Johannesburg - While South Africa's economy does have the potential for a soft landing and quite a lot of political risk is already priced in, global risk consultancy Control Risks cautioned on Monday that it expects "confidence wobbles" going forward.
The two key issues mentioned are the possible successor to Finance Minister Trevor Manuel - with this seen as a possibility - and the outcome of ANC President Jacob Zuma's various court proceedings.
"Treasury and cabinet restructuring is mooted and this will send crucial signals to the markets," said Africa analyst at Control Risks, Anne Fruehauf.
"There is speculation that Manuel could be replaced by [central bank governor Tito] Mboweni or [Sars commissioner Pravin] Gordhan, but it is impossible to say with confidence this will happen. However, if they do, I
think the market will react extremely positively," she added.
Of more concern, says Fruehauf, is whether upcoming appointments amount to "political power play" or are based on competence.
"If it is a political appointment close to the left, it will spark short-term wobbles," she says.
Over the long term, areas of concern relate to issues like reducing the debt burden.
She feels that investors will start having a clear sense of the new direction at the time of the Medium Term Budget Policy Statement around October.
She is not convinced that Manuel could find a place in a new "super cabinet", for example, by taking charge of policy or becoming deputy president.
"At this stage it is fundamentally uncertain," said Fruehauf.
On a positive note, she pointed out that South Africa is one of the few countries that had tried to fix its problems while the sun was shining, for example, by moving to a budget surplus.
"South Africa is also not spending money on bailing out banks, but on a huge infrastructure drive, which has to be positive compared with other countries," she said.
She also feels that the ability for populism may well be constrained by the current economic circumstances.
"They may be sensitive to the need to reassure investors," she noted.
'No honeymoon' for Zuma
She feels the Zuma government may turn out to be more careful than detractors say, with Zuma potentially becoming something of a "consensus-broker", which will be a move away from the approach of Thabo Mbeki.
But she cautions: "We must brace ourselves for an over-pricing of political risk in South Africa."
She feels there are still plenty of short-term concerns and there will be "no honeymoon" for Zuma.
She says that investors remain concerned that his trial causes obstacles if he is caught up in it to the detriment of fulfilling his duties of office.
She concedes, though, that there is still the possibility of charges being
dropped.
"But will this short-term outcome be at the expense of long-term interests, like upholding the rule of law?" she questioned.
She says she still expects the ANC to emerge victorious on April 22, but acknowledges that the battle is now in a "reconfigured landscape".
Any changes to policy remain underlying concerns as the ANC renegotiates with its alliance partners.
"The loss of a two-thirds majority is plausible, but not assured," she adds.
But Fruehauf says she has been to a few visits to the townships during the course of her research and feels there seems to be a "default loyalty" to the ANC despite the various concerns voters may have.
She wonders if the new Cope party has the organisational capacity and resources necessary to emerge as a serious threat, although she does feel opposition parties now have new-found optimism.
"Manuel's term may well be over and investors will have to live with that," she concluded.
- I-Net Bridge