Latest cabinet reshuffle by Jacob Zuma – now is the time to act!

President Jacob Zuma has gone and done it again.

In a one fell strategic move designed to strengthen his political position and entrench the interests of his close allies in an economic climate overshadowed by low growth, corruption and state capture, he has announced his twelfth cabinet reshuffle in just over 8 years.

A mere seven months after his previous cabinet reshuffle that saw the respected and trusted Finance Minister Pravin Gordhan being axed because he fought corruption and state-capture, Zuma yesterday announced six changes to his executive.Jacob Zuma in the news - Cabinet Reshuffle

The reaction, as with his previous reshuffle, was dramatic to say the least. It made international headlines and from across the political, organised labour and business spectrum there was outrage and criticism. As with previous reshuffles it comes at a high cost to the economy.

For anyone heavily invested in rand-based assets, it should again have signalled a clear imperative: now is the time to review your investment strategy, to diversify and to look at more secure offshore options. At least for part of your portfolio.

The usual knee-jerk reaction to Zuma’s many controversial moves – this time thankfully less sharp than with his previous reshuffle at the end of March – may be followed by the usual correction in the markets. But that is little consolation, as the overall effect continues to impact the economy in destabilising ways in the longer term. Also, the suspected underlying political motives of President Zuma’s latest move creates more uncertainty both on the economic as well as the political front. It seriously heightens risk and makes forward projections and planning for investors, fund managers, businesses and others extremely difficult.

Will Zuma reshuffle the cabinet again in the near future?

There is much talk in ANC circles that Zuma may announce yet another cabinet reshuffle before the ANC national conference, this time with the aim of removing Ramaphosa. If true, that is likely to have as big a negative impact, if not bigger, than when Gordhan was fired, the rand dived and billions were wiped off the JSE.

But all is not necessarily lost. There has been strong opposition to and criticism of Mr Zuma’s latest move in the ANC as well, notably from ANC secretary-general Gwede Mantashe. And Ramaphosa still has a good chance of succeeding Zuma as ANC president. If he does, it could herald Mr Zuma’s early departure from the Union Buildings, as well as the end of his newly reconstituted cabinet which will be replaced by Ramaphosa’s choice of cabinet.

All of this reads like something out of a political crime thriller. But the sad part of it is the damage to South Africa and its economy, and the destabilising uncertainty it creates in respect of policies, the political landscape, management of the economy and more. We wrote extensively about this in an article posted on our website on October 2, titled Political uncertainty, volatility SA’s biggest enemy.

With this rather ominous shadow continuing to loom over South Africa, Carrick Wealth has in recent times consistently stressed the importance of high net worth individuals, companies, trusts and other entities to diversify their investment portfolios with a strong offshore component built into it as a hedge against these uncertainties.

Carrick advises that wealth preservation involves a long-term plan and preservation strategy that will safeguard your wealth from any number of potential threats, including that outlined above. Among the available tools are options such as investing in a variety of assets that hedge inflation while allowing for optimal growth over the long term: in a nutshell, diversifying your portfolio against a long-term goal.

As highly experienced financial advisers in both local and offshore investments, we have also advised that a substantial offshore allocation should be part of your investment portfolio. For this there are a number of vehicles, including such options as an international pension or an offshore foreign currency reserve. The call to action that everyone should seriously consider now, is to plan ahead, diversify and invest offshore.

In such uncertain times, Carrick is the leading expert in growing, protecting and preserving our clients’ wealth.  Don’t delay: contact us on [email protected] for a consultation with one of our qualified advisers.

Carrick Wealth is a registered South African financial services provider specialising in South African and international financial planning. Carrick is also licensed in Zimbabwe and Botswana, and holds three global licences in Mauritius. Carrick at all times maintains its  independence with regard to product providers and asset managers, and provides bespoke risk assessment, financial planning and other services to high net worth individuals (HNWI). Through partnerships with industry leaders in the fields of foreign exchange, tax, international property, offshore bank accounts, trusts, wills and estate planning, Carrick is able to provide the highest levels of service for your financial planning and investment requirements, both offshore and domestic.

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