South Africa on the brink as key ministers resign, deepening crisis

The announcement that Finance Minister Trevor Manuel would resign shook markets and the rand tumbled on the news, but the currency regained its losses after his office said he was ready to serve under a new president.

The resignation of 10 ministers and the deputy president out of a cabinet of 30 came after Mbeki announced on Sunday that he was stepping down in the face of pressure from the ruling African National Congress.

Parliament is expected to choose deputy ANC head Kgalema Motlanthe as interim president on Thursday until a general election next year. Mbeki’s resignation followed accusations of meddling in the graft trial of ANC leader Jacob Zuma.

Treasury spokeswoman Thoraya Pandy said Finance Minister Manuel had "resigned as a member of the cabinet and felt duty bound to do so as he served at the pleasure of the president, and President Mbeki had resigned."

"However, the minister has indicated a strong willingness to assist and to serve the new administration in whatever capacity they may ask of him."

Along with the rand, the Top-40 index of blue-chip stocks <.JTOPI> regained some ground on the assurance that Manuel may stay, trading 2.8 percent lower after extending losses to more than 4 percent when the resignations were first announced.

Central bank governor Tito Mboweni will also stay on, his spokeswoman said.

Nevertheless the resignations are likely to raise investor fears of political instability in Africa’s biggest economy.

Zuma, who is expected to become president after next year’s election, has tried to reassure foreign investors he would not bow to pressure from leftist union allies to shift away from business-friendly policies.

Zuma has made clear his backing for Motlanthe and pledged on Monday that the party would ensure a smooth transition and unchanged economic policy.

But the ANC is deeply divided by the long struggle between Mbeki and Zuma.