Newly appointed ministers and deputy ministers were sworn in on Friday, at the Union Buildings, in Pretoria.
President Cyril Ramaphosa on Thursday evening (5 August) announced changes to his cabinet, as part of improving the capacity of government.
Among other changes announced by the president is the separation of the Ministry of Human Settlements from the Ministry of Water and Sanitation. The two portfolios were brought together with the understanding that the provision of water is closely tied to the development of human settlements.
The president also announced the decision to do away with the Ministry of State Security and place political responsibility for the State Security Agency within the Presidency.
While this was not a sweeping reconfiguration of cabinet, the announced moves did address urgent vacancies and likely strengthened the potential effectiveness of the cabinet at the margin, said Sanisha Packirisamy, an economist at Momentum Investments.
“The implementation and delivery of key economic, regulatory and political reforms are of the utmost importance to sustainably place the country on a higher growth trajectory in the medium to longer-term and as such it should be viewed as a market positive if a clear willingness to support the president’s reform agenda is observed in the months to come, following these appointments,” she said.
However, according to Intellidex analyst Peter Attard Montalto, the changes to cabinet appear to be more of a missed opportunity for Ramaphosa to make the sweeping changes needed to get South Africa on the right track to reform the economy.
Most notably, Attard Montalto said that the new ministers, and the shuffling around of those who were already in cabinet, do very little to change the actual make-up of government – as such, markets and investors should not expect much, if anything to change in South Africa’s current landscape.
“We find this a questionable reshuffle to particularly show intent to take the country anywhere particularly new,” he said.
“It does somewhat have the flavour of a reshuffle designed to satisfy the condition of doing a reshuffle. The bar may well be low – in which case this reshuffle passed it – however, that still does not give the sense of a cabinet of intellectual thought leaders driving things forward.”
The analyst said the biggest missed opportunity was retaining Energy and Mineral Resources minister Gwede Mantashe, who he said the market views as being the biggest stumbling block for energy reform in government.
“His recent appearances talking about climate and energy policy have been embarrassing and not investor-friendly. There are other people who could bring together the unions and left, and deal with climate issues with vested interest management and energy policy,” Attard Montalto said..
This is what the experts think of other key appointments:
Finance – Enoch Godongwana
Enoch Godongwana’s popular standing and influential position on the National Executive Committee could provide him with enough political clout to push back on unaffordable fiscal demands, Packirisamy said.
“His previous position as head of the Economic Transformation Committee of the ruling party ensures that he has had his finger on the economic development pulse for several years. He is well known in financial markets and is generally viewed to have a more market-friendly approach to economic reform.”
“In our opinion, he advocates the use of social compacting to reach equitable economic outcomes,” said Packirisamy. “The backing of a strong technocrat, in the Director-General position in National Treasury, suggests this overall move in the finance ministry to be broadly positive.”
Attard Montalto described Godongwana’s appointment as possibly being the best one could hope for, given the options available.
“Godongwana is seen on the surface as ‘pragmatic’ and ‘investor friendly’. The latter is an oversimplification, however,” he said. The analyst noted that markets and investors have a complex view of the new finance minister. He is broadly seen as being closer to Tito Mboweni in terms of policy, but still sitting more on the left.
This means that markets should expect at least some continuity on the side of a more fiscally conservative Treasury – but a slightly looser grip on the coffers, which means continued slippage.
Health – Joe Phaahla
The new ministerial appointment has been in the position of deputy minister of health since 2014.
“A lot rests on Joe Phaahla’s shoulders in terms of rolling out SA’s vaccination programme to combat the ongoing Covid-19 pandemic, but the market is likely to view this appointment as reassuring,” said Packirisamy.
Attard Montalto said that appointing Phaalha was a good move from Ramaphosa, as he worked under Mkhize and is respected in the field.
“(He’s) an actual doctor, and he was viewed as a solid operator – though lacks political capital. A good safe pair of hands at the Department of Health if he can step up to the big job,” he said.
Communication and Digital Technology – Khumbudzo Ntshavheni
This ministry has, in the past, struggled with delays in the rollout of broadband, battled continued losses at the South African Post Office and has further been involved in the stalling of retrenchments at the state broadcaster.
A new minister brings about an opportunity for positive change in this ministry, said Packirisamy.
Attard Montalto said this appointment was one of the more questionable ones.
“Ntshavheni had not proved herself in Small Business – though Covid proved she can handle communication pressures as spokesperson during the unrest, and she has performed better in recent weeks on small business support,” he said.
However, the complex legal minefield and vested interests mess at the Department of Communication, particularly around spectrum, will not easily be shifted by her, he said.
Public Service and Administration – Ayanda Dlodlo
The recently negotiated wage settlement is a one-year deal.
“If the next set of negotiations are not finalised by the end of March 2022, the agreed-upon cash bonus will be extended, placing further upward pressure on government expenditure in a fiscally constrained environment. Ayanda Dlodlo now faces this Herculean task,” said Packirisamy.
Attard Montalto said the loss of Senzo Mchuno to the Department of Water and Sanitation is a major loss for the Department of Public Service and Administration – and that shuffling Dlodlo to the portfolio is problematic.
“Dlodlo did not prove at the State Security Agency she could get on top of reforming an institution,” he said, adding that putting her in such a crucial portfolio ahead of wage negotiations for next year – kicking off from September – is highly questionable.