Turmoil in South Africa after finance minister fired in cabinet purge

Demonstrators protest outside parliament in Cape Town, South Africa, on March 31, 2017. (Brenton Geach / AP)

PRETORIA, South Africa -- South Africa faced political and financial turmoil on Friday after President Jacob Zuma fired the finance minister in a Cabinet reshuffle, intensifying a rift in the party that took power after the 1994 end of white minority rule as well as concerns about corruption at top levels of government.

The currency slipped, and people protested outside parliament and the national treasury against the dismissal of Finance Minister Pravin Gordhan, the widely respected steward of one of Africa's biggest economies and a bulwark against perceived efforts to raid state coffers for personal gain.

The reshuffle of 10 of the country's 35 ministers was announced after midnight in a move that likely was designed to soften negative impact on markets but also deepened intrigue and shock in South Africa, whose pride in its democratic credentials, forged in the struggle against apartheid, has been diminished over the years by scandals around Zuma.

"South Africa is not for sale," said Gordhan, denouncing any graft in government as well as murky allegations that he had been conspiring against the nation during London meetings that were meant to encourage investment in South Africa. He was abruptly called back from those meetings earlier this week.

At a news conference after his dismissal, Gordhan urged South Africans worried about the direction of their country to draw on past protest experience during white rule, saying: "What should the public do? Organize. Organize."

The departure of Gordhan exposed tensions within the ruling African National Congress party, which lost control of key metropolitan areas in local elections last year, partly because of dissatisfaction with Zuma. While the party's reputation as the main movement against apartheid has been tainted, it is still seen as the front-runner ahead of general elections in 2019.

Gordhan was replaced by Malusi Gigaba, a former home affairs minister and ex-head of the ruling party's youth league.

Gigaba "is humbled by the opportunity extended to him to serve the country and the people of South Africa" as finance minister, the national treasury said in a statement. He held discussions with Gordhan and agreed to a meeting with his predecessor soon, it said.

Deputy President Cyril Ramaphosa criticized Gordhan's firing in a rare public rebuke of the president, and Gwede Mantashe, the ruling party's secretary-general, said on Radio 702 that effective Cabinet ministers were dismissed and ineffective ones were kept. However, key party factions including its youth and women's leagues expressed support for Zuma, whose office said the reshuffle was aimed at promoting efficiency, as well as women and younger lawmakers.

In a statement, the ANC acknowledged "varying opinions" in the party, and urged members and leaders "to focus more on what contributes to unify the nation than what divides us."

The Democratic Alliance, the main opposition party, said it would file an urgent legal request to block the planned swearing-in of the new ministers later Friday.

The DA also is pushing for a vote of no-confidence in Zuma, who has survived similar votes in the ANC-dominated parliament in the past. Zuma, in the midst of his second and final five-year term, also overcame an attempt by senior party members to oust him late last year.

Many South Africans are now concerned that the economy could be downgraded to junk status by credit ratings agencies. Gordhan's firing is another blow an economy that grew just 0.5 per cent last year and has an unemployment rate of around 27 per cent.

"The effects are manifold. We have a weaker currency, we are likely to get a weaker currency and that's going to have an impact on interest rates and inflation," economist Mike Schussler said.

"South Africans are getting poorer, and on top of that they will pay more for their food, whilst there will be less money for social welfare, and under those circumstances I think the chances of further political instability have just increased," he said.

Fitch Ratings predicted that the reshuffle will raise tensions within the ruling party and could weaken public finances and governance standards.

Scandals surrounding Zuma include more than $20 million in state spending on his private home -- Zuma paid back some funds after the country's top court ruled against him -- and the president's links to the Guptas, an Indian immigrant family accused of trying to influence past Cabinet appointments.

Gordhan was finance minister between 2009 and 2014 and was reappointed in December 2015. At that time, Zuma had abruptly fired Finance Minister Nhlanhla Nene and replaced him with a relatively unknown figure, unsettling markets.

In his last public appearance as finance minister, Gordhan said subterfuge had no place in a democratic South Africa.

"Ordinary South Africans shouldn't pay the price for any nonsense created elsewhere," he said.

Torchia reported from Istanbul. Associated Press writer Renee Graham in Pretoria contributed