President Cyril Ramaphosa announcing changes to his Cabinet at the Union Buildings, Pretoria. Picture: Thobile Mathonsi/ANA Photo

Cape Town - President Cyril Ramaphosa struck an uncomfortable political compromise with his first Cabinet but in the country's two key economic portfolios he turned to two former trusted finance chiefs to clean up after former president Jacob Zuma's administration.

As widely expected he turned to Pravin Gordhan to head public enterprises, the main liability on the state's balance sheets, and reverse a tradition of debt and cash injections entrenched by mismanagement and corruption.

Gordhan for a decade managed the unlikely feat of being a most likeable taxman when he took over the running of the South African Revenue Service in 1999 and turned it into the one of the most-user friendly but sophisticated electronic tax collection services in the world.

He was appointed finance minister by Zuma in his first Cabinet, and after what many saw as a lacklustre start, grew into the role and held a line of fiscal consolidation without ever stepping into austerity terrain. 

"There is always fat to cut", became his trademark admonishment, along with with a commitment that the country's poor majority would not lose their welfare net.

It held firm through the economic crash of 2008, when it was widely considered that the fallout from the global crisis would have been worse for South Africa, had it not been for his firm hand on the country's finances. 

When Zuma was re-elected, he shifted Gordan to cooperative governance to take on the mammoth task of tackling corruption and mismanagement in the country's municipalities. 

Ramaphosa's thinking was not un-similar when he decided this week to take the same man, by now a political martyr after he was sacked by Zuma last year, to turn around a portfolio in even bigger crisis, bleeding money into the hands of the rent-seekers who surrounded the former president.

Newly appointed Finance Minister, Nhlanhla Nene, was the somewhat dull but sensible deputy finance minister who went on to succeed him before he was axed by Zuma in a battle for control of the public purse.

His axing lifted the lid on the extent of the sway the Gupta brothers, now running from justice, had on the former president when the Financial Times revealed that his deputy at the time, Mcebisi Jonas had been offered the post by the brothers.

Nene's first job will be 11th-hour damage control to ward of a credit rating downgrade by Moody's in March. It's late in the day, and Malusi Gigaba, who moves back to the home affairs ministry after tabling a single budget, has already held rounds of meetings with the agency who put South Africa on a three-month review in November, and is expected to downgrade long-term issuer and senior unsecured bond ratings.

Gordhan's foremost task is to avoid a failure of one of the state-owned enterprises, which would prompt another credit ratings downgrade. The biggest risk is Eskom, the company targeted by the Gupta family as a cash cow according to information coming out of a parliamentary inquiry.

“The cost of borrowing increases by an average of 2.4 percentage points over the medium term. GDP [gross domestic product] growth contracts by 3.1 percent and 0.3 percent in 2018 and 2019, respectively, before recovering to 1.1 percent by 2020,” the budget review said.

Eskom, which needs another R15 billion in funds before the end of March to avoid defaulting on debt due and used an additional R18 billion of its state guarantees and is expected to use R17.9 billion annually over the medium term, the budget review added. It holds a total of R350 billion in government guarantees and has drawn almost R221 billion.

According to the budget, the parastatals will be heading for a review of their business model. It is not clear whether this is a strength of Gordhan's but he has a reputation for surrounding himself with officials with impeccable integrity and has, in the parliamentary inquiry into Eskom, shown an aggressive appetite for weeding out corruption.

No Member of Parliament has been more scathing in their questioning, with the former minister telling one of the managers who tried to assail National Treasury's controls on his watch, former Eskom CFO Anoj Singh, he was a "delinquent" executive with an overblown salary of R4 million a year whose most recognisable skill was flouting the rules.

There will be more of that to come, when he is officially in charge of the ailing stable of state-owned enterprises.

African News Agency/ANA