/ 25 May 2014

Zuma reshuffles economics cluster, to mixed reaction

New Finance Minister Nhlanhla Nene's solid expertise
New Finance Minister Nhlanhla Nene's solid expertise

In a major shake up of the executive President Jacob Zuma has promoted former deputy finance minister Nhlanhla Nene to replace Pravin Gordhan, who will take over the post of minister of co-operative governance and traditional affairs.

The new appointments, announced on Sunday night, saw some substantial changes to the structure of the top echelons of government and have already met with mixed reactions.

In his speech Zuma stressed that his new administration would begin a “radical phase of socio-economic transformation”. The team would implement the five year Medium Term Strategic Framework of government – announced in his state of the nation address earlier this year – which had been developed using the National Development Plan and the ANC Manifesto.

Cyril Ramaphosa has been named deputy president, with the functions of the national planning commission and performance monitoring and evaluation folded into the Presidency.

Major reshuffles to the economics clusters took place alongside Nene’s promotion, with key figures such as Minister Malusi Gigaba formerly of public enterprises moving back to familiar territory at home affairs.

Gigaba will be replaced by Lynne Brown, a long-time leader in the Western Cape, one of the ANC’s more fractious provinces, which it lost to the Democratic Alliance in 2009.

Nene, is an old hand in the finance portfolio and despite his relatively low profile, some analysts argue his solid expertise, and track record make him an excellent choice.

Nene was the chair of Parliament’s standing committee on finance, until he took over the role of deputy finance minister under Trevor Manuel in 2008. His predecessor Jabu Moleketi had resigned following the ANC’s recall of former president Thabo Mbeki.

“He has the acumen for Treasury, he is not a populist and is aware of what goes on in international markets,” said Ralph Mathekga, political analyst at Clear Content, who formerly worked as a policy advisor at Treasury, under both Gordhan and Nene.

Even though he was a political principal, Nene’s competence, matched that of a director general said Mathekga. Although he too hails from Zuma’s home province of KwaZulu-Natal, like many of the president’s most powerful cabinet appointments have in the past, “he is his own man”, Mathekga argued.

Nene’s deputy will be Mcebisi Jonas, formerly the MEC for economic development, environmental affairs and tourism in the Eastern Cape, who is little known on the national stage.

Gordhan’s deployment to co-operative governance and traditional affairs, is seen by some as a shock demotion. “This is a tiny ministry with little power. We had expected him to either retire or stay,” said Nomura analyst Peter Attard Montalto, in a research note.

Nene meanwhile was “well respected within the National Treasury,” and “a believer in the current macroeconomic policy dispensation”.

“However he is a party loyalist and the worry which we will be watching him on is how much he can stand up for National Treasury and its beliefs and pro-investor stance within Cabinet and the ANC more broadly,” he said.

Speculation was rife that former reserve bank governor Tito Mboweni would get Gordhan’s post, alongside reports of a strong lobby calling for an African finance minister. But when Mboweni withdrew his candidacy for Parliament last week, Gordhan was expected by many to stay on.

Mathekga disagreed however arguing, that Gordhan’s history as a trouble-shooter and technocrat – which enabled him to overhaul SARS and maintain stability at the Treasury – meant he was the right man to deploy to a department he called “a mess”.

Gordhan’s ability to instil systems, as well as his ability to reign in excess was much needed in the local government sphere Mathekga said.

Brown steps into a very demanding role at public enterprises, which is responsible for mega-parastatals such as Eskom, South African Airways and Transnet.

Eskom in particular is battling to keep the lights on, as it fights to deliver its new power stations Medupi and Kusile, which have seen massive delays and cost escalations during construction.

The national carrier has also faced a series of leadership crises, requiring numerous bailouts from government as it battles to return to sustained profitability.

Gigaba spearheaded a concerted drive to have SOEs placed at the heart of the economic growth and development, often to the criticism of private sector pundits, who argued that the state did not have the capacity drive this process alone. It was difficult to see what skills Brown brought to the role, given the “command and leadership” Gigaba had, said Attard Montalto.

In a surprise shift, former minister of agriculture, forestry and fisheries, Tina Joemat-Pettersson will take over as minister of energy. Joemat-Pettersson’s department has faced a number of scandals. Most recently the department has had to set aside its allocation of new fishing rights, which caused an industry and public outcry.

Minister of mineral resources Susan Shabangu meanwhile has been shunted to the role of minister of women in the presidency, after a rocky period overseeing a sector that is the epicentre of major clashes between mineworkers and bosses.

Under Shabangu’s watch major amendments were also made to the country’s minerals legislation through the Mineral and Petroleum Resources Development amendment bill, which has introduced major uncertainty to the industry. Her replacement, Ngoako Ramathlodi, has sparked some unease given past statement’s he has made on the role of the country’s courts and his criticism of South Africa’s widely celebrated constitution.

Ramathlodi has been at the forefront at some of the party’s policy squabbles Mathekga pointed out and was a known “hardliner”.

In a bid to boost small business and its potential to grow the economy, the ANC indicated previously that it intended to introduce a ministery of small business development. It has now done so under former international affairs advisor to the president, Lindiwe Zulu.

Minister’s Rob Davies and Ebrahim Patel stay on at Trade and Industry and Economic Development respectively. The introduction of an SME minister was however an “unwelcome muddying of policy” argued Attard Montalto. “Whilst headed by the capable and effective Lindiwe Sisulu the replication of DTI policy and likely micromanagement and overegulation of a sector that needs a strong foundation but then room to grow rapidly means positive effects may be limited,” he said.