latest tenure as the finance minister he inherited a economy that is a mess thanks largely due to state capture and corruption and other problematic policies set out by former President Zuma, such as free tertiary education that has to be funded out of the state coffers some how. He is also in charge of the country's finances while the revenue service is in turmoil after it was almost completely broken down by former commission of SARS, Tom Moyane. Thus tax and revenue collection for the state is a problem, investor confidence is a big problem due to corruption and state capture and reckless policies such as land expropriation without compensation etc. So all South Africa's economic issues is unfortunately hurting the numbers while Minister Nene is in charge. But if all goes well, the ground work for a more prosperous South African economy can be laid by a stable and uncaptured Treasury and Finance ministry. So lets hope Minister Nene gets to stay on as the finance minister, as stability is what is required right now, as more political uncertainty is the last thing South Africa can afford at this point in time.