Will Tito Mboweni return?

2014-02-23 10:00

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Rumours are flying that Finance Minister Pravin Gordhan will step down after the elections in May

This could very well be Finance Minister Pravin Gordhan’s last budget – but despite persistent rumours that it is, there has been little speculation about his successor.

Rumours that he will resign after the election have been doing the rounds and were strengthened this week when Tito Mboweni, the former governor of the Reserve Bank and former labour minister, resigned as chair of AngloGold Ashanti.

Last year, Gordhan indicated to a journalist that he was considering his career options, but Treasury later denied he was thinking of resigning.

Tim Harris, the DA’s shadow minister of finance, said the fact that Gordhan’s name did not appear in the top 10 of the ANC’s list further fuelled the speculation.

Harris said his position “does seem precarious given the growing dissatisfaction with his leadership style in Treasury, which may have been a contributing factor to the departure of 25 senior Treasury employees in 2012-2013”.

Harris said Gordhan “has been unable to champion the labour law reforms he called for at the beginning of his term, has seen his youth wage subsidy significantly watered-down in Parliament, and has been unable to put a cap on rising state debt”.

However, Harris said Gordhan “has been a bulwark against the state-interventionist machinations of some of his colleagues in the economics cluster, namely ministers Ebrahim Patel and Rob Davies”, and in this respect, his retirement at the end of this term would not bode well for South Africa’s future economic management.

“It is difficult to think of a candidate with the respect of the markets and the required technical ability to succeed the current finance minister. The current and former Reserve Bank governors and finance ministers respectively seem to be a league apart from anyone else associated with the governing party’s current economic team.”

In addition to Mboweni, two other names have popped up as possible successors – Deputy Finance Minister Nhlanhla Nene and Public Enterprises Minister Malusi Gigaba.

Mzoxolo Mpolase, analyst at Political Analysis SA, said Mboweni would be the most likely candidate out of the three to replace Gordhan.

“His relatively successful stint as Reserve Bank governor means that he is verified in both his capacity in the realm of finance and the kind of thinking that the business community, the government and outside stakeholders including the International Monetary Fund (IMF), the World Bank and the World Economic Forum advocate for South Africa’s economic and financial path.”

Mboweni has also been regaining his political standing, he said. “Mboweni has, however, been citing his many business interests and general disinterest as precluding him from the position. I would not put much weight on these words, if indeed, Pravin Gordhan were to retire or be redeployed, and President Jacob Zuma asked Mboweni to fill the position; I doubt that he would decline.”

Mpolase said Nene was an option for the sake of continuity, but “the truth is that Gordhan’s term has not been successful, and as a result there is diminished value in emphasising or making the appointment based on continuity”.

He said Nene’s obsession with fiscal discipline was already quite entrenched in Treasury. Also, a deputy rarely replaces a minister for the new term. Nene has been in Parliament since 1998. Before he became deputy minister of finance, he was the chairman of the parliamentary portfolio committee on finance.

Mpolase said Gigaba had gained “political clout and standing in the past five years, but his time as public enterprises minister does not inspire much confidence in him taking on the role of finance minister”.

“His inability to inculcate the most fundamental of fiscal principles within state entities like South African Airways, Eskom and the like does not bode well for him. Furthermore, ideologically, Gigaba is not of the ‘right mould’ – he does not possess the kind of neoliberal thinking that the business community, the government and outside stakeholders like the IMF, the World Bank and the World Economic Forum espouse for South Africa’s economic and financial path.”

Gigaba was elected to Parliament for the first time in 1999 and was previously deputy minister of home affairs.

Professor Alan Hirsch, director of the graduate school of policy development at the University of Cape Town, said he could not speculate on who would replace Gordhan, but it is very important that a minister of finance in South Africa:

» Has a strong political base within the ANC;

» Has the full confidence and support of the president and other senior Cabinet members; and

» That he or she has a good knowledge of economic debates within the ANC and the alliances so that they are able to engage imaginatively and constructively but firmly with the other leaders in the economic policy sphere in the ANC.

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