Ramaphosa cabinet reshuffle sees investor favorites return to run South Africa's economy
- New South African President Cyril Ramaphosa announced his first cabinet reshuffle Monday night, putting investor favorites in key economic management positions.
- Former Finance Minister Nhlanhla Nene was reinstated in the position, while Pravin Gordhan, also a former finance minister, was restored as minister for public enterprises.
- The faction of the ANC allied with former President Jacob Zuma also has representation in the new cabinet.
South African President Cyril Ramaphosa has appointed investor favorites to key economic management roles in a cabinet reshuffle announced late Monday.
Former Finance Minister Nhlanhla Nene has been reinstated, while Pravin Gordhan, a two-time former finance minister who was most recently sacked by former President Jacob Zuma in March last year, has been restored to the African National Congress (ANC) cabinet as minister for public enterprises.
The reappointments of Nene and Gordhan "will be well-received by financial markets and ratings agencies, as will the significant clean-out of ministers with clouds of corruption and mismanagement and sheer incompetence hanging over them," Gary van Staden, senior political analyst at South Africa-based NKC Economics, wrote in a note Tuesday.
Nene served as South Africa's finance minister from May 2014 to December 2015 until he was fired by Zuma and replaced by an unknown backbencher. He is keen to stem public spending — for example by crushing plans to build nuclear power stations in South Africa, which could cost up to $100 billion.
Gordhan's new role in the Department of Public Enterprises means that he is responsible for some 300 state-owned firms, including the struggling South African Airlines and utility firm Eskom.
Gordhan is "an iconic figure among investors due to his resistance to the state capture project and his record of sound fiscal management," Ben Payton, head of Africa research at consultancy Verisk Maplecroft, wrote in a note Tuesday.
"Given that maladministration in state-owned companies such as Eskom threatens to generate a financial meltdown, Gordhan is now the most important official in the government, other than Ramaphosa himself."
Nene was cautious about the budget delivered by his predecessor Malusi Gigaba last week, in which South Africa's value added tax was hiked for the first time in 25 years, up from 14 percent to 15 percent in an attempt to address the country's deficit.
When Nene was asked by local station Talk Radio 702 if the move would deter ratings downgrades, he answered, "I wouldn't say that yet," Reuters reported.
Gigaba is now home affairs minister.
"In making these changes, I have been conscious of the need to balance continuity and stability with the need for renewal, economic recovery and accelerated transformation," Ramaphosa said in a statement Monday night.
Nonetheless, the faction of the ANC supporting Zuma also has representation in Ramaphosa's cabinet. David Mabuza, deputy president of the ANC and a known ally of Zuma, was appointed as South Africa's deputy president.
Nkosazana Dlamini-Zuma, Zuma's ex-wife, who challenged Ramaphosa to the ANC leadership in December, was given the role of minister in the presidency of planning and monitoring. Dlamini-Zuma was Zuma's choice for the ANC leadership.
Markets responded positively to Ramaphosa's reshuffle, with the Johannesburg Top 40 Index trading 0.73 percent higher on the news during mid-morning trade.
"The reshuffle is the first stage of a big clean-out," van Staden wrote, describing the changes as "the largest single purge of an ineffective and significantly corrupt cabinet in post-democratic history."