South African President Jacob Zuma on Sunday tapped junior minister Nhlanhla Nene to become the country’s first black finance minister as he unveiled his new cabinet a day after taking office.
The appointment of Nene, aged 55, represents a statement of intent from Zuma, who has vowed to bring radical social and economic transformation in his second five-year term.
Within South Africa’s ruling ANC there is a strong desire to put more economic power in black hands.
In the 20 years since South Africa struggled free from racist apartheid rule, the economy remains predominantly in white hands, despite a raft of empowerment programmes.
“Economic transformation will take centre-stage during this new term of government as we put the economy on an inclusive growth path,” Zuma said at his inauguration Saturday.
Nene had served as deputy to internationally respected finance chief Pravin Gordhan, who is of Indian origin.
“Nene is an old-hand at the treasury,” said Razia Khan, Africa’s regional head of research for Standard Chartered Bank. “He will be seen to represent policy continuity.”
But his appointment is not without risk. He follows on from Gordhan and the similarly well-regarded Trevor Manuel — who is mixed race — and perhaps faces a tougher challenge than either of his predecessors.
The rand has been under pressure for months and ratings agencies have warned that deficits, high unemployment and slow growth may prompt a further credit downgrade to junk bond status.
That could raise the cost of borrowing for the South African government and prompt international investors to look to other faster-growing emerging markets in Africa.
Some analysts also believe the country will report negative growth in the first quarter later this week.
“Progress made in lifting growth, and fulfilling previous fiscal consolidation pledges, will be closely watched,” said Khan.
Nene is a former parliamentarian and chair of the finance portfolio committee.
He spent 15 years at insurance firm MetLife, where he was a regional administrative manager and where, during apartheid, he organised the country’s first strike in financial sector.
He does not have a high public profile in South Africa, and before Sunday’s announcement was perhaps best known for tumbling off a broken chair during a television interview in 2008.
Peter Attard Montalto of Japanese bank Nomura said investors would be watching carefully to see if Nene had enough clout within the cabinet to stand up to more anti-free market colleagues.
“He is a party loyalist… how much can he stand up for National Treasury and its beliefs and pro-investor stance?” he asked.
Investors are likely to take little comfort from the appointment of trade-unionist-turned-billionaire Cyril Ramaphosa as deputy president.
“Whilst he will be a very effective communicator with business and investors we do not think policy wise it’s a given that he will be investor friendly,” said Attard Montalto, injecting a note of caution.
After making his money through black economic empowerment deals, Ramaphosa’s background “is very different from a free market (private) business economy that would be growth enhancing,” he added.
Following a punishing five-month platinum strike, mineral resources minister Susan Shabangu was booted out.
Police minister Nathi Mthethwa, who was in office during the killing of 34 striking miners at Marikana in 2012 also was shifted from his post.
A new ministry for small business development was also created.