Business welcomes new Cabinet

12 May 2009

South African President Jacob Zuma’s new Cabinet appointments, along with a restructuring of government departments and the creation of a National Planning Commission to co-ordinate their work, have won widespread praise from business – and a wait-and-see response from international rating agencies.

The markets have been reassured by the retention of former Finance Minister Trevor Manuel, whose moves into the Presidency as minister in charge of the new National Planning Commission has been taken by many as a promotion.

Investors will also take comfort from the appointment of Pravin Gordhan as Manuel’s successor in the National Treasury. Gordhan became commissioner of the South African Revenue Service in 1999, and has been widely credited with the institution’s turnaround since then, raising state revenue well beyond targets and coming down hard on private and corporate tax dodgers.

“With Pravin Gordhan in the ministry of finance and Trevor Manuel assuming responsibility for the National Planning Commission, we believe that concerns around rapid, radical economic policy changes are put to rest,” SA Chamber of Commerce and Industry CEO Neren Rau said on Monday.

Brait economist Colen Garrow also welcomed Manuel’s new appointment, as well as Barbara Hogan’s move from the Department of Health – where she revolutionised the government’s approach to HIV/Aids treatment and care – to the Department of Public Enterprises.

“Hogan is very switched on over economic and financial affairs,” Garrow told Business Report on Monday. “This is a good move.”

Another significant change announced by Zuma on Sunday was the establishment of a new Department of Economic Development, headed by new minister Ebrahim Patel, to focus on economic policymaking, while keeping the implementation function with the Department of Trade and Industry, under Rob Davies.

Davies’ promotion from deputy minister of trade and industry was welcomed by Business Unity South Africa CEO Jerry Vilakazi, who said that Zuma’s new Cabinet overall was a “very good combination of experience and change.”

Rau agreed, saying the “assignment of strong leadership to various departments which were historically weak in terms of delivery demonstrates that delivery was not just campaign speak but is proving to be a hallmark of the Zuma administration in its early days.”

Rau said it was clear that Zuma and his advisers had taken a “considered and critical” view of the structure of government, its weaknesses, and how it could be strengthened in the interests of better service delivery.

Zuma told journalists on Sunday that the creation of the National Planning Commission followed extensive research on how governments in other parts of the world planned and monitored their performance.

Rau said the principles underlying the establishment of the commission and the restructuring of various departments “seem to be grounded in sound management principles and, if appropriately implemented, should be successful in meeting the current and emerging challenges facing our nation.”

Meanwhile, Business Day reported on Tuesday that international rating agencies were giving South Africa’s new Cabinet the benefit of the doubt on possible economic policy shifts.

“I think policy will remain pragmatic,” Fitch Ratings sovereign director Veronica Kalema told Business Day. “The key thing for South Africa is to manage the fallout from the global recession, which means that options [for increasing state spending] are fairly limited.”

Kalema said Fitch was sheduled to visit the country soon to assess the situation, and would be meeting with the new ministers to “get a better idea of who is calling the shots … but in general, we don’t think policy will change much.”

SAinfo reporter

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