Finance Minister Enoch Godongwana. Photo: Mlungisi Louw/Gallo Images
The rand was generally stronger on Monday and the stock market also edged higher as investors gave an apparent nod to President Cyril Ramaphosa’s decision to retain respected ministers Enoch Godongwana and Kgosientsho Ramokgopa in the key finance and electricity portfolios in his new cabinet.
After closing Friday’s session at R18.17 against the dollar, the rand rallied to R17.95 early on Monday before coming back to R18.11 by midday. The JSE all share index was up 0.89% at 80 419 points, compared with Friday’s close.
The market was pleased with Ramaphosa’s decision to keep Godongwana as finance minister in his cabinet, announced on Sunday, economic analysts said.
“There is stability in the finance and electricity ministries. This is likely to strengthen optimism over an improved economic trajectory in the medium term,” said Sanisha Packirisamy, an economist at Momentum Investments.
Ramaphosa also kept Ramokgopa in charge of electricity, in a portfolio that has been expanded to incorporate energy. He was previously minister of electricity in the presidency and is partly credited with steering the country away from the chronic load-shedding which was crippling the economy.
Another minister who stays in his post is Gwede Mantashe, who will head the slightly reformatted mineral and petroleum resources portfolio.
Godongwana’s reappointment as finance minister came as no surprise. He has been in the post for three years after replacing the similarly respected Tito Mboweni.
Godongwana, who has pursued the austerity measures implemented by his predecessors to reduce debt, previously served as the deputy minister of public enterprises and was deputy minister of economic development during former president Jacob Zuma’s tenure.
In his 2024 budget review, Godongwana said the government would draw R150 billion from the Gold and Foreign Exchange Contingency Reserve Account to reduce public borrowing and bring debt-service costs to heel.
Godongwana’s deputy, David Masondo, was also re-appointed, although the Democratic Alliance (DA) tried to snatch the position from him as part of the 12 cabinet posts it had its eye on. Masondo has been serving as deputy finance minister since 2019 and the Mail & Guardian previously reported that he was being groomed to take over the treasury.
Perhaps as a compromise, Ramaphosa appointed the DA’s Ashor Sarupen as the second deputy minister in the finance ministry.
Dawie Roodt, chief economist of the Efficient Group, said it was clear that the ANC would not give away the ministry of finance and that there was no obvious person suited to replace Godongwana. But he did not understand why there needed to be a second deputy minister.
“The deputy minister of finance is very powerful because they are also responsible for the PIC [Public Investment Corporation]. Now, with two deputies there, I don’t know who will be responsible for the PIC. That came as a real surprise to me,” Roodt said.
Sarupen has a master’s in philosophy and one in business administration. His research covered the effect of anti-globalisation on the South African economy. He had served as an MP from 2019 and was the DA’s representative on the appropriations committee.
The new team will have to work together to address the structural constraints that have kept economic growth lacklustre, as well as pull South Africa’s credit ratings up from junk status and remove the country from its greylisting by the Financial Action Task Force.
Roodt said he did not anticipate any major changes in policy and that all the DA could do was to influence the government to be more effective and efficient and thus help the economy to grow.
In Sunday’s announcement, Ramaphosa said the incoming government would prioritise “rapid, inclusive and sustainable economic growth and the creation of a more just society by tackling poverty and inequality”.