- The 24 February budget has reinforced the importance of keeping Finance Minister Tito Mboweni in his post, but also speculation about his tenure.
- President Cyril Ramaphosa needs to reshuffle his cabinet soon owning to vacancies.
- However, Mboweni may remain in office for longer on the back of last week’s budget and a lack of credible replacements.
The budget consolidation effort presented last week makes Mboweni look more indispensable than ever in the eyes of investors, particularly amid political opposition from African National Congress (ANC) and labor allies. By far the biggest fight facing Mboweni – together with Minister of Public Service and Administration Senzo Mchunu – will be over the public-sector wage bill, where the Treasury’s plan for a nominal wage freeze collides with union demands for a deal 4 percentage points above inflation (the Treasury estimated CPI inflation for 2020 at 3% and forecasts 3.9% in 2021).
Nevertheless, Mboweni’s reluctant, reclusive, and blunt leadership style has done little to suggest that he is politically adept at selling his plans within a divided ANC. His attendance at cabinet as well as ANC National Executive Committee (NEC) meetings is reportedly poor; there is also little sign that he is present enough to fight the corner of the National Treasury. The department has already lost its reputation as an all-powerful ministry and has continued to hemorrhage top staff. The Treasury periodically loses spending fights (an obvious example is South African Airways (SAA) funding), but perhaps the biggest concern is its waning ability to drive broader economic policy.
The top finance job has become next to impossible as a particularly toxic period in ANC politics collides with the worst fiscal constraints in the post-apartheid era. Mboweni’s bluntness about the need to address South Africa’s growing fiscal crisis, at a time when ANC consensus around this is seems very frail, makes him many enemies politically but all the more indispensable to hold the fiscal line.
What is certain is that Ramaphosa will need to announce a cabinet reshuffle soon owing to the recent passing of minister in the presidency Jackson Mthembu. The most likely outcome currently seems to be that Mboweni will stay on for now, particularly given the lack of alternative candidates.
The only market-positive replacement would be a heavy-hitter like South African Reserve Bank (SARB) Governor Lesetja Kganyago. Former deputy finance minister Mcebisi Jonas, who is well respected, not least for standing up to ‘state capture’ corruption, would also be considered a good appointment. However, the technocratically-minded Kganyago seems reluctant to leave the SARB and the affable Jonas is reluctant to return to frontline politics.
If push came to shove, including if Mboweni himself were to throw in the towel, few alternatives are in sight. Names being touted include:
- David Masondo, deputy finance minister (but he is a reputational liability after the ANC’s integrity committee recommended his dismissal, and he does not share Mboweni’s hawkish views on fiscal policy);
- Ronald Lamola, minister of justice and correctional services (though he is needed at his current department and, while being a rising political star, does not boast finance experience);
- Zweli Mkhize, health minister (but he has become almost indispensable in the fight against Covid-19);
- Dr. Renosi Mokate, current chairwoman of the Government Employees Pension Fund (GEPF) (who as a former SARB deputy governor might have the credibility but lack political clout);
- Barbara Creecy, minister of forestry, fisheries & environmental affairs (who has experience as Gauteng’s former finance minister but still lacks significant national and international exposure);
- Paul Mashatile, ANC treasurer-general (the former Gauteng premier has been touted for the finance job in the past, but his ANC role is technically a full-time post and his political loyalty to Ramaphosa is uncertain).
Ultimately, Mboweni might still be Ramaphosa’s best bet, at least for the moment, since most alternative candidates would likely generate negative headline risk in the markets as well as factional squabbles within the ANC. Neither market perceptions nor political fights over appointments are battles that Ramaphosa will be keen to pick. No change may still be easier to manage – even as ANC populist factions attack Mboweni’s austerity drive and trade unions fight his wage freeze – than consulting the ANC’s top six leadership, particularly Secretary-General Ace Magashule, on an alternative appointment.