Johannesburg - Nhlanhla Nene has been appointed by President Jacob Zuma to take the reins as the first black African finance minister, succeeding Pravin Gordhan whose deft hand ably helped the country’s economy navigate the aftermath of the 2008 global financial crisis without major hiccups.
By appointing Nene, Zuma has tried to balance the need for continuity and that of predictability when it comes to the country’s fiscal discipline as Nene has been serving as Gordhan’s deputy since 2008.
Zuma has also trod a fine line as Gordhan’s departure presents financial markets, investors and credit ratings agencies with some sense about Zuma’s real intentions for his second term.
Nene’s appointment marks the boldest of moves by Zuma as it dispels what has long been unfounded speculation that capital markets were perhaps not ready for a black African as finance minister.
And if there was ever any doubt about how Zuma sees the importance of putting in place a lasting legacy for his second term, Nene’s promotion should put it to rest as Zuma will now go down in history as the first president to put a black African at the helm of Africa’s most diverse and sophisticated economy.
In recent months Nene had begun to increasingly shoulder a disproportionately large number of public engagements, including an event he addressed in January when former New York mayor Michael Bloomberg visited Johannesburg for the opening of the newest offices of his eponymous company.
“Our country is in good hands,” Sipho Nkosi, the chief executive of mining company Exxaro, told Business Report last night in reaction to Nene’s appointment. He described him as “a very pragmatic and far-sighted gentleman. We are so lucky and blessed to have him.”
Nene’s biggest test, however, will be how he balances the need to keep a steady hand on the country’s finances, while at the same time providing fiscal space for the government to deliver on what Zuma has called the second phase of South Africa’s transition.
And in order for that transition to gain traction, Nene will need to do as Gordhan did, and that means providing a clear policy framework that gives certainty to the financial markets, especially when the country is grappling with its twin-deficit problem and intense scrutiny from ratings agencies.
Although South Africa’s persistent legacy of poverty and inequality has necessitated that the government intervenes through increased spending on social interventions like welfare grants, Gordhan did not shy away from demanding that the government cut wasteful expenditure, tackle corruption and rein in the public sector wage bill.
In October, Gordhan took his colleagues in government by surprise when he announced cuts to frivolities like booze at government functions, business-class airfares for functionaries, issuance of government credit cards and purchases of government vehicles.
Gordhan will now become the minister of co-operative government.
Peter Attard-Montalto, an economist at Nomura in London, said Nene “is a sound technocrat with a good grasp of the brief and well respected within the National Treasury. He is a believer in the current macro-economic policy dispensation.”
Where there might be a bit of unease was on the fact that Nene is a party loyalist, and as such “the worry which we will be watching him on is how much he can stand up for the National Treasury and its beliefs and pro-investor stance within the cabinet and the ANC more broadly,” added Attard Montalto. He said Gordhan on the other hand was good at mastering “politicking”.
Zuma also announced that Mcebisi Jonas will be the new deputy finance minister. By a large measure, Jonas is an unknown figure, except for the time he spent in the Eastern Cape provincial government as finance MEC.
How the markets react to these appointments will likely be apparent today but analysts said the reaction might be muted as there were no inherent major surprises regarding the Treasury portfolio.
BIOGRAPHY - Nhlanhla Musa Nene
Date of birth: December 5, 1958.
Married and has three dependents.
Member of Parliament since June 1999.
Co-chairperson of the joint budget committee from October 2002 until August 2005.
Chairman of the portfolio committee on finance from August 2005 until November 4, 2008.
Deputy minister of finance from November 5, 2008.
Member of the local organising committee for the Fifa 2010 soccer World Cup.
Chairman of the Public Investment Corporation.
Matriculated from Gcothoyi Adult Centre.
Diploma in marketing management from DMS.
Advanced diploma in economic policy from the University of the Western Cape.
Certificate in economics from the University of South Africa.
BCom Honours in economics from the University of the Western Cape.
Certificate in macro and microeconomics from the University of London.
Course in evaluating macroeconomic strategies in 2000 from the Center for Development Economic sat Williams College, Massachusetts, US
Active in student politics since 1979.
Organised the first ever strike in the financial industry under the banner of the SA Commercial, Catering and Allied Workers Union in 1990 while still at Metropolitan Life Insurance Company.
Shop steward from 1990 until 1995 and led a negotiation team for better working conditions”.
Chairman of the Ntunjambili Development Forum from 1994 until 1999.
ANC local government councillor and caucus chairperson from 1996 until 1999.
Chairperson of the Kranskop policing forum from 1997 until 1999.
ANC regional secretary of Ukhahlamba region from 1997 until 2000.
Regional administrative manager for the Metropolitan Life Insurance Company for 15 years.
Source: National Treasury