South Africa's currency saw renewed pressure Monday morning as investors fret over the shock sacking of highly-respected Finance Minister, Pravin Gordhan, with his replacement beating the drum for a "radical economic transformation" agenda over the weekend.
"The issue of radical economic transformation arises from a criticism that for quite a long time the structure of the South African economy has not been changed. We have not paid sufficient attention to the real economy, to industrializing the economy, to ensuring that we create entrepreneurs and industrialists, particularly among black people," the country's new finance minister, Malusi Gigaba, told reporters on Saturday.
Although "no-one can properly define this term" Peter Attard-Montalto, emerging markets economist at Nomura, told CNBC Monday that it was likely to imply initiatives such as faster land redistribution, forced share ownership changes and higher wealth taxes, with the goal of addressing the fact that around 10 percent of the population – a largely white cohort – still own at least 90 to 95 percent of all wealth, according to widely cited research from REDI published last June.
"It's a very hard to pin down term. The minister had a stab at doing that explanation at the weekend but probably has a lot more explaining to do both to investors and rating agencies," commented the Nomura emerging markets specialist.
South Africa jealously clings to its credit rating which hovers just above the line separating "investment grade" from "junk", however, Gordhan's removal last week and the negative implications it carries for international finance flows into the country, have already triggered an adverse reaction from the biggest agencies.
"Continued political instability that adversely affects standards of governance, the economy or public finances, was one of the