Speculation is mounting that a cabinet reshuffle is “imminent”, with murmurings that president Jacob Zuma is looking to get rid of those who stood against him at the ANC’s NEC meeting at the end of 2016.
Research analyst at Nomura, Peter Attard Montalto, says the chances of such a shuffle happening are still up in the air, but it is more likely than before, and may take place soon.
“Ultimately, calling the timing of a reshuffle is pointless; though we look in two segments – the risks of a move before the 9 February (State of the Nation Address), and if nothing by then, a shift to a move after the budget on 22 February.”
The reason for such a close time span is rather simple – South Africa’s political chess pieces are primed for the president to consolidate power, and to give those who oppose him the boot ahead of several important political battlegrounds that lie ahead in 2017.
According to Attard Montalto, there are three key reasons why now would be the time to shuffle things:
- Zuma has his eye on winning the elective conference in December, and his supporters will be looking to position his ‘slate’, led by former AU chair Nkosazana Dlamini-Zuma, in key positions.
- In doing so, Zuma would also likely want to remove any opposition, targeting SACP members in cabinet specifically – and especially those who opposed him in 2016.
- The final strategic move would be to gain access to National Treasury (by removing finance minister Pravin Gordhan) and the Public Investment Corporation (by removing deputy finance minister Mcebisi Jonas), which will be important in funding the country’s nuclear plans, driving transformation in the banking sector, and other schemes.
This is how Attard Montalto believes a shuffle could go – with a focus on the key players:
Pravin Gordhan – In
The position everyone has eyes on is the minister of finance, who holds the keys to the National Treasury.
Attard Montalto said that Gordhan’s position is becoming increasingly uncertain (with Zuma holding the “scorched earth” card which he can use at any time), but could very well survive a cabinet reshuffle, as Zuma would want to avoid the political fallout, as was the case of Nhlanhla Nene in 2015.
The reason for Zuma potentially giving Gordhan a skip is that he can still accomplish a lot of his political goals without having to place himself and his cabinet under even more scrutiny.
“We think, looking at the risk/reward (in the light of Nene-gate) – Zuma can achieve most of what he needs to without the fallout risks of (Pravin Gordhan’s exit),” Attard Montalto said.
“We are concerned, however. We think the chances of PGxit have risen somewhat vs after the November NEC.”
Mcebisi Jonas – Out
The same cannot be said for for the deputy finance minister, Mcebisi Jonas, who Attard Montalto believes will be able to be ‘safely’ booted by Zuma, without too much backlash.
Jonas has been a thorn in the Zuma camp’s side since his allegation that the Zuma-linked Gupta family had offered him the position of finance minister, on condition that he ‘play ball’ with the family’s business interests.
By replacing Jonas with a Zuma loyalist, the president will have full control of the Public Investment Corporation – which controls a massive sum of cash, ready to be fed into various projects.
Nkosazana Dlamini-Zuma – In
The primary thrust behind any cabinet reshuffle would be to place Dlamini-Zuma in cabinet, and prime her for the race to the party’s presidency.
A cabinet position will boost Dlamini-Zuma’s profile within the party, and Attard Montalto believes she will likely move to one of her previously-held cabinet positions – either in health (getting rid of Aaron Motsoaledi, who is seen as anti-Zuma), or in home affairs (replacing Malusi Gigaba, making him available for other influential roles).
Other possible positions could be in the department of trade and industry, replacing Rob Davies who, as a SACP member, is seen as “increasingly anti-Zuma” – or in the department of economic development, replacing another SACP member, Ebrahim Patel.
Brian Molefe – In
A new entry into the cabinet would be former Eskom boss Brian Molefe, who has long been pegged as a potential replacement for Gordhan.
Attard Montalto believes that it is likely his inclusion is delaying a cabinet reshuffle at this stage, as he is not yet fully eligible to take a position.
“It seems he is being seriously put forward to become an MP shortly; given the PR list system in place, basically anyone can become an MP at any time if there is a vacancy – which there are.
“We would suspect he would then be appointed to either a role at the DTI or National Treasury. However, this process takes maybe a month or so from here, which would take us to after the SONA. Put simply, patience is needed on this issue,” the analyst said.
According to Attard Montalto, the belief is that the purpose of any potential reshuffle is to turn the cabinet into a more cohesive and loyalist unit.
“We think a reshuffle, if and when it occurs, will be a sign of consolidation of power that increases the probability of success of the status quo in December, and as such, is credit negative for South Africa. This is why we see asset prices weakening after any reshuffle.”
In any scenario where Gordhan is given the boot, the markets will react negatively, Attard Montalto said, with the rand likely to briefly hit R17 to the dollar again, before recovering.
If Jonas is given the chop, markets will also react badly, but to a much lesser extent.
“Overall, we think markets need to see the political risk dynamic on a reshuffle as a live issue, but one that will take some time to play out,” he said.
“As ever, it is important to consider that president Zuma is not weak as many seem to think – he is weaker than he was pre-Nene-gate, but the option and availability of a scorched earth strategy are still there.”