The power dynamics in South African president Cyril Ramaphosa\u2019s inner circle have shifted, bolstering finance minister Tito Mboweni\u2019s influence.<\/p>\n
Since his appointment in October 2018, Mboweni, 61, has been fighting an uphill battle against Ramaphosa\u2019s opponents within the ruling African National Congress as he strives to trim expenditure and fix indebted state-owned companies.<\/p>\n
His efforts have been stymied at times by another of Ramaphosa\u2019s close allies – Public Enterprises minister Pravin Gordhan.<\/p>\n
Now the economy, which was already in its worst state since the 2008 financial crisis, has been hit by the coronavirus pandemic and the loss of South Africa\u2019s last investment-grade credit rating from Moody\u2019s Investors Service.<\/p>\n
That\u2019s left Mboweni, a former labor minister who\u2019s called for asset sales and an end to bailouts for state companies, in the strongest position he\u2019s been in since returning to the cabinet.<\/p>\n
\u201cHe is the winner,\u201d said Ralph Mathekga, an analyst and author of books on South African politics. \u201cTito Mboweni is on the rise. His case has been made more real.\u201d<\/p>\n
Mboweni has pushed through two measures this month that were separately opposed by Gordhan, 71, and Ramaphosa\u2019s other key ally – the labor union movement in which he rose to prominence in the 1980s.<\/p>\n
On April 14, the National Treasury told South African Airways, which hasn\u2019t made a profit since 2011 and has survived on state bailouts, that no more funding was available.<\/p>\n
The next day it reneged on a government agreement to raise pay for more than 1.2 million civil servants. Together the actions could save the state tens of billions of rand.<\/p>\n
While Mboweni repeatedly called for SAA to be closed or sold, Gordhan argued for the need for a national airline, and placed it in bankruptcy protection in December in a bid to ensure its survival.<\/p>\n
In February, Gordhan said it was \u201cimperative\u201d that ways be found to rescue the carrier because closing it would have \u201cdisastrous consequences\u201d including job losses, broadcaster EWN reported.<\/p>\n
The carrier now plans to lay off its entire workforce.<\/p>\n
Gordhan has also been accused by the country\u2019s main labor unions and the opposition of dragging his feet in reforming Eskom Holdings SOC Ltd, the state power utility that has $24 billion of debt.<\/p>\n
He also intervened to secure Eskom employees a 7% pay rise in 2018 when management wanted to freeze wages.<\/p>\n
Gordhan\u2019s office didn\u2019t respond to a request for comment, while the Treasury didn\u2019t comment beyond comments Mboweni made on April 14.<\/p>\n
SAA may not be the only troubled state company to have support withdrawn, according to two people with knowledge of talks within the cabinet.<\/p>\n
Alexkor, a state diamond miner, may be denied further funding and the viability of selling Denel, the state arms company, is being considered, one of the people said.<\/p>\n
They asked not to be identified as the government has yet to comment.<\/p>\n
Ramaphosa Rising<\/strong><\/p>\n Mboweni isn\u2019t the only political beneficiary of the new economic reality confronting South Africa.<\/p>\n It\u2019s also helped Ramaphosa wrest control of decision-making from ANC officials loyal to former president Jacob Zuma, whose graft-ridden nine-year rule left South Africa with a mountain of debt and regular power outages.<\/p>\n \u201cThe positive side of this crisis is we can see how the government should actually work, without the day-in, day-out intervention by elements within the ANC,\u201d said Theo Venter, a political analyst at North-West University in Potchefstroom, west of Johannesburg.<\/p>\n Mboweni, who went into exile during the struggle against apartheid, is an economics graduate who has served as central bank governor, advised Goldman Sachs and held the post of chairman at AngloGold Ashanti Ltd.<\/p>\n Gordhan, a pharmacist who twice held the finance minister post, served in the leadership structures of the South African Communist Party and the ANC\u2019s underground structures during apartheid. His staunch opposition to corruption during Zuma\u2019s rule won him public support.<\/p>\n Now there\u2019s little room to implement policies favored by the communist party or the Congress of South African Trade Unions, the country\u2019s biggest labor group, such as inflation-beating pay rises for civil servants and a bigger role for the state in the economy.<\/p>\n \u201cGovernment has to make hard choices,\u201d said Martin Kingston, the vice president of Business Unity South Africa, the nation\u2019s main business group, and chairman of Rothschild & Co\u2019s local unit.<\/p>\n \u201cIt is going be very difficult to demonstrate largesse in this environment.\u201d<\/p>\n Mboweni has spoken of his newfound strength.<\/p>\n At a March 29 media briefing, he recounted how he had been told by Ramaphosa that the downgrade by Moody\u2019s Investors Service meant he could forge ahead with economic reforms and he had responded \u201challelujah.\u201d<\/p>\n \u201cThe balance of power in the ANC-led government has shifted in favor of a \u2018triumvirate\u2019 consisting of president Cyril Ramaphosa, finance minister Tito Mboweni, and South African Reserve Bank governor Lesetja Kganyago,\u201d said Robert Besseling, executive director of political risk advisory firm EXX Africa.<\/p>\n \u201cThe government will respond to the double shock of the coronavirus outbreak and the Moody\u2019s downgrade by making long-overdue structural reforms.\u201d<\/p>\n
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