After their unceremonious exits from the National Treasury, Nhlanhla Nene and Pravin Gordhan have returned to crucial portfolios with the expectation that they will rebuild South Africa’s ailing economy and fix state-owned enterprises (SOEs).
Nene was appointed finance minister, replacing Malusi Gigaba, while Gordhan was chosen to replace embattled Lynne Brown as public enterprises minister after President Cyril Ramaphosa’s first Cabinet reshuffle.
“These two appointments show the level of seriousness that the new administration is putting into the cabinet. They are both competent ministers who are widely respected by rating agencies and investors,” said Dennis Dykes, the chief economist at Nedbank.
After being removed as finance minister last year, Gordhan was appointed as a member of the subcommittee on public enterprises in Parliament.
He became increasingly vocal about state capture, and was critical of senior officials at SOEs when they appeared before the parliamentary inquiry into governance at the state power utility.
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“Public enterprises is our biggest problem as it is draining resources from the Budget. These SOEs are in a critical state. This is going to be a huge challenge, but there is no one better than Pravin to fix that. In his role at the parliamentary committee, he had been looking at these things in great detail,” Dykes said.
Nene was the finance minister for 18 months between May 2014 and December 2015, when he was axed in favour of Des van Rooyen - who was axed three days later.
“Nene’s credentials speak for themselves. He is a well-
established leader in the finance sector, and his experience is a confidence booster.
“He spoke out against corruption, economic mismanagement and the looting of state resources. His return is a step in the right direction towards winning back much-needed investor confidence,” Dykes said.
Dawie Roodt, the chief economist at The Efficient Group, stated that while these changes were significant steps in boosting investor confidence, there would not be immediate economic growth.
“There is an improvement in confidence, and that is where some effects will come. But real growth benefits will take a while. Once investment is improved, it will take maybe two to three years for our economy to be at its best,” Roodt said.
The Banking Association of South Africa also welcomed Nene’s appointment. In a statement yesterday, its managing director, Cas Coovadia, said ethical leadership at the Treasury was the most critical anchor point in growing the economy.
“The Treasury must be entrusted to a leader who is untainted by the devastation of corruption and state capture. This is a long-awaited and crucial step towards addressing the legitimate misgivings regarding the previous administration,” he said.