Fears for Investment Funds as Mbeki Steps Down

September 25 - South African investors and banks were jittery this week over fears that foreign investors would pull out from the local market, following the news that President Thabo Mbeki would be resigning from his post.

South Africans eyed their retirement funds with caution as they watched the Rand slip low against the US Dollar and Euro.

Mbeki's resignation came days after the country's High Court suggested that his government may have had something to do with the decision to bring corruption charges against the President of the African National Congress, Jacob Zuma.

However, an industry analyst, George Glynos hurried to placate investors and said: "International investors are placing a risk premium on the rand due to uncertainty over the short term. The fact that Mbeki's sacking has been peaceful and strictly followed democratic principles outlined in the constitution means there is unlikely to be a rout."

These sentiments were echoed by Leon Myburgh of Citigroup Inc. who said: "The slight weakness in the rand is hardly a blip in the radar in the context of its recent volatility given the crisis in global financial markets. Mbeki's axing may raise some investor concern due to the fact that internal party politics has spilled over onto the national stage, but it's not a crisis in the democratic process."

Another analyst pointed out that the fact that an interim president has been named suggests that South Africa will not see the saga dragged on, giving a boost of confidence to the investor market.

The general South African political landscape also seemed to remain stable following Mbeki's announcement, with no ministers announcing their resignation as an act of solidarity.