South Africa is facing deep political turmoil and corresponding uncertainty across markets amid growing calls for President Cyril Ramaphosa to step down over an emerging bizarre scandal centered on the alleged theft of $580,000. The over half million in cash was literally found stuffed in a sofa at a farm that Ramaphosa owns. The timing of the crisis couldn't be worse given long-awaited economic reforms had only just begun to take shape and improve the country's outlook.
The mysterious cash payment has sparked outrage particularly among the opponents of the ruling African National Congress, and with his allies holding emergency consultations. On Thursday South African media is reporting President Ramaphosa is to imminently address the nation as prospect for his resignation grows, and as he faces impeachment.
Ramaphosa, who has advanced himself as an 'anti-corruption' and reformist president, has vehemently denied wrongdoing in the scandal coming to be known as "Farmgate", centered on a game farm he owns in South Africa's northeast.
According to a summary of the scandal in CNBC:
In what has become known as the “Farmgate” scandal, Ramaphosa is alleged to have covered up a $4 million theft from his Phala Phala farm in the north east of the country in 2020. Some $580,000 of this was found beneath sofa cushions, and allegations also include working with Namibian authorities to apprehend, torture and bribe the suspects.
Ramaphosa staunchly denies the allegations and has not been charged with any crimes. He maintains that the cash was the proceeds from the sale of buffalo. He has confirmed that the robbery took place, but insists that the amount stolen was smaller than alleged and denies participating in a cover-up.
The rand has weakened more than 3% against the dollar as the country is on edge awaiting Ramaphosa's and the ANC's next move. The economic reforms he set in motion are now seen as under threat by the major scandal, also as political succession within the ANC would remain uncertain.
According to more on the jitters unleashed across South African markets on news of Ramaphosa's likely impending resignation, via Bloomberg:
- The yield on 10-year local-currency bonds climbs 74 basis points to 11.55%, the most in a day since December 2015
- Benchmark dollar bonds lead losses among EM peers; 10-year yield up 48bps to 7.42%
- Dollar-rand one-week imlied volatility surges to the highest since May 2022 at 20.4%
- 5-year CDS +12.5% to 274.62 bps, biggest jump since March 2021