Zuma puts economy to the test with cabinet shake-up

Stability of markets and currency in doubt as award-winning Finance Minister 'says goodbye to staff'
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South Africa's most respected minister, Trevor Manuel, is reportedly set to leave the cabinet, presenting Jacob Zuma's new government with its first major test since last week's election. The last time the Finance Minister briefly resigned it crashed the markets in Africa's largest economy and triggered a run on the Rand.

The fate of the award winning 56-year-old, who has been courted by the World Bank among others, is seen as an indicator of the stability and direction of President Zuma's new government.

The country's longest serving finance minister would be moved to a new oversight body called the central planning commission when the post-election cabinet is announced on 9 May, reports indicated yesterday. An unnamed member of the minister's staff told a South African newspaper, the Sunday Times, that Mr Manuel had already held a function to say goodbye to his colleagues at Finance.

There has been no public comment from the ANC, which insisted during the campaign that Mr Manuel would retain his job. In theory, the new commission would exercise considerable power in monitoring the government's performance and work from inside the office of the President. It is possible that Mr Manuel could serve in both roles. However, any move for the Western Cape politician will add to uncertainty about policy direction under Mr Zuma, a former communist.

The Zulu showman narrowly failed to secure the two-thirds majority he had targeted in last week's election. This means he will not be able to change the constitution without the support of the opposition. But he won a substantial 65.9 percent of the vote. Mr Zuma has close links to the hard left and trade unions which will be expecting to have a more influential voice in government.

The Congress of South African Trade Unions (Cosatu), which has clashed often with Mr Manuel, wasted little time in demanding a return on its political investment in Mr Zuma. "We must take vigorous action to protect workers from the impact of the global economic crisis, create new, decent jobs, transform the lives of the poor majority of South Africans and ensure that we all share in the fruits of our labour" Cosatu said yesterday.

While the legacy of former president Thabo Mbeki has been tarnished by Aids denial, he and Mr Manuel can take the credit for relatively robust public finances. The political capital enjoyed by the ANC in the wake of apartheid was used in part to direct the party away from its left-wing command economy roots and to pay down public debt with a monetarist agenda.

The dividends from that unpopular housekeeping have since been ploughed back into public services and benefits, with South Africa leading the developing world in welfare spending.

It's a record that has won Mr Manuel many admirers both inside and outside the country and saw him placed at number four on the ANC party list earlier this year. That list determines the order in which candidates will move into parliament but also highlights their standing in the party.

Mr Manuel grew up poor in Cape Town where under apartheid his mixed race background saw him classified as "coloured". After joining the ANC, he was imprisoned several times. He has held his current job since 1996, While Mr Manuel's value to the ANC has been apparent for some time, his status as a top-table politician came on 23 September when Mr Mbeki resigned as president. Ten cabinet ministers, including Mr Manuel, quickly announced their departures, however, it was the Finance Minister's resignation that mattered. Within an hour, millions of Rand were wiped off the value of stocks, the market fell 4 per cent and the Rand itself fell nearly 3 per cent against the dollar. Then Mr Manuel rescinded his resignation, declared himself "more than prepared" to serve under a new president.

Sources close to Mr Manuel have hinted that he may hanker after the deputy presidency, allowing him to play a similar role to that of Mr Mbeki during the one-term Mandela administration.

Possible replacements for the finance post include ANC stalwart Cyril Ramaphosa and Mr Manuel's accident-prone deputy Nhlanhla Nene, who attracted unwanted fame by breaking his chair in a live interview. Many in the business community would like to see Pravin Gordhan, who has overseen a near doubling in tax revenues as head of the tax authority, take over.

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