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Cape Town - President Jacob Zuma’s appointment of former finance minister Pravin Gordhan to oversee local councils is perhaps the biggest surprise in the cabinet shake-up.
Gordhan, who steered South Africa through its first recession in 17 years, was widely expected to keep his post.
So why replace the respected finance chief and what’s in store for him now? Fin24 looks at the key questions.
Why move Gordhan?
Peter Attard Montalto, an emerging markets economist with Nomura, said Zuma’s move to oust Gordhan from the finance ministry was unexpected.
He said: "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.”
Business Unity South Africa (Busa) acting CEO Cas Coovadia said the organisation was disappointed that Gordhan was no longer finance minister.
Gordhan is now being tasked with heading up the department that tackles South Africa’s local government.
The department of cooperative governance and traditional affairs is in charge of developing national policies and legislation with regard to provinces, municipalities and local government. It is also responsible for overseeing the traditional leadership of South Africa’s indigenous communities.
As a less high profile department than the finance ministry, some have deemed the appointment a demotion. Montalto said Gordhan is now in charge of "a tiny ministry with little power”.
Despite its size, Coovadia said Gordhan has been moved to a critical post.
"The sustainable growth and development of municipalities is critical to growth and service delivery, and Minister Gordhan's experience and discipline will be excellent in this ministry,” he said.
Nazmeera Moola, economist and strategist at Investec Asset Management, agreed that Gordhan’s “positive influence” would be “hugely welcome” at the department.
She added: “He could help bring some sanity to the finances of the provinces.”
Who is Gordhan’s replacement?
Gordhan’s former deputy, Nhlanhla Nene, replaces his boss as top dog in the finance ministry.
Nene has been the ministry’s number two since 2008, when he became an internet sensation after a clip showing him falling from a chair on the TV programme View from the House went viral.
An ANC loyalist who became active in politics as a student in the 1970s, Nene’s first name means “luck” in Zulu.
After working as an administrative manager for Metropolitan Life Insurance for 15 years, he became a local government councillor for the ANC in 1996, going on to become an MP in 1999. He served as co-chairperson of the legislature’s joint budget committee and chairperson of its finance committee.
What will investors think?
The appointment of Nene isn’t expected to cause too many ripples on the financial markets.
Colen Garrow, an economist at Meganomics in Johannesburg, said it was a market friendly appointment. He added on Twitter: “Look carefully – the credentials are there.”
Indeed, Nene has already proven himself as a “very competent, pragmatic and consistent person”, according to Busa’s Coovadia.
“These are critical qualities for the position of minister of finance,” he added.
Montalto agreed that Nene is "a sound technocrat with a good grasp of the brief and well respected within the National Treasury”.
Chris Hart, strategist at Investment Solutions, said there would be “no reaction” on the financial markets.
He added on Twitter: “Nene is known and there are no concerns”.
Lacking political muscle?
However, in an emailed noted to clients, Montalto questioned Nene’s political muscle.
As a party loyalist, the worry is over how much Nene can stand up for the National Treasury and its beliefs and pro-investor stance, he said.
Montalto added: “Gordhan on the other hand was good at mastering this politicking."
Moola echoed Montalto’s concerns. While Nene has an excellent grasp of the issues at hand and a good track record, she said the main worry was “if he has the stature to push back against other long-standing ministers”.
Montalto also flagged concerns over new Deputy Fnance 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."
Gordhan, who steered South Africa through its first recession in 17 years, was widely expected to keep his post.
So why replace the respected finance chief and what’s in store for him now? Fin24 looks at the key questions.
Why move Gordhan?
Peter Attard Montalto, an emerging markets economist with Nomura, said Zuma’s move to oust Gordhan from the finance ministry was unexpected.
He said: "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.”
Business Unity South Africa (Busa) acting CEO Cas Coovadia said the organisation was disappointed that Gordhan was no longer finance minister.
Gordhan is now being tasked with heading up the department that tackles South Africa’s local government.
The department of cooperative governance and traditional affairs is in charge of developing national policies and legislation with regard to provinces, municipalities and local government. It is also responsible for overseeing the traditional leadership of South Africa’s indigenous communities.
As a less high profile department than the finance ministry, some have deemed the appointment a demotion. Montalto said Gordhan is now in charge of "a tiny ministry with little power”.
Despite its size, Coovadia said Gordhan has been moved to a critical post.
"The sustainable growth and development of municipalities is critical to growth and service delivery, and Minister Gordhan's experience and discipline will be excellent in this ministry,” he said.
Nazmeera Moola, economist and strategist at Investec Asset Management, agreed that Gordhan’s “positive influence” would be “hugely welcome” at the department.
She added: “He could help bring some sanity to the finances of the provinces.”
Who is Gordhan’s replacement?
Gordhan’s former deputy, Nhlanhla Nene, replaces his boss as top dog in the finance ministry.
Nene has been the ministry’s number two since 2008, when he became an internet sensation after a clip showing him falling from a chair on the TV programme View from the House went viral.
An ANC loyalist who became active in politics as a student in the 1970s, Nene’s first name means “luck” in Zulu.
After working as an administrative manager for Metropolitan Life Insurance for 15 years, he became a local government councillor for the ANC in 1996, going on to become an MP in 1999. He served as co-chairperson of the legislature’s joint budget committee and chairperson of its finance committee.
What will investors think?
The appointment of Nene isn’t expected to cause too many ripples on the financial markets.
Colen Garrow, an economist at Meganomics in Johannesburg, said it was a market friendly appointment. He added on Twitter: “Look carefully – the credentials are there.”
Indeed, Nene has already proven himself as a “very competent, pragmatic and consistent person”, according to Busa’s Coovadia.
“These are critical qualities for the position of minister of finance,” he added.
Montalto agreed that Nene is "a sound technocrat with a good grasp of the brief and well respected within the National Treasury”.
Chris Hart, strategist at Investment Solutions, said there would be “no reaction” on the financial markets.
He added on Twitter: “Nene is known and there are no concerns”.
Lacking political muscle?
However, in an emailed noted to clients, Montalto questioned Nene’s political muscle.
As a party loyalist, the worry is over how much Nene can stand up for the National Treasury and its beliefs and pro-investor stance, he said.
Montalto added: “Gordhan on the other hand was good at mastering this politicking."
Moola echoed Montalto’s concerns. While Nene has an excellent grasp of the issues at hand and a good track record, she said the main worry was “if he has the stature to push back against other long-standing ministers”.
Montalto also flagged concerns over new Deputy Fnance 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."
