Investors seek Gordhan’s reappointmentComment on this story
Cape Town - 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, 72, will begin his second term in office next week amid the longest local mining strike in history that’s shut the world’s biggest platinum mines, a 25 percent jobless rate and public outrage over a series of corruption scandals.
Retaining Gordhan, 65, 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 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 Cape Town-based Investec Asset Management, said in Johannesburg on May 13.
“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 May 25, a day after he is inaugurated following the decisive win by his African National Congress in elections last week.
Officials at the National 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 labor 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, head of Africa economic research at Standard Chartered in London, said by phone on May 14.
“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’s 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 in 2013.
It rose 0.1 percent to 10.3994 against the dollar as of 9:20 a.m. in Johannesburg.
Possible replacements for Gordhan include 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 in Johannesburg.
“We all know Tito Mboweni is very keen on the post,” Booysen, the author of “The ANC and the Regeneration of Political Power,” said by phone.
Some senior ANC leaders don’t 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, head of South African investments at Citadel Wealth Management, which oversees more than 20 billion rand in assets, said by phone from Cape Town yesterday.
“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, 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.
Ramaphosa, 61, will probably be appointed Zuma’s deputy and be put in charge of executing the government’s National Development Plan, two people familiar with the plans of the ruling party said in March.
“What we would want to see is coherence in terms of the policy framework,” Kristin Lindow, senior vice president at Moody’s Investors Service, told reporters on May 12.
“The NDP is the policy of the ANC, it’s the policy of the government. One of the things that would be helpful in order to implement this strategy is to have a coherence behind the implementation of the NDP.” - Bloomberg News