Cabinet’s less glamorous posts are where rubber hits the road

Markets tend to fixate on the finance minister, as they predictably did this week when President Cyril Ramaphosa included a switch of finance minister in his cabinet reshuffle. The fixation is not so surprising: for a bond market investor, the issue is whether a country will be able to service its debt in the medium to long term, and no-one is more important to this than the finance minister.

But when it comes to the issue of how the real economy will fare in the medium to long term, and whether it will grow and create jobs, the other ministers may count just as much.

The Ramaphosa reshuffle this week was driven by political positioning rather than economic reform, or the lack of. But it could have a material effect on economic outcomes nonetheless, which is why the other ministers matter — especially when it comes to the micro, as opposed to the macro-economics, of fiscal and monetary policy, which the finance minister leads.

Even on the macro, Ramaphosa’s decision to oust Ayanda Dlodlo from state security but install her at public service & administration to replace Senzo Mchunu could be a problem for the fiscal framework. Mchunu held the line on public sector wages, more or less. Dlodlo was one of the Zumaera ministers of public service & administration who definitely did not; she bears some of the blame for the bloated public sector wage bill.

At the micro level, there are two sets of portfolios that pre-Covid and pre-unrest we might not have thought were that crucial to investment and growth. But now we know that the vaccine rollout is the single most important thing we can do to get the economy rolling again.

Acting health minister Mamaloko Kubayi did a pretty good job of working with the private sector to get jabs up to the current 8-million-plus: the new minister, Joe Phaahla, was there already as deputy, and will hopefully keep at it. We’ve been reminded, too, that the state’s ability to enforce law and order are crucial to doing business, so the president’s complex manoeuvres to restore that are potentially an economic plus.

Against that, he has put two of his reject ministers (who arguably should have been ousted altogether) at the two departments tasked with looking after sectors that have been most severely impacted by the Covid crisis, as well as by the unrest — small business and tourism.

And then there are the ministries on which the president’s promised package of growth-boosting structural reforms most clearly depends. On the upside, there’s a new minister at communications — Khumbudzo Ntshavheni. Some hope she might finally be able to deliver the very long-awaited auction of broadband spectrum.

On the downside are all the really important ministries where presidential allies were kept firmly in place and nothing at all happened to improve the prospects for structural reforms.

The transport minister is unchanged, despite a host of logistical disasters at the ports and on the roads and rail that are hampering SA’s ability to export and to trade as well as its ability to attract private sector investment in infrastructure.

The home affairs and labour ministers are still there, with little chance their departments will open up SA’s visa regime. The public enterprises minister is still there, and while some would argue he has embarked on reform, pretending to privatise South African Airways, I and others would counter that he continues to squander billions on vanity projects such as SAA.

Mineral resources & energy minister Gwede Mantashe is definitely still there. Maybe he will meet the deadline this week to publish the legislative amendments required to enable companies to generate their own electricity up to 100MW. Maybe he won’t. It would come as no surprise if he again delayed the process. His department rather confusingly told Business Times this week that there is some requirement of “concurrence” with the National Energy Regulator, which will be launching a consultation process.

Meanwhile, billions of rands are waiting on the sidelines waiting to be invested in the renewable energy that SA urgently needs to help it with energy security and with going greener. This week, the Development Bank of SA announced a $200m (R2.9bn) fund, and Patrice Motsepe’s African Rainbow Energy and Power teamed up with Absa to create a giant new fund to invest in renewable energy, including self (or “embedded”) generation.

It is possible the reshuffle will infuse some dynamism into the executive more broadly and fix at least some of what’s broken. With the economic recovery still looking tenuous, we can but hope.