(Bloomberg) -- South African President Jacob Zuma told senior leaders of the South African Communist Party that he plans to fire Finance Minister Pravin Gordhan, according to three people with knowledge of the matter. The rand plummeted.
Zuma told officials from the party, which is allied to his ruling African National Congress, during a meeting on Monday in Johannesburg, according to the people, who were present and asked not to be identified because a public statement has not been made. He didn't say when he planned to fire Gordhan.
Pravin Gordhan arrives at court on March 28.
Zuma, 74, ordered Gordhan to cancel meetings with investors in the U.K. and the U.S. and return home on Monday, a day after he had flown to London to begin the week-long roadshow. Asked about reports that he may be fired after he landed Tuesday in Johannesburg, Gordhan said, “I've just landed so let's wait and see.”
On Monday, a meeting of the top six leaders of the ANC was held after the SACP gathering and there was no indication that they agreed with the decision to fire Gordhan. Zizi Kodwa, a spokesman for the ANC, said the people were misinformed.
The rand weakened as much as 2.9 percent and was at 12.8580 to the dollar by 10:37 a.m. in Johannesburg after sliding as much as 3.2 percent a day earlier. The government's rand-denominated bonds due 2026 fell, driving the yield 42 basis points higher to 8.78 percent over the two days.
Zuma-Gordhan Tension
Speculation that Gordhan, 67, is on the verge of being fired has swirled for months, as he clashed with Zuma over the management of state companies and the national tax agency. While Gordhan has led efforts to keep spending in check and fend off a junk credit rating, Zuma wants to embark on “radical economic transformation” that he says will tackle racial inequality and widespread poverty.
Read more on how Zuma has lurched from crisis to crisis in this QuickTake
Gordhan said that while in London, he and his delegation of finance minister officials and business and labor union leaders met with about 50 investors who have “great faith” in the South African economy.
“There are many in government who want to do the right things and make sure that our economy is on track and keep our development moving in the right direction so we can say we have done our job and done it well,” he said.
Zuma said during the meeting with the communists he had taken the decision to remove the finance minister because he's the president with responsibility for leading the government and Gordhan is blocking him, according to the people.
“There is a power struggle between the politics of patronage and politics of constitutionalism,” Colin Coleman, a partner and head of Goldman Sachs Group in South Africa, said Tuesday in an interview on Bloomberg Television. “We may certainly see a very strong battle emerge in the days and in the months ahead.”
Zuma ordered Gordhan to return home as Sahara Computers, owned by the Guptas, who're friends of the president, filed an application demanding that Gordhan be present in court on Tuesday for a hearing. The case that started Tuesday will determine whether the minister can intervene to request banks to reopen bank accounts of companies associated with the family. Gordhan asked for the state attorney to appear for him.
Anti-Apartheid Activist
Gordhan's dismissal may be delayed because ANC officials will be preoccupied with ceremonies to honor Ahmed Kathrada, the anti-apartheid activist jailed with former South African President Nelson Mandela, who died Tuesday at the age of 87.
Zuma named Gordhan finance minister in December 2015 after he was forced to backtrack on an earlier decision to install a then little-known lawmaker in place of Nhlanhla Nene. The president's decision to fire the respected minister had hammered the nation's bonds and currency and spurred ANC and business leaders to pressure him to reconsider.
“I don't know if it's true that Gordhan will be fired,” Enoch Godongwana, the head of the ANC's economic policy committee, said by phone. “If that were to happen, it would be tragic for the economy. We are trying to move our growth to better levels. The growth numbers are beginning to reflect a positive trend. This sort of issue will be damaging.”
--With assistance from Arabile Gumede Ana Monteiro Antony Sguazzin Mike Cohen and Amogelang Mbatha
To contact the reporter on this story: Sam Mkokeli in Johannesburg at mmkokeli@bloomberg.net.
To contact the editors responsible for this story: Karl Maier at kmaier2@bloomberg.net, Karl Maier, Gordon Bell
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