#SAElections2019: Ramaphosa’s Top Post-election Priorities


By Joburg Post

As South Africans await the election results after flocking to the polls today, here are what economists think President Cyril Ramaphosa should do — and promptly — if the ANC comes out on top.

Cabinet reshuffle


At the top of Ramaphosa’s agenda will be his first big test: the make-up and size of the Cabinet which is likely to be announced in about two weeks.

A reshuffle that elevates more of Ramaphosa’s allies would be a sign that he has won over some of his critics, Capital Economics economist John Ashbourne says.

Given that appointments are controlled by the party as well as the president, there likely won’t be any big changes. However, the replacement of Zuma-era appointees with new faces would suggest that that the election has strengthened the president’s hand. Another sign will be Ramaphosa’s appointment of special advisors, according to Ashbourne.

“The individuals he chooses will say much about his reform ambitions and whether he is able to sideline his opponents,” Absa economist Miyelani Maluleke said.

The key portfolios to keep an eye out for are finance; public enterprises; rural development and land reform; labour; energy; and mining.

“A slimmed down Cabinet will signal the scope of his planned rationalisation of the entire executive branch of the government,” Maluleke said.

Eskom

From a policy standpoint, Ramaphosa will have to navigate SA’s energy strategy. In particular, the stabilisation and unbundling of Eskom will be Ramaphosa’s most pressing challenge, particularly as he faces a backlash from ANC-allied unions.

Earlier this year, Ramaphosa said Eskom would be remodeled and split into three entities dealing with generation, transmission and distribution

“We’re relatively optimistic that the president will manage to save Eskom from total collapse. The situation is now, after all, impossible to ignore. And the government seems to have accepted the need for significant spending to address the problem,” Ashbourne says.

Determining who should shoulder the burden of Eskom’s unsustainable debt is key, Absa economist Peter Worthington notes.

Momentum Investments economist Sanisha Packirisamy says, 

“Ramaphosa should accelerate plans on unbundling Eskom and improve financial and operating efficiencies at the state-owned enterprise (SOE) to prevent electricity shortages from hindering shorter term growth prospects.” 



Economic growth

As economic growth threatens to stutter this year, dragged down further by load-shedding, Ramaphosa will need to focus on revitalising the economy.

Ramaphosa should prioritise creating a more certain economic and regulatory environment so as to boost business and consumer confidence, which has remained in the doldrums due to a highly uncertain environment, Packirisamy said.

“If sustained, higher levels of sentiment can translate into spend by the private sector, which could contribute positively to overall economic activity,” she said.

According to Standard Chartered economist Razia Khan, “This will likely mean providing a sustainable solution for Eskom and other SOEs in a way that does not crowd out other spending; ramping up both private and public investment; and still reassuring on long-term macro-stability.”

Repair and improvements to governance should accelerate, while efforts to improve the supply of electricity, country competitiveness and stronger institutions would all support faster economic growth, Investec chief economist Annabel Bishop says.

Reserve Bank


With the departure of Francois Groepe in January and the possible departure of the Reserve Bank’s deputy governor Daniel Mminele in June, Ramaphosa will have to act fast to appoint two new deputy governors to the Bank. Governor Lesetja Kganyago’s term also comes to an end in November, though he has said he is willing to accept another term.

“The monetary policy committee is going through a lot of unusual changes. While none of these are sinister, they do add forecast risks, so decisions will have to be made,” Citibank economist Gina Schoeman said.

Ramaphosa will also be under pressure to provide more clarity on the nationalisation of the Bank.

Absa’s Worthington says, 

“As Ramaphosa’s opponents could capitalise on a failure to implement the ANC’s conference resolution to nationalise the Bank, we believe he will have to implement it at some cost and no material benefit — but without damaging the Bank’s independence.” 
-JP

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