Mboweni can move ratings

The appointment of Tito Mboweni as the new minister of finance is likely to be viewed positively by credit ratings agencies and markets, placing SA in excellent stead for reigniting economic growth and investment.

While it’s unfortunate that former finance minister Nhlanhla Nene’s resignation took place two weeks before the Medium-Term Budget Policy Statement (MTBPS), it is unlikely to have any effect, as the budget process is a machine that runs mostly without the minister.

Ratings agencies are therefore unlikely to be concerned by this rotation and will rather focus on the credit dynamics that will be published in the MTBPS.

Mboweni’s experience and confidence should stave off any risk of a credit rating downgrade despite a challenging fiscal environment, and as a well-known and respected government official, his appointment is in fact likely to yield numerous positive spin-offs in the short-term.

All SA markets are likely to react positively to this development, and when compared to many emerging market peers, SA is finally re-establishing itself as an excellent investment destination with good leadership, improving policies and solid governance under President Cyril Ramaphosa.

Nene deserves respect for taking the decision to step down after failing to disclose private meetings with the controversial Guptas.

He should be applauded as the first South African politician to have apologised and fallen on his sword for having played a role in state capture, without having been found guilty of any transgressions in a court of law.

That Ramaphosa specifically cited governance as his reason for accepting the resignation represents a huge step forward in his administration’s fight against corruption. His swift handling of the matter will also be a huge boost to investor and business confidence.

Mboweni said he was proud the “three TMs” – Thabo Mbeki, Trevor Manuel and himself – had managed an economy that grew over 6% per annum.