South Africa: Zuma's team looks geared for delivery and the poor expected to benefit

May 10th, 2009

  

 

Johannesburg (South Africa — President Jacob Zuma has put together a powerful, diverse Cabinet to tackle one of SA's biggest challenges - service delivery - and the line-up should be welcomed by financial markets.

The choice of former finance minister Trevor Manuel to head a new, overarching planning commission signalled that the success of the Treasury would spread into other sectors of the government, analysts and business leaders said.

His replacement with Pravin Gordhan, who presided over the hard-nosed tax collection which led to SA's first budget surplus, was also seen as likely to reassure investors worried about any shift towards more spendthrift policies.

"A lot of the proof will ultimately be in the pudding, but if you wanted an administrative response to any shortfalls in service delivery this looks like a strong one," said Absa Capital economist Jeff Gable.

"It's too early to say just how problems will be solved, but there's a very different shape in Cabinet, a very different focus and that focus is on delivery."

The creation of a new economic development ministry -- which Zuma said would make economic policy -- raised questions over the role of Treasury and whether the real clout would still be wielded by Manuel, who has the confidence of markets and business.

Zuma also appeared to give more power to the Department of Trade and Industry , saying it would implement policies set by the new economic ministry, headed by Ebrahim Patel -- a skillful pro-labour negotiator.

"It's vital for us to understand what the new mandates are and how they relate to each other, so that there is no fragmentation of economic policy," said Jerry Vilakazi, CE of Business Unity SA.

"We will be watching developments closely over the next few days to see where the powers lie."

But Vilakazi said that, overall, the choice of ministers and their deputies reflected a broad balance between "experience and change" which would be welcomed.

Manuel's presence in the Presidency's planning commission would ensure it "doesn't become pie in the sky", while Patel and trade and industry head Rob Davies had strengths which would be welcomed by business, he said.

Standard Bank group economist Goolam Ballim said the combination of powerful and different personalities in Zuma's Cabinet should not be equated with what he described as a "potential policy paralysis".

"It suggests that no party is excluded from a seat around the fireplace, so we should infer inclusive policy making that is representative of all views," he said.

Ballim also dismissed the view that markets should be fearful of the entrance of communists or labour leaders to senior posts.

"They've long been part of SA's government and are instrumental in fashioning pragmatic and balanced policy posture," he said.

"Policy is not static, it evolves. But I don't think that policy will infringe on the principles of private property and private risk-taking, which are central to sustainable economic development."

Standard Chartered's research head for Africa said that for markets, the key issue would be how far-reaching Manuel's influence would be. "The fact that his portfolio is as a minister in the Presidency suggests that he has the highest backing. Markets should therefore react positively."

Zuma appears to have a similar view. He told reporters after the Cabinet was unveiled that Manuel's experience had enabled him to understand government "inside out" and he still had a "powerful" position.

"I think markets react on a number of issues, not just Cabinet appointments," he said in reply to a question. But he added that even markets understood no one could remain finance minister forever.

"I'm confident markets will react very positively," he said.

 

source.Business Day (South Africa)