LONDON (Reuters) -South Africa’s President Cyril Ramaphosa announced on Sunday a cabinet of the country’s government of national unity following weeks of protracted and at times acrimonious negotiations.
Ramaphosa retained the African National Congress’ Enoch Godongwana as finance minister and appointed former opposition leader John Steenhuisen as minister of agriculture, bringing the Democratic Alliance and other parties into his new coalition cabinet.
Below are analysts’ reactions to the announcement:
ELNA MOOLMAN, ECONOMIST, STANDARD BANK GROUP
“The Finance Minister’s re-appointment was widely expected. It is positive insofar as we have always viewed him and his team as strongly committed to the fiscal consolidation plan that they tabled.
“The portfolios focussed on priority areas for the policy reform agenda include several improvements and some strong appointments. This strengthens our long-standing optimism around the positive impact of the traction with policy reform supported by Operation Vulindlela (the policy implementation unit of the presidency and national treasury) – although the structural reforms are by nature protracted, complex and difficult.”
MIKE VAN DER WESTHUIZEN, PORTFOLIO MANAGER, CITADEL
“This is good for continuity. Godongwana – and Treasury under his leadership – have shown solid commitment to fiscal consolidation under difficult circumstances.
“As far as I’m concerned the onus is on the rest of government to get growth up sustainably in order for Treasury to have more wiggle room with the budget. If government has more revenue to work with, then they are able to sort out debt issues which has been the overhang threatening South Africa’s fiscal sustainability.”
SANISHA PACKIRISAMY, ECONOMIST, MOMENTUM INVESTMENTS
“The reappointment of Enoch Godongwana introduces an element of continuity in the Finance Ministry, which is positive for confidence in financial markets. The inclusion of a DA deputy minister adds to the checks and balances of that portfolio and allows the DA to make a more meaningful contribution to policymaking.”
MICHAEL KAFE, ECONOMIST, BARCLAYS
“President Ramaphosa’s new cabinet includes ministers from the opposition in key portfolios that could help drive structural reform and lift growth. Strategically, all opposition ministers are closely marked by ANC deputies, and the president was also careful not to leave out the left-leaning segments of his voter base.
“On the whole, the fact that the DA was offered some key ministries where the injection of fresh ideas and the implementation of important structural reforms could help lift the economy on to a higher growth path is likely to be taken positively by markets. The fact that the EFF was not offered any position will likely be perceived positively too.”
JEE-A VAN DER LINDE, SENIOR ECONOMIST, OXFORD ECONOMICS
“There will be a palpable sense of relief that Mr Ramaphosa has finally named his executive following protracted and often terse negotiations with his new coalition partners. Working in silos is simply not an option for the incoming government and finding agreement on sticky issues will be of great importance.
“With the new Cabinet finally unveiled and most of the uncertainty out of the way, the government can finally get on with the task at hand. Although it remains to be seen whether the GNU will be able to address South Africa’s economic issues, we consider this is a business-friendly outcome.”
ANDREW MATHENY, ECONOMIST, GOLDMAN SACHS
“In our view, the cabinet outcome resulting from elections one month ago likely points to policy continuity, in particular a continued fiscal consolidation with the primary surplus likely to rise from 0.5% of GDP in FY23/24 to 1% of GDP in FY24/25 (in line with existing plans). This view is reinforced by the reappointment of Finance Minister Enoch Godongwana. Given the multi-party arrangement in the new government, we see some upside potential for reforms, which could accelerate given greater accountability/oversight that could translate into improved policy implementation.
“Set against this, however, are greater political risks given potential disagreement within the coalition that could impede the effectiveness of government. From a market perspective, we view the latest developments as positive as the market is likely to price out lingering short-term uncertainty over the past several weeks of coalition/cabinet negotiations.”
ZIYANDA STUURMAN, SENIOR ANALYST, AFRICA, EURASIA GROUP
“Ramaphosa made several changes. For example, the energy and mining ministries have been separated.
“Crucial state-owned entities such as national power utility Eskom and freight rail and port authority Transnet will now be under the management of the energy and transport ministries respectively. The integration of Eskom and Transnet into the relevant government departments will also likely take several weeks and how the new ministers manage this new role will be a key watch point.”
(Reporting by Karin Strohecker, Bhargav Acharya and Kopano Gumbi, editing by Emelia Sithole-Matarise)
