Investors keen for Gordhan to returnComment on this story
Johannesburg - Investors are looking to President Jacob Zuma to reappoint Pravin Gordhan as finance minister in a new cabinet to help bolster confidence and drive economic growth and job creation.
Zuma will begin his second term in office this week amid the longest mining strike in the nation’s history that has shut the world’s biggest platinum mines, a 25 percent jobless rate and public outrage over a series of corruption scandals.
Retaining Gordhan will give credence to the government’s 20-year economic plan that seeks to accelerate investment in ports and railways, loosen restrictions for businesses and double the annual growth rate to 5.4 percent.
“The market would be very comfortable if Pravin Gordhan remained as finance minister,” Nazmeera Moola, an economist and strategist at Investec Asset Management, said last week. “If he is replaced, it would need to be with someone credible. There are not a whole lot of obvious candidates around.”
Zuma is set to announce his cabinet on Sunday, a day after he is inaugurated following the decisive win by the ANC in the May 7 elections. Officials at the Treasury, ANC and Zuma’s office declined to comment on the cabinet appointments.
In his five years in office, Gordhan steered the economy through its first recession in 17 years and helped to parry pressure from labour unions to increase spending in the face of a widening budget deficit.
He struggled to retain investor confidence as the currency tumbled and credit rating companies downgraded the nation’s debt for the first time since the end of apartheid two decades ago.
“It would be very odd if Gordhan were to step down now,” Razia Khan, the head of Africa economic research at Standard Chartered in London, said last week. “He’s a trusted pair of hands. It has been an incredibly challenging time for the South African economy. The perception is that the finance ministry has done as good a job as it could have.”
Gordhan forecast economic expansion of 2.7 percent this year, a projection that is now at risk of being missed as a 16-week strike by miners cripples the platinum industry.
The rand has gained 1.6 percent against the dollar this year after sliding 19 percent last year. It closed 3.92c firmer against the dollar on Friday at R10.3491.
Possible replacements for Gordhan included Tito Mboweni, the former chairman of AngloGold Ashanti who served for a decade as governor of the central bank, and Gordhan’s deputy Nhlanhla Nene, said Susan Booysen, a political analyst at the University of the Witwatersrand.
“We all know Tito Mboweni is very keen on the post,” Booysen said, but some senior ANC leaders did not support him and “Zuma is not going to unnecessarily risk relations within the ANC by making unpopular appointments”.
Gordhan boosted his standing within the ANC in December 2012 when he was elected to the party’s national executive committee, its top leadership structure. He was ranked 13th on the party’s list of candidate legislators.
“Our first choice would be for the finance minister to be unchanged,” George Herman, the head of South African investments at Citadel Wealth Management, said.
“That would be plan A. I don’t think there are any other obvious candidates.”
Zuma will also need to provide certainty on other key economic posts in the government. Investors are waiting to see what role Cyril Ramaphosa, the deputy leader of the ANC and one of South Africa’s richest black businessmen, will play in Zuma’s cabinet and whether Reserve Bank governor Gill Marcus will be reappointed when her term expires in November. – Bloomberg