Instant view: S.Africa President Ramaphosa announces cabinet of unity government

LONDON (Reuters) – South Africa’s President Cyril Ramaphosa announced on Sunday a cabinet of the country’s government of national unity following weeks of protracted and at times acrimonious negotiations.

Ramaphosa retained the African National Congress’ Enoch Godongwana as finance minister and appointed former opposition leader John Steenhuisen as minister of agriculture, bringing the Democratic Alliance and other parties into his new coalition cabinet.

COMMENTS:

MICHAEL KAFE, ECONOMIST, BARCLAYS

“President Ramaphosa’s new cabinet includes ministers from the opposition in key portfolios that could help drive structural reform and lift growth. Strategically, all opposition ministers are closely marked by ANC deputies, and the president was also careful not to leave out the left​-​leaning segments of his voter base.

“On the whole, the fact that the DA was offered some key ministries where the injection of fresh ideas and the implementation of important structural reforms could help lift the economy on to a higher growth path is likely to be taken positively by markets. The fact that the EFF was not offered any position will likely be perceived positively too.”

JEE-A VAN DER LINDE, SENIOR ECONOMIST, OXFORD ECONOMICS

“There will be a palpable sense of relief that Mr Ramaphosa has finally named his executive following protracted and often terse negotiations with his new coalition partners. Working in silos is simply not an option for the incoming government and finding agreement on sticky issues will be of great importance.

“With the new Cabinet finally unveiled and most of the uncertainty out of the way, the government can finally get on with the task at hand. Although it remains to be seen whether the GNU will be able to address South Africa’s economic issues, we consider this is a business-friendly outcome.”

ANDREW MATHENY, ECONOMIST, GOLDMAN SACHS

“In our view, the cabinet outcome resulting from elections one month ago likely points to policy continuity, in particular a continued fiscal consolidation with the primary surplus likely to rise from 0.5% of GDP in FY23/24 to 1% of GDP in FY24/25 (in line with existing plans). This view is reinforced by the reappointment of Finance Minister Enoch Godongwana. Given the multi-party arrangement in the new government, we see some upside potential for reforms, which could accelerate given greater accountability/oversight that could translate into improved policy implementation.

“Set against this, however, are greater political risks given potential disagreement within the coalition that could impede the effectiveness of government. From a market perspective, we view the latest developments as positive as the market is likely to price out lingering short-term uncertainty over the past several weeks of coalition/cabinet negotiations.”

ZIYANDA STUURMAN, SENIOR ANALYST, AFRICA, EURASIA GROUP

“Ramaphosa made several changes. For example, the energy and mining ministries have been separated.

“Crucial state-owned entities such as national power utility Eskom and freight rail and port authority Transnet will now be under the management of the energy and transport ministries respectively. The integration of Eskom and Transnet into the relevant government departments will also likely take several weeks and how the new ministers manage this new role will be a key watch point.”

(Reporting by Karin Strohecker and Bhargav Acharya, editing by Emelia Sithole-Matarise)