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Extra Virgin June
Extra Virgin June

Of all the welcome changes to the political landscape in JZ’a new cabinet – no room for former Health Minister Mtsimang, no return for Winnie – it was the placement of Trevor Manuel at the heart of policy making that eased market fears. But will his successor be any good, and how will the markets react? David Mayfield finds the answers.

' Markets took Gordhan in its stride as he has also been incredibly successful in turning around a defunct South Africa Revenue Service'

Trevor Manuel's new role is undeniably a positive development for South Africa's economic sustainability. For a start, considering the skittishness of global investors, the recent downgrading of South Africa's economic growth prognosis and the precarious position of South Africa's fiscal and current account balances, it was always critical that the apparent left-leaning newly elected President Jacob Zuma maintained some semblance of policy continuity.

Recall, during the build-up to the election in April Jacob Zuma spent the majority of the time bending over backwards, spelling out to anyone who would listen, that the African National Congress had no intention of making a wholesale policy dovetail to the left. In fact, if anything, the ANC election manifesto presented almost no deviation from the conservative, Washington Consensus-inspired policies of yesteryear, which were vigorously defended by the then Finance Minister, Trevor Manuel.

The promise was always going to be put to test once Jacob Zuma became President Zuma. The fate of the world's longest serving Finance Minister was always going to be an important one. Meanwhile, astute international investors waiting trigger happy to see whether Africa's “next Big Man,” as the Economist referred to Zuma, would honour his words.


For Finance Minister Manuel’s continuation would go along way in backing-up the ANC’s commitment to pragmatic market economics. And, international investors respect his sound judgment and adherence to prudent macroeconomic management.

With Pravin Gordhan replacing Manuel as Finance Minister of his first cabinet on Sunday, Manual was promoted to head the National Planning Commission. In effect, Manuel’s skill, agility, leadership and experience has been retained by the ANC National Executive Committee. He is also now at the helm of a decision making body that will enable him to address heftier questions of poverty, service delivery, inequality and, of course, the economy.

Manuel’s responsibility shifts from deciding how to spend the government’s revenues, to making sure that the expenditure is co-ordinated effectively and spend as directed by the Treasury. In reality, no other policy maker would be able to make this potentially critical committee effective.

Promisingly, Gordhan would have been Trevor Manuel's first pick; the two have worked side-by-side for numerous years: Gordhan collecting the government’s revenue and Manuel allocating it. Markets took Gordhan in its stride as he has also been incredibly successful in turning around a defunct South Africa Revenue Service over the space of a short time, earning a great deal of praise and admiration in the process – not too mention exceeding the government revenue forecasts most years.

He is sure to add his own style to the operation and has already asked questions concerning the importance of inflation targeting, but most importantly he offers fresh impetus and frees Manuel to pursue new challenges. Let’s hope he is as successful in his new position as he was his last. So far, markets seem confident he will be.

Extra Virgin June



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