By Tannur Anders
JOHANNESBURG (Reuters) – South Africa’s rand fell sharply on Thursday after media reports of a major disagreement between the pro-business Democratic Alliance (DA) party and President Cyril Ramaphosa over cabinet posts.
At 1527 GMT, the rand was trading at 18.48 against the dollar, 1.7% weaker than its previous close.
The DA agreed to join Ramaphosa’s African National Congress (ANC) in a unity government after the ANC lost its parliamentary majority in elections last month.
It is expected that the prosecutor will be given cabinet positions in return for supporting Ramaphosa’s re-election as president. But the News24 website and Business Day newspaper reported that Ramaphosa had reneged on an offer to give the DA the Ministry of Trade, Industry and Competition.
News24 said the DA’s leadership had decided to tell Ramaphosa that if he did not adhere to the agreement struck this week, the deal between the two parties would not go ahead.
Both sides did not immediately respond to Reuters calls for comment.
Business Day said Ramaphosa withdrew the offer of the ministry position after top ANC officials argued at a meeting on Wednesday that this would result in the DA “pulling back the levers for economic recovery”.
The DA supports relaxing labor laws and replacing one of the ANC’s key policies to boost the participation of black South Africans in the economy.
Financial markets are tense about the composition of the Cabinet as it will provide an indication of whether the ANC plans to meaningfully share power with parties including the DA.
“Further delays in the Cabinet announcement will only add to the jitters and fuel the impression that the GNU (Government of National Unity) is stumbling at the first hurdle,” said Louw Nel, senior political analyst at Oxford Economics.
The Johannesburg Stock Exchange’s Top 40 index closed 0.4% lower. Benchmark government bonds for 2030 fell, while the yield rose 30 basis points to 10.125%.
