It has finally happened.
Against the advice of senior ANC leaders, business, his allies in Cosatu and the SACP and investors, President Jacob Zuma has fired finance minister, Pravin Gordhan.
Make no mistake, this is a turning point for the country and the ANC.
For the country, a ratings downgrade and junk status looms. This means that the cost of borrowing is about to go through the roof. This will raise the price of everything and add to the cost of investment in the South African economy.
The currency is likely to be severely battered as the downgrade forces funds to sell South African bonds and assets.
Government debt will rise significantly, reducing government’s ability to allocate funds to its programmes as more and more money has to go to servicing debt.
For government, the implications are enormous. The Treasury will lose its credibility as it becomes a clearing house for looting.
Gordhan will go and a new minister and ‘advisors’ will move in, leading to an exodus of the brains trust that has held the line for the past two decades.
Banks will come under severe pressure over the closure of the Gupta accounts and you can expect regulators to be taken over and turned into tools used by Zuma’s cronies to settle scores and create enrichment opportunities.
Expect a Gupta bank to be approved and then expect it to place itself in the middle of any major government financial activity.
For the ANC, the ramifications are serious. The party’s electoral support will enter terminal decline as it loses the last of its support in the middle class and among workers, who will bear the brunt of a tanking economy.
A range of ANC leaders will now go into open rebellion against Zuma who may find himself challenged in Parliament which has begun to take a critical view of his presidency.
Zuma will face a vote of no confidence and it is no longer a sure thing that the ANC’s MPs will all be whipped into line, especially if a secret ballot is allowed.
The party’s leadership will be Zuma’s next target as he seeks to shut down dissent and shore up his ability to secure the position of his successor – or an extended term for himself – at the party’s December conference.
Expect a serious attack on Ramaphosa in an effort to discredit him ahead of the conference.
In short, we have stepped through the looking glass and we are now in another country.
– This column first appeared on BusinessLIVE