South African President Cyril Ramaphosa is considering quitting after an advisory panel found the “cash-in-sofa” scandal that’s embroiling his administration may be grounds for his impeachment.
The panel, led by a former chief justice, found the president may have violated sections of the constitution following the theft of $580,000 stashed in a sofa at a game farm owned by Ramaphosa. The African National Congress’s National Executive Committee is due to discuss the findings and Ramaphosa has spent much of the day in consultations over the report.
Investors awaiting answers have been selling South African assets amid fears that his potential departure may set back reforms aimed at bolstering economic growth, stabilizing public finances and tackling graft.
The dollar-rand cross jumped by as much as 4.4% to 17.9596, its biggest increase since March 2020, when South Africa shuttered all but essential services during its first Covid 19 lockdown. The yield on 10-year rand-denominated debt surged 91 basis points to 11.71%, the most in a day since former President Jacob Zuma’s axing of Nhlanhla Nene as finance minister in December 2015 roiled markets.
Here’s what investors and analysts are saying:
Cristian Maggio, head of portfolio and ESG Strategy at TD Securities
“The market is reacting negatively, but if Cyril Ramaphosa’s position is so compromised that he’s looking to resign, it shouldn’t be too bad for South African assets. The market dreads political instability and often prefers to go with the devil they know than the devil they don’t.”
“Ramaphosa’s reform agenda has been underwhelming to say the least. Doubts will remain as to whether another ANC candidate can kick start that process, but we surely know that Cyril Ramaphosa is unlikely to deliver what is needed.”
Credit: Mark-Anthony Johnson