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The Africa Confidential Blog

  • 19th February 2018

SOUTH AFRICA: President Ramaphosa mulls new cabinet and a new budget

Patrick Smith

We start in South Africa as the country comes to terms with last week's upheavals and looks forward to a new cabinet and a budget on Wednesday (21 February). Its northern neighbour, Zimbabwe, has been in mourning after the death of opposition leader Morgan Tsvangirai.

As dramatic events played out last week in South Africa, Ethiopian Prime Minister Hailemariam Desalegn surprised many by resigning his office. A new state of emergency was also announced ahead of a ruling party congress. In Nigeria, the chief statistician says that although farmers have stepped up production and the oil price is stronger, growth will not exceed 3% this year.

SOUTH AFRICA: President Ramaphosa mulls new cabinet and a new budget
Fresh from multiple accolades for his State of the Nation Address last Friday (16 February) and a steeply rising stock exchange index, President Cyril Ramaphosa has two main tasks this week: ensuring the reading of a financially credible and politically acceptable budget on Wednesday (21 February) and appointing a new cabinet.

The two are closely linked, given widespread calls for Ramaphosa to sack or reassign current Finance Minister Malusi Gigaba, a close ally of ex-President Jacob Zuma.

There is no shortage of talented politicians who could take on the finance portfolio, most of whom had fallen foul of Zuma and his business friends, the Guptas. In the running are: Nhlanhla Nene, a former finance minister whose sacking by Zuma precipitated a run on the rand; his former deputy Mcebisi Jonas, who reported that the Guptas had offered him over US$50 million to take over the finance portfolio; former South African Reserve Bank governor Tito Mboweni, who had become increasingly critical of Zuma over the past year; former Finance Minister Pravin Gordhan, who became a leading opponent of Zuma's network of business allies and insider deals; Zweli Mkhize, a  former treasurer-general of the African National Congress, is a strong contender as a respected politician from KwaZulu-Natal who stood apart from Zuma's tightly-controlled patronage network in the province.

Whoever reads the budget will have to explain how the government will pay for the introduction of free tertiary education and vocational training for students from poor backgrounds this year, as promised by both Ramaphosa and Zuma and enshrined in official ANC policy. Ramaphosa allies argue that the planned reform of state-owned enterprises and some sales of government assets could help finance the new deal for college students.

Most vulnerable in Ramaphosa's coming reshuffle are: Social Development Minister Bathabile Dlamini, heavily criticised for authorising an expensive media campaign to promote her claimed achievements in the ministry; Mineral Resources Minister Mosebenzi Zwane, linked to the corrupt payments to the Estina dairy farm in the Free State, now under investigation; Co-operative Governance and Traditional Affairs Minister Des van Rooyen, close to the Guptas and Zuma's finance minister for three days; Public Service and Administration Minister Faith Muthambi, an ultra-loyalist to Zuma who faces questions of financial mismanagement; and Energy Minister David Mahlobo, another Zuma acolyte who has been pushing a nuclear power deal worth tens of billions of dollars with Moscow's Rosatom.

ZIMBABWE: Changing tone, President Mnangagwa calls for national day of mourning for oppositionist Tsvangirai
The death of Morgan Tsvangirai, leader of the Movement for Democratic Change, last Wednesday (14 February) from cancer, has left the opposition party he founded in disarray. President Emmerson Mnangagwa has seized the opportunity to woo wavering opposition supporters by signalling a more conciliatory attitude to the government's opponents.

Mnangagwa, a shrewd tactician, made a point of inviting Tsvangirai to his inauguration after the ousting of Mugabe last December, organising a motorcade for the veteran opposition leader. In recent weeks he held private meetings with Tsvangirai, who has been visibly ailing for the past year.

In theory, Tsvangirai's anointed successor, Nelson Chamisa, 40, takes over the party leadership and will be the party's presidential candidate in national elections due by the middle of the year. Chamisa, a former communications minister in the MDC's ill-fated coalition government with ZANU-PF, is not universally popular within his party. One of his toughest challengers will be his former fellow MDC Vice-President Thokozani Khupe, who has ambitions of her own for the presidential ticket.

ETHIOPIA: Ruling party to hold key conference after security crackdown and Premier Hailemariam's resignation
The opposition might well accuse Premier Hailemariam Desalegn of trying to bury bad news by announcing his resignation on 14 February, at the height of political furore in South Africa. The following day, as Cyril Ramaphosa took power, the ruling Ethiopian Peoples' Revolutionary Democratic Front declared a state of emergency.

The immediate reason for Hailemariam's exit and security crackdown is the unrest in the Oromo and Amhara regions, which has intensified over the past three years.

Human rights organisations quickly condemned the state of emergency declaration, which runs counter to the signs of political liberalisation following last month's release of hundreds of political prisoners in Oromia.

Hailemariam will remain premier until the EPRDF holds a national conference to pick a successor. Political insiders suggest the new premier is likely to come from Oromia in a bid by the party to dampen down opposition in the region.

NIGERIA: Chief statistician points to farming boom but warns recovery still fragile amid worries about election spending
Yemi Kale
, the highly-respected Statistician General, the head of the National Bureau of Statistics, forecasts that a boom in infrastructure spending and much higher borrowing will push up growth levels to 3% this year.  But the economy remains far too dependent on oil exports, he added.

'Oil got us into recession and largely took us out,' Kale told the Economic Outlook Summit organised by Business Day newspaper in Lagos last Friday (16 February). Failing to build up reserves in a period of high oil prices cost the country dear when export revenues crashed in 2015. Forex reserves have increased to over US$40 billion, a $10 bn. increase in the past year.

Efforts at diversifying the economy are having some success, said Kale. Farm output had risen to 29% of gross domestic product by the end of 2017, from 21% a year earlier. But the share of services and industry in GDP had fallen over the same period as a result of cuts in foreign exchange allocations.

Fiscal reforms, such as incentives to persuade tax evaders to return their money to the country, and a push to promote non-oil revenues along with a restructuring of the government's domestic debt obligations should boost state revenues, said Kale.

He cautioned that the economy also faced multiple risks, from geopolitical tensions in the country to politicians of all parties preparing a spending bonanza ahead of national elections in February 2019.


FINANCE AND DEBT: Côte d'Ivoire, Egypt, Ghana, Kenya, Nigeria, and South Africa all plan major Eurobond issues in coming months

ZAMBIA: IMF rejects the Lungu government's spending plans, pushing it to negotiate new loans from Beijing

DJIBOUTI: President Guelleh's Rassemblement populaire pour le progrès to take more seats in parliamentary elections on 23 February