Cape Town - South Africa’s new finance minister, Malusi
Gigaba, will have to steer an economy that’s barely growing, fend off a junk
credit rating and reassure investors that he’ll protect the National Treasury’s
independence.
That’s a tough task for the 45-year-old, who trained as a
teacher and is a rookie when it comes to finance and business.
Gigaba has been at the forefront of South African
politics for more than two decades, serving as head of the ruling African
National Congress’s youth wing, a party lawmaker and minister of public
enterprises and then home affairs. He succeeds Pravin Gordhan, a favourite of
investors who was dumped after months of sparring with President Jacob Zuma for
control of the Treasury.
Gigaba has got off to a rocky start. The rand weakened
early on Friday following news of his appointment and civil-rights activists
and a labour-union group have threatened to occupy the Treasury to prevent it
falling into the hands of Zuma and his allies. The reaction to his appointment
has been overwhelmingly negative.
Read also: Gigaba an unknown quantity - analysts
“The market will struggle to digest Gigaba,” said Peter
Attard Montalto, an economist at Nomura International in London. He has
“clearly been put in a role to do a particular job by Zuma and viewed as loyal
to Zuma”.
The rand depreciated 1.7 percent to 13.4942 per dollar by
7:28 a.m. Friday, extending the decline this week to 8 percent, the worst
performance among more than 140 currencies tracked by Bloomberg.
Phoenix Kalen, director of emerging-market strategy at
SocGen in London, described Gigaba as lacking in prior experience on financial
markets or economics, while Eurasia’s Africa director Darias Jonker said his
reputation was tainted by his poor management of state-owned enterprises and
immigration policy.
Youth leader
The son of an Anglican priest and a nurse, Gigaba was
born in Eshowe in the eastern KwaZulu-Natal province. He obtained a bachelor’s
degree in education from the University of Durban-Westville in 1991, and a
master’s degree in social policy three years later.
While a student, he joined the ANC and won the presidency
of the party’s Youth League in 1996, two years after the ANC took power
following the post-apartheid elections. He was reelected in 1998 and 2001. At
the age of 28, Gigaba was elected in 1999 to Parliament, where he served until
2001 before resigning. He was reappointed a lawmaker after a vote in 2004 and
then-President Thabo Mbeki named him deputy home affairs minister.
In 2007, he was found to have billed 1,020 rand ($76) to
his government credit card to buy flowers for his wife. He described the
spending as an “administrative” error and repaid the money.
Immigration rules
When Zuma wrested control of the ANC from Mbeki in 2007
and claimed the national presidency two years later, many Mbeki allies were
ousted from key posts. Gigaba survived the transition and was named public
enterprises minister in November 2010, giving him political oversight over
eight state-owned companies. They included power utility Eskom Holdings SOC
Ltd., which drew criticism for implementing managed blackouts because it
couldn’t generate enough electricity to meet demand.
After Zuma won a second term in 2014, he named Gigaba as
minister for home affairs. His record there was blighted by the implementation
of new immigration rules, which were aimed at boosting security but ended up
deterring tourists.
Despite having government experience Gigaba is “unlikely
to lead the Treasury as effectively as Gordhan,” Jonker said. “He is also
likely to be more antagonistic towards the concerns of international investors,
especially Western investors.”