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Gordhan's shock move sends signal on policy

Cape Town - The seeming demotion of former finance minister Pravin Gordhan to minister of cooperative governance and traditional affairs has been described as a "shock move" and "a waste of talent".

President Jacob Zuma appointed Nhlanhla Nene to the position instead.

Nomura's emerging markets economist Peter Attard Montalto on Sunday described Gordhan's new portfolio as "a tiny ministry with little power".

"We had expected him to either retire or stay. Maybe this is a way of transitioning him into retirement but never the less it seems his talents are wasted in this new role and we are very sad to see him leave the National Treasury.

"Him leaving like this does send an odd signal on policy," Montalto said.

In his take on President Jacob Zuma's new cabinet announced on Sunday, Montalto said the overall flavour of the changes to Zuma's cabinet is to say the least odd and seemingly more political than practical - "keeping Zuma loyalists close at hand with little acknowledgment for ministers who were doing well to stay put, or replacements being strongly suited".

He said it is far from clear that the new cabinet compared to the old one is better placed to secure jobs growth, fix South Africa's vulnerabilities or boost potential growth any more than the last one, and maybe less so.

He added that there has been a significant loss of talent both in some of the moves and in former deputy president Kgalema Motlanthe and former planning minister Trevor Manuel leaving.

"It is difficult to see much market reaction on these technicalities in the current market environment," said Montalto.  

Montalto described Nene, the new finance minister, as a sound technocrat with a good grasp of the brief, well respected within the National Treasury, and a  believer in the current macroeconomic policy dispensation.

"However, he is a party loyalist and the worry which we will be watching him on is how much he can stand up for National Treasury and its beliefs and pro-investor stance within cabinet and the ANC more broadly.

"Gordhan on the other hand was good at mastering this politicking."

Montalto also expressed concern about the new deputy finance minister, Mcebisi Jonas, whom he described as "somewhat of an unknown".

"A previous Eastern Cape provincial government minister of finance he seemed to do the job okay there but little really is known of his more macro policy views."

On the micro-economic policy side, Montalto said there is an unwelcome muddying of policy with a new small business development ministry.

"While headed by the capable and effective Lindiwe Zulu, the replication of DTI policy and likely micromanagement and over-regulation of a sector that needs a strong foundation but then room to grow rapidly means positive effects may be limited," he said.

 
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