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The new South African cabinet announced by President Jacob Zuma emphasised continuity in economic policy as the new Finance Minister, Nhlanhla Nene, was Deputy Finance Minister since 2008, so he knows the Treasury very well. The other key economic ministries of trade and industry, as well as economic development, retain their ministers of Rob Davies and Ebrahim Patel respectively. In addition, a new ministry for small business development headed by Lindiwe Zulu underlines the impetus on job creation.
The highly respected Pravin Gordhan moves from Finance to become Minister of Cooperative Governance and Traditional Affairs. This may seem like a demotion, but for the African National Congress it is a key appointment, as the opposition Democratic Alliance has made inroads at provincial level and service delivery will have to be improved before the 2016 local government elections.
“You will recall that we stated in the inauguration address that the economy will take centre-stage,” Zuma said when he announced the new cabinet.
“The members of the National Executive have been tasked with improving and speeding up the implementation of our progressive policies and programmes. The team will implement the five-year Medium Term Strategic Framework of government, which has been developed using the National Development Plan and the African National Congress (ANC) Manifesto,” he said.
The new cabinet drew a cautious welcome from various players.
“I like the new cabinet, certainly the aspect of it that has to do with the economy. A ministry to look after small business is a breakthrough. A ministry in charge of water and sanitation shows the commitment to service delivery. I’m cautiously optimistic. The economy needs as much help as it can get. If we don’t get out of this nosedive, we will lose our coveted investment grade ratings,” Colen Garrow, an economist at Meganomics told The BRICS Post.
The first quarter gross domestic product (GDP) data will be announced on Tuesday. The consensus forecast is that this will show the first quarterly contraction since the recession of 2009, as the manufacturing and mining sectors contracted based on already-released monthly production data. The services sector may have expanded enough to counter this, but there are not enough monthly service sector production data series to make a call on this.
The South African Chamber of Commerce and Industry (SACCI) welcomed the new cabinet, but remained concerned about the interventionist tone of recent official statements.
“The cabinet shows a commitment to the priorities in the President’s inauguration speech, these being accelerated infrastructure investment; radical economic transformation and jobs growth. SACCI will be an active partner toward an improved economic and investment environment, but remains of the view that this must be predicated on lower levels of state interventionism,” the business body said.
Helmo Preuss in Pretoria, South Africa for The BRICS Post