A Cabinet shuffle could be embattled President Jacob Zuma’s next defensive move, according to emerging markets economist Peter Attard Montalto of Nomura.
Reacting on Monday to the ANC’s National Executive Committee (NEC) meeting held over the weekend, Montalto commented that the ANC has closed ranks and given Zuma a six-month breather while state capture is being probed. However, he believed “the ground is shifting”.
With Zuma’s departure – a so-called Zumxit – on the back burner, what’s left is the simmering conflict between the Hawks and Finance Minister Pravin Gordhan, the South African Airways board battle, which Montalto believes is set to move forwards after Easter, and the nuclear power issue “hovering in the background”, with the South African Revenue Service leadership issue still unresolved.
While the anti-Zuma faction may start to go the legal route against the Hawks, “resolution on this front seems unlikely in the immediate future and so will remain a distraction to markets and policy makers from the bigger issues of avoiding a ratings downgrade, etc”, said Montalto.
“The most interesting threat to come for markets is a cabinet reshuffle. This has been mooted for a year now in public and private and we believe it remains on the table. Doing so now, or over Easter, would be blatant for President Zuma after the NEC, but would be a show of and a consolidation of power. There has been too much noise, so it could be a real possibility in coming weeks.”
In what Montalto calls “Nenegate lite”, Deputy Finance Minister Mcebisi Jonas could be “removed and replaced with a Zuma ally, who would be within the National Treasury as a tenderpreneur faction point man and control the Public Investment Corporation (PIC) and local development banks, for which the deputy finance minister is normally chairperson”.
Montalto believes Rob Davies of the Department of Trade and Industry (whose name has been mentioned in this regard since last year) and Higher Education Minister Blade Nzimande could also be in the firing line. Both ministers are from the South African Communist Party which has been “increasingly vocal and anti-Zuma since the second half of last year”, said Montalto.
He believes Minister in the Presidency Jeff Radebe is another possible reshuffle candidate. This is because he is viewed as too powerful – he is “often referred to as the South African Prime Minister”, said Montalto – to be among the Zuma detractors.
“We watch and wait for political moves in the factional battles in coming months, but any ‘resolution’ of this issue – to take a larger step forwards in the succession battle itself via possible Zumxit, still looks far off.
“In this environment, structural reforms and the expense of political capital on policy, to avoid a downgrade look unlikely – as does encouraging the private sector to invest,” said Montalto.