SA’s Manuel seen moving from finance post

JOHANNESBURG – The fate of South Africa’s respected Finance Minister Trevor Manuel is crucial for investors, who want him to keep playing a powerful role in the country’s new government.

Manuel may transfer to a new powerful planning commission following last week’s election victory by the ANC, a move that would be seen as positive for the government and welcomed by investors provided it kept him at the heart of policy-making.Analysts warn a move from the finance ministry by Manuel may disappoint markets seeking continuity amid a global economic crisis that looks to have pushed Africa’s biggest economy into its first recession in 17 years.A senior ANC official, Mathews Phosa, told Reuters on Monday that Manuel would continue to have an important role, but would not say whether he would remain finance minister.The new planning post will need to have real powers to oversee and coordinate government policy, analysts believe.’The key thing for investors is if the position has some teeth,’ said Razia Khan, head of Africa research at Standard Chartered in London.’If Trevor Manuel becomes responsible for the overall thrust of policy then that would be positive for investors.’A market-friendly successor as finance minister, with the clout within the ruling African National Congress to stand up to pressure to change policy from the party’s left wing allies, may ease investor jitters, she said.President-elect Jacob Zuma will announce a new cabinet after his inauguration on May 9, following the ANC’s big election win, and he may yet delay Manuel’s move until the global crisis has ended to avoid more market instability.Some in the ANC want to see Manuel stay in his post for a transitional period, possibly two years.A source, though, told Reuters he had already said goodbye to staff at the Treasury, revenue service and statistics agency that fall under his control.IMPROVE DELIVERYManuel, widely respected by markets for tight control over spending and for instilling financial stability, has been in the position since 1996.He has built up a strong team at the Treasury and presided over South Africa’s longest-ever growth period – a decade until the fourth quarter of 2008.The rand plunged in September last year when Manuel resigned after Thabo Mbeki was ousted as president and quickly recovered when he said he would continue to serve under a new leader – highlighting the regard in which he is held.Local media say he will head up the government’s planned oversight body.A government spokesman said details of the new commission still had to be finalised but it is likely to oversee departments, from within the office of the president, to help improve the delivery of basic services, such as housing, electricity and sanitation.Delivery remains a weak point for ANC governments, with unemployment at more than 20 per cent and millions still living in poverty 15 years after the end of apartheid.Zuma will be under severe pressure to spend more to help the poor and create jobs, particularly from the ruling party’s trade union and communist party allies.’During the election campaign, we have come across many of our people who love the ANC but (are) angry about lack of decisive intervention to speed delivery of basic service,’ the South African Communist Party said.’We need to take radical actions to give meaning and hope to the lives of the thousands that we have met.’SUCCESSOR?Boosting delivery may ease some of the ANC’s allies’ demands for a major change in policy – a serious concern for foreign investors and ratings agencies.’If it acts as a monitoring body for policy and coordination between departments, that would be good … the idea of it may be good but it does depend on what powers it has,’ Eurasia Group Middle East and Africa analyst Mike Davies said.A weak mandate for the commission would create the impression Manuel had been sidelined, he said.Davies said the ANC understood the importance of the finance minister post to markets, and doubted whether it would appoint anybody who would move away from the line Manuel had taken.Should he leave the finance ministry, Manuel’s replacement will have to act quickly to placate markets.’There definitely are some concerns about it … (but) if it is someone that can convince investors that the government will keep the same policies it might not be too bad,’ said Jon Harrison, emerging foreign exchange strategist at Dresdner Kleinwort, said.’It all depends on how the person lays out the policy agenda.’A number of names have been mentioned as possible successors, including businessman Cyril Ramaphosa, who remains a member of the NEC, the ANC’s top decision-making body, and Mathews Phosa, the party’s Treasurer-General.Others are Pravin Gordhan, who heads up the tax authority under Manuel, and current deputy finance minister Nhlanhla Nene.Ramaphosa, Phosa and Gordhan are not on the ANC’s list for parliament but could be co-opted into the cabinet by Zuma.Phosa accompanied Zuma on roadshows over the past year to try ease investor concerns about his presidency, so is well known internationally.But analysts say the best-case scenario was still Manuel remaining in the post, at least to get South Africa through the global crisis and domestic downturn.’There definitely are some concerns about it,’ Harrison said. ‘It is important that there is seen to be continuity.’-Nampa-Reuters