Cabinet Size, Structure Among Key Post-election Investor Issues For Ramaphosa


By Joburg Post

The size and structure of South Africa's new cabinet are among the key issues investors will judge President Cyril Ramaphosa on after last week's national elections, wealth management company Citadel said on Tuesday.

Ramaphosa's African National Congress retained power in the May 8 polls, although its share of the valid vote dipped to 57.5 percent from 61.15 percent at the previous elections in 2014 amid public anger over his predecessor Jacob Zuma's mismanagement of the economy.

"With the elections now largely behind us, investors’ focus will shift to President Cyril Ramaphosa’s ability and political will in addressing issues of concern, namely: the composition of cabinet ... transforming the economy with the promised policy reform and resolving the problem that Eskom poses to South Africa," 

Citadel chief economist and advisory partner Maarten Ackerman said.

Cash strapped state-owned power utility Eskom poses one of the biggest threats to economic growth as it struggles to meet electricity demand.

Ackerman said the cabinet announcement, expected later this month, was perhaps even more important than the actual election results, especially for international investors, given that the ANC was already expected to win.

"This announcement will test whether Ramaphosa is confident enough in his position to reduce the size of the cabinet, as well as whether he is able to withstand pressure from opposing ANC factions in appointing cabinet members," 

he said.

Shaving cabinet positions would send a signal that Ramaphosa was serious about bringing stability to government finances and reducing ballooning expenses, the economist said, adding that international investors would likely wait for the announcement before making decisions or commitments in terms of foreign direct investment into South Africa.



Having failed to implement any meaningful policy reforms in the first few months of the year, Ramaphosa was now freer to press ahead with reform and set a new direction for the economy for the remainder of the year, Citadel said.

Investors would also judge whether the government would finally deploy the policies needed to ignite economic growth and address unemployment, currently hovering around 27 percent of the labour force.

"These include amongst the many challenges addressing the country’s structural economic issues, removing red tape for small and medium enterprises in terms of registering businesses and seeking financing, as well as unbundling Eskom and restoring its financial health," 

said Ackerman.

-JP

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