Business sector, commenting on President Cyril Ramaphosa’s political uncertainty, says South Africa can ill afford further erosion of confidence and instability. Picture: Phando Jikelo/African News Agency(ANA)
Political uncertainty in South Africa related to President Cyril Ramaphosa’s future has left a bloodbath on the JSE, with the rand tanking and financial stocks plummeting.
Bank stocks plunged nearly 10% yesterday, led by Absa, which fell 9.6% to R185.40 per share; followed by Capitec, which was down 9.3% to R1 836. 31 per share.
FirstRand and Nedbank lost 9.2% and 8.8% to R60.79 and R208.45 per share, respectively.
This followed reports that Ramaphosa was considering resigning in the wake of preliminary evidence he may have committed serious misconduct.
The rand fell by more than 3% to R17.90 to the US dollar in intraday trade, the lowest since November 4, before paring losses to R17.66 to the dollar by 5pm as the news gripped the markets and spooked investors. The rand plunged R1.41to R21.71 to the pound by 5pm, also tumbling R1.02 to R18.59 against the euro.
The independent panel of experts appointed by Parliament and chaired by retired Chief Justice Sandile Ngcobo found that Ramaphosa may have a prima facie case to answer for not reporting the burglary where millions of rands in foreign currency were stolen at his Phala-Phala farm in Limpopo in February 2020.
The Section 89 Independent Panel found preliminary evidence that Ramaphosa may have violated his oath of office, may have contravened a section of the Prevention and Combating of Corrupt Activities Act, and that he should face further scrutiny.
The news sent shock waves through the local markets and put the rand under pressure as Ramaphosa, investors’ preferred candidate for president, is now facing possible removal from the Union Buildings just weeks before the crucial ANC’s elective conference where he seeks a second term.
Anchor Capital’s co-chief investment officer Nolan Wapenaar said stocks could trade weaker for a prolonged period because of uncertainty.
Wapenaar also said the rand’s movement was in stark contrast to what was going on in the rest of the world.
“The Phala Phala events have shocked the domestic market with South African centric equities, domestic bonds and the rand losing value while the market assesses the impact on domestic politics and the ability of the government to continue with its drive toward rebuilding South Africa,” Wapenaar said.
“This will likely weigh on domestic assets for a while.”
The ruling ANC has called an urgent meeting of the National Executive Committee (NEC), its highest decision-making body between conferences, for today, Friday, to discuss the implications of the report.
The report is still set to be debated for adoption by Parliament next week.
In a statement on Wednesday, Ramaphosa said the Section 89 process has presented an “unprecedented and extraordinary moment” for South Africa’s constitutional democracy.
However, he reiterated the statement he made in his submission to the panel and exonerated himself of any involvement in the cover-up of the Phala-Phala crime and the subsequent alleged clandestine hunting down of suspects.
“I have endeavoured, throughout my tenure as president, not only to abide by my oath but to set an example of respect for the Constitution, for its institutions, for due process and the law,” Ramaphosa said.
“I categorically deny that I have violated this oath in any way, and I similarly deny that I am guilty of any of the allegations made against me.”
Meanwhile, the business sector weighed in on the fiasco.
Business Unity SA’s CEO, Cas Coovadia, said this was a significant crisis for the country and posed high risks that would see further erosion of confidence and will increase an already unstable political climate, particularly in the run-up to the ANC Electoral Conference.
“Our country can ill afford further erosion of confidence and instability, at a time business is committed to devote resources and capacity to work with government to address numerous crises in South Africa,” Coovadia said.
“We need clear direction on this within the next few days, so that a clear message is sent to citizens, investors, and others that authorities are able to respond decisively to this crisis.”
Business Leadership SA said the fact that allegations against Ramaphosa had been investigated was a positive sign of the health of South Africa’s democracy and its institutions.
“It is now important that our institutions are supported in concluding investigations and if appropriate further actions are taken to prosecute or otherwise impose appropriate consequences without fear or favour,” it said.
“We would also like to call on all the other organs of State who are working on this matter to conclude their processes and come forward with their findings.”
BUSINESS REPORT