Monday, May 11, 2009



Sunday, May 10 2009

Mr Pravin Gordhan, the former head of South Africa’s tax authority, was named as Finance minister today.

President Zuma faced pressure to appoint effective ministers who can deliver on the ruling ANC’s promises to tackle widespread poverty, crime and Aids and create jobs.

He said in his inauguration speech on Saturday the country should acknowledge it faces tough economic times and will not be spared the impact of the global credit crunch.

Mr Trevor Manuel was expected to stay in the Finance post or be transferred to a powerful new planning commission.

A transfer would be welcomed by markets provided it kept him at the heart of policy-making.

Stacking his cabinet with loyalists could undermine the credibility of Zuma, who has told ANC officials they should not expect jobs just because they supported him.

President Zuma won a wide mandate in the ruling African National Congress’ (ANC) April 22 landslide election victory.

His toughest task may be balancing the interests of unions and communists who helped him rise to the top against those of investors who fear he will steer the economy to the left.

One of the most divisive figures in South African politics, Winnie Madikizela-Mandela has returned from the political wilderness after a fraud conviction to appear alongside Zuma at party rallies, and was feared could well join the cabinet.

Feared by investors for her old-style revolutionary rhetoric, Nelson Mandela’s ex-wife is unlikely to secure a high-profile ministry. But her return to prominence may provide clues about Zuma’s focus and priorities.

Accused by critics of embarrassing South Africa by backing governments with dubious human rights records, Foreign Minister Nkosazana Dlamini-Zuma also has a frosty relationship with her ex-husband Zuma, and may get the boot from her job.

Mr Gordhan, who has headed the South African Revenue Service since 1999, serving under Mr Manuel, and has been praised for turning it into an efficient body that has repeatedly collected tax over target.

His appointment could lead to a relatively seamless transition and policy continuity, a key hope of foreign investors.

President Zuma was also expected to choose ANC heavyweight Cyril Ramaphosa to head the finance portfolio.

The former trade unionist served as ANC secretary-general and was an architect of the globally-admired constitution that took effect after the end of apartheid.

Since then he has built up a business empire, steering the unlisted Shanduka Holdings to become one of the biggest black-owned groups in the country.

Mr Manuel is praised by many in the markets for tight control over spending and instilling financial stability.
He has been in the post since 1996, making him the longest-serving finance minister in the world, and remains one of the highest-ranked members of the ruling party.

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First Cabinet

Mr Manuel was appointed to head a powerful new planning body, keeping South Africa’s former Finance minister at the heart of policy-making in President Zuma’s first Cabinet.

“I think the positions that the financial markets were worried about have been skilfully handled,” said independent analyst Nic Borain.

Mr Manuel had been in the job for 13 years, making him the world’s longest-serving finance minister. Investors approved of the tight monetary and fiscal policies he kept in place.

“Comrade Trevor Manuel has been given a new structure, a very powerful structure that is going to work out a national plan of government,” said President Zuma who expects a positive financial market reaction to Mr Gordhan’s appointment.

His toughest task may be balancing the interests of unions and communists who helped him rise to the top against those of investors who fear he will steer the economy to the left.

Some of the more vocal left-wingers found places in the cabinet, but not holding key economic portfolios.

South African Communist Party General-Secretary Blade Nzimande was named minister of Higher Education and Training.

“He certainly put his own staff on the cabinet which I think is a good thing,” said Nel Marais, acting managing director at Executive Research Associates.

“There are quite a few strong new faces in the cabinet that played a significant role in President Zuma’s political fight for survival in the past few months.”

President Zuma also reached out to Afrikaners, many of whom feel excluded 15 years after the end of white minority rule. He named the deputy agriculture minister from the Freedom Front, which explicitly aims to protect Afrikaner interests.

Top businessman Tokyo Sexwale, who returned to politics two years ago, became minister of Human Settlements.

But President Zuma left out Ms Madikizela-Mandela, who is back in parliament after a fraud conviction.

Tougher measures

Possibly in a sign of tougher measures against violent crime before next year’s soccer World Cup finals in South Africa, President Zuma created a new ministry specifically for the police.

President Zuma named his predecessor, Kgalema Motlanthe, as his deputy. Motlanthe had served in a caretaker role since Zuma’s rival, former President Thabo Mbeki, was forced from office last September by the ANC.

Although markets were expected to welcome the key economic appointments, some pundits questioned how effectively Manuel’s new planning commission and another new economic ministry would work with trade and finance ministries. (Reuters)