LISTEN: SA economy still feeling impact of Nene’s removal
The commission of inquiry into state capture has heard that the country's economy is still reeling from former president Jacob Zuma's decision to remove Nhlanhla Nene as finance minister in December 2015.
Nene's removal has been dubbed #NeneGate.
An economist from Treasury, Cathrine McLeod, appeared before the commission on Tuesday to corroborate testimony given by former director-general Dondo Mogajane.
In October 2018, during his testimony at the commission, Nene said he was warned about his looming removal after he twice refused to sign the nuclear deal with Russia.
He told the commission that South Africa simply could not afford the deal.
"The investors were also aware of what a change in ministers might mean for the fiscus. Treasury was attempting to caution and stop certain projects from coming through that were fiscally unsustainable to the extent that a change in minister was seen as an erosion of Treasury’s attempts to stop unsustainable policy from being implemented. Investors also saw that and were concerned that the change in ministers would weaken Treasury's ability to fight that policies in the cabinet," said MacLeod.
In the immediate aftermath of Nene’s removal the rand lost ten percent against the US dollar.
MacLeod said this had an impact on the government’s ability to repay its debts, which in turn impacted on the provision of social services such as grants.
Nene was replaced by unknown ANC backbencher Des van Rooyen, who left the position after only four days.
"What is important to note is that after Nenegate, minister Pravin Gordhan was reappointed as finance minister and because of the continued pressure Gordhan remained under, which investors saw, there was still pressure on financial asset prices. So you can see that in the rand-dollar exchange rate, because the state capture project, had a very visible impact with Nenegate, but it was a risk that was building up over time," added MacLeod.