- Late on 5 August, President Cyril Ramaphosa announced his long-awaited cabinet reshuffle.
- The replacement of Finance Minister Tito Mboweni should not have been Ramaphosa's priority, even if his successor, Enoch Godongwana, is a well-known and pragmatic ANC policy heavyweight.
- Most remaining cabinet changes concern positions in the presidency, the departments of health, water and sanitation, and the security cluster; they are welcome but appear more politically driven than reform-oriented.
The biggest news, which the markets may receive with trepidation, is the removal of Mboweni. Ramaphosa said he had accepted Mboweni's “long-standing request…to be excused from his position.” However, at this particular juncture, the outspoken minister does not appear to have been in a hurry to retire and was seemingly unaware of his axing until this evening.
The blow of Mboweni's removal might be somewhat softened by his replacement, Enoch Godongwana. Godongwana is a decent, if not an amazing replacement. He has limited cabinet experience, but he is the powerful head of the African National Congress (ANC)'s economic policy unit, a pragmatist who is well-known to investors and credit ratings agencies, and usually has the tough task of managing and watering down controversial ANC policy decisions. He has also served as chairman of the Development Bank of Southern Africa (DBSA).
While Mboweni charmed investors with his hawkish policy views without caring about ANC dogma, Godongwana may not talk an equally strong game. Yet he may do a better job of explaining and pushing the Treasury's agenda within the ANC and, at best, he might deliver similar fiscal outcomes (considering that Mboweni often used to draw a fiscal line in the sand in public, only to be overruled within cabinet).
However, the impression is that Mboweni's departure happened for political reasons (probably because in Godongwana Ramaphosa can bring another Eastern Cape heavyweight and close ally into a key cabinet portfolio), rather than wanting the safest pair of hands to steer the Treasury. Broader concerns are the gradual depletion of the Treasury's bureaucratic capacity and the fact that the once all-powerful ministry is often sidelined in major cabinet decisions. At the same time, the presidency appears to be gradually centralizing control over economic policy-making, not least in relation to the unrest-induced debate around a basic income grant (BIG).
The recent unrest had redoubled pressure on the president to weed out some of the (many) poor performers in cabinet. Ramaphosa cited three priorities as the drivers for the cabinet changes: 1) the pandemic response and the vaccine rollout in particular; 2) “ensur[ing] peace and stability in the wake of the recent outbreak of violence and destruction;” and 3) “mobilising all available resources and capabilities to rebuild our economy and provide relief to those most vulnerable.”
At the Department of Health (DoH) – all important in the context of the pandemic – it is positive that Zweli Mkhize has been replaced by his deputy and fellow medical doctor, Joe Phaahla. After all, Mkhize's position had become untenable after media revelations of the so-called Digital Vibes scandal and a damning Special Investigating Unit (SIU) report. Phaahla inherits a vaccine rollout which, while very slow to get off the ground, is now fast accelerating as deliveries from the only two contracted suppliers – Johnson & Johnson and Pfizer – have ramped up significantly and vaccinations have started to hit or surpass the government's daily target of administering 250,000 shots. A more sensitive longer-term policy issue will be how Phaahla handles the ANC's ambitious plans to overhaul the health sector via the National Health Insurance scheme (NHI).
To respond to the recent unrest, which could become a recurring threat, Ramaphosa announced the scrapping of the post of Minister for State Security (hitherto Ayanda Dlodlo, who will now take over at Public Services and Administration). Crucially, responsibility for the State Security Agency (SSA) will now move to the presidency. Ramaphosa had been warned of the need to shake up the intelligence service in 2019, as it had become deeply factionalized in KwaZulu-Natal but also at a higher level under ex-president Jacob Zuma's tenure. Trusted Ramaphosa ally Zizi Kodwa has now been appointed as Deputy Minister in the Presidency responsible for state security, and he might oversee an SSA shake-up, which will be considered crucial to avoid future intelligence failures to pick up efforts to orchestrate unrest. Nevertheless, Ramaphosa may be heavily criticized for failing to replace Police Minister Bheki Cele, whose police service was so slow to respond to the unrest that it allowed looting and destruction to spiral out of control.
On balance, Ramaphosa's cabinet changes appear more politically driven than answering reform imperatives. Reflecting the president's limited political options, many poor performers remain in cabinet. The overall impression of the reshuffle is that it draws key ANC figures from Ramaphosa's “CR17” ANC election campaign closer to the center of power, probably in preparation for the president's ruling party re-election bid in 2022.