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South Africa: The inscrutable fire fighter

South Africa: The inscrutable fire fighter

Alliance mustangs
A particularly vexatious issue for the President is how to play the Tripartite Alliance, South Africa’s unique melding of the ANC politicos, Communist Party idealogues and labourites’ amalgam of unions, Cosatu, as the governing machine.

The labour unions are the mustangs in the alliance, constantly kicking over the traces. While the President and his team try to steer a neutral economic course with policies and attributes attractive to investors, the unions, Africa’s most vociferous by far, constantly press for bigger wages and better conditions. Strikes are no longer exceptional, with the fallout increasingly hurting employment and investor confidence. 

The sudden halt to ministerial freewheel spending made Gordhan few friends. It’s possible Zuma felt the heat of his outraged colleagues and the minister had to go

The number of confrontations between the ANC and Cosatu is growing and it’s an even-money bet that the tripartite alliance will fall apart sooner rather than later. As it is the giant 200,000-strong metalworkers union, South Africa’s biggest, has walked out and formed its own political party.        

It is traditional for the President to do some housekeeping before settling into his next term. Few, however, were expecting Zuma to apply the new broom with such vigour. As the dust flew, few cabinet portfolios were left unaffected.

Perhaps the biggest shake-up was in the Finance Ministry with trusted and respected Minister Pravin Gordhan packing his bags for the distinctly unexciting post of Minister of Cooperative Governance and Traditional Affairs. What happened? Why was the best-performing minister in the cabinet shown the door?

The speculation inevitably fell on Gordhan’s snipping at ministers’ purse strings. In an effort, a year ago, to contain government executive spending, he confiscated the credit cards of ministers and their deputies, put a ceiling on the value of the cars they could buy and generally told them to behave more responsibly in spending taxpayers’ money.

The sudden halt to ministerial freewheel spending made Gordhan few friends. It’s possible Zuma felt the heat of his outraged colleagues and the minister had to go.

The replacement is the incumbent Deputy Finance Minister Nhlanhla Nene. He was cautiously welcomed by market commentators, remarking that his years before the fiscal mast pointed to policy continuity. He was Deputy Finance Minister since 2008 and before that, chairman of Parliament’s standing committee on finance.

Nene made it clear that it would be business as usual. “It is all very clear,” he said after his appointment was announced. “The Ministry had always been on track. Our predecessors have set the stage. The President has clearly stated that the National Development Plan is our blueprint. We also have a three-year budgeting process, so there should not be any surprises.”

Foreign markets were not as optimistic, punishing the rand currency to a low of R10.65 to the greenback with little sign of strengthening any time soon.

Most market watchers reserved judgement on Nene’s appointment with BNP Parabas Cadiz’s Nic Borain pondering whether the new minister could successfully counterbalance powerful interests in government and the party.

“The Minister of Finance needs to be powerful enough to resist a number of pressures, not least of which will come from his own party for increased spending or a shifting of priorities,” observes Borain. “It is a tough position that requires political backing or power. It is not clear that Mr Nene has that.”

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Written by Tom Nevin

Tom Nevin is a South African journalist, researcher and author and contributes to a selection of publications in South Africa and abroad. He is associate editor of London-based African Business and editor of Business Word Botswana. He is leading a programme that actively promotes small and micro power projects as a first step in encouraging the economic upliftment of the continent rural poor.

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