* ANC-allied Cosatu trade union asks Zuma to step down
* Rand, bonds firm as calls grow for Zuma to go
* Zuma urges calm, says reshuffle to "energise" cabinet
* Analyst says Zuma still has strong support in ANC
* C.bank deputy governor: may act if rate outlook worsens
(Adds ANC Wednesday briefing on two-day meetings)
By Olivia Kumwenda-Mtambo and Tanisha Heiberg
PRETORIA, April 4 South Africa's biggest trade
union called on President Jacob Zuma to quit on Tuesday, in the
wake of a cabinet reshuffle that has cost the country one
investment-grade rating and deepened a rift within the ruling
African National Congress (ANC).
Zuma's sacking of respected finance minister Pravin Gordhan
in the reshuffle last Thursday has outraged his opponents and
even some of his allies, undermining his authority as president
and threatening to split the ANC, which has governed South
Africa since the end of apartheid in 1994.
The rand, which fell as much as 1.9 percent at the
start of trading on Tuesday, turned 1 percent firmer through the
day as calls for Zuma to quit came in from unions, religious
leaders, civil society and the opposition - although one analyst
said he retained strong support within the party.
The ANC said late on Tuesday that it will brief media on
Wednesday on decisions taken by its senior officials after two
days of meetings over the fallout from Zuma's cabinet changes.
Cosatu, the biggest union and an ally of the ANC, joined the
chorus of criticism, saying it no longer believed in Zuma's
ability to lead, and that it wanted to restructure its alliance
with the party.
"The time has arrived for him to step down and allow the
country to be led forward by a new collective at a government
level," Cosatu said in a statement.
It later said it would meet Zuma "as soon as possible" at
his request to discuss the cabinet reshuffle.
Zuma himself, in his first public comments since he fired
the internationally respected Gordhan, said that fiscal policies
would be unchanged and that people should remain calm.
Rating agency S&P Global Ratings cited Gordhan's dismissal
as one reason for its downgrade of South Africa to "junk" in an
unscheduled review on Monday.
In a bid to reassure markets, Zuma said he expected the
addition of "many young ministers" to "add renewed energy into
Cabinet and the executive".
"With regards to the finance portfolio, we reiterate that
while the political leadership has changed, government's overall
policy orientation remains the same," Zuma said.
He called for a truce within the government as well, saying
public disagreements "demoralise our people and create
Cosatu is the second big ANC ally to call on Zuma to quit
after South Africa's Communist Party urged him to go last
"It's a deep dagger," political analyst Daniel Silke said of
the union's withdrawal of support.
But Nomura analyst Peter Attard Montalto said Zuma would
survive the talks going on at ANC headquarters despite calls
from some factions for him to go.
"Ultimately, they are not respected by the Zuma faction and
their call that he resign is therefore largely irrelevant. The
same goes for the SACP and Cosatu. Factions are already set and
it's unlikely there will be a swing against Zuma," he said.
RATES TO RISE?
Zuma said the government remained committed to measured
fiscal consolidation that stabilises rising public debt. But it
also aims to radically transform the economy "to include the
black majority in the ownership and control," he said.
More than 20 years after the ANC ended white-minority rule
with Nelson Mandela at its helm, inequality festers. Black
people make up 80 percent of the population, yet the lion's
share of the economy in terms of ownership of land and companies
remains in the hands of white people, who make up about 8
percent of the population.
New finance minister Malusi Gigaba told a news briefing the
ratings cut, which will push up borrowing costs, would put an
even greater focus on growing the economy, and he said he would
address the issues raised by S&P.
"Despite our current challenges, now is not a time for
despondency," he said, noting that local currency debt, which
makes up about 90 percent of 2.2 trillion rand ($161 billion)
South Africa owes, is still rated investment-grade.
But deputy central bank governor Daniel Mminele said the
downgrade was a serious setback and the bank would act if
political events caused the favourable interest rate outlook to
reverse, suggesting it may have to contemplate rate hikes.
Rating agency Moody's has said it is reviewing the Baa2
credit rating it assigns South Africa, two notches above junk, a
process that could take 30 to 90 days.
Half of the ANC's Top Six group of officials including
Deputy President Cyril Ramaphosa and Secretary General Gwede
Mantashe have publicly criticised Gordhan's sacking.
But Zuma, also one of the Top Six, has the support of two
other members and influential groups in the ANC, sources said.
The main opposition party - which has called for a
no-confidence motion against Zuma - wants parliament to return
from recess to debate the "crisis" triggered by the reshuffle.
Previous no-confidence motions in parliament against Zuma
have failed as the ANC has a commanding majority there.
($1 = 13.6558 rand)
(Reporting by Johannesburg bureau; Writing by James Macharia;
Editing by Hugh Lawson)