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Ramaphosa embraces continuity in economic cluster of new Cabinet

Ramaphosa embraces continuity in economic cluster of new Cabinet
Ray Mahlaka
By Ray Mahlaka
1 Jul 2024
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Enoch Godongwana and David Masondo return to the finance ministry. Financial markets and investors will probably sigh in relief as it means continuity in fiscal prudence and economic structural reforms.

In the economic cluster of the Cabinet, President Cyril Ramaphosa took the approach of continuity in appointing ministers, with some old names making a comeback in the seventh administration. 

Arguably, financial markets and investors are likely to be happy about the reappointment of Enoch Godongwana as finance minister and David Masondo as his deputy.

Under the previous administration, the pair had begun work to stabilise public finances by cutting government spending, stabilising smothering debt that stands at R5.5-trillion and weaning state-owned enterprises such as Eskom and Transnet off more taxpayer-funded bailouts.

Godongwana and Masondo have also pressed ahead with structural economic reforms aimed at changing the fabric of the economy by implementing a few pro-growth and investment reforms. These reforms also promote the private sector’s participation in key sectors of the economy such as energy and logistics.

In a recent interview with Daily Maverick, Masondo said he was optimistic about policy continuation under a government of national unity (GNU). He didn’t expect there would be a gridlock in policy implementation, constant infighting, reversal of recently achieved milestones in energy and logistics sectors, and regression in service delivery.

Read more in Daily Maverick: Ex-deputy finance minister David Masondo optimistic on economic policy reforms under SA’s GNU

After all, sticking to the economic reform path can lift economic growth from the 1.3% that the National Treasury predicts for 2024. The Bureau for Economic Research’s model predicts that South Africa’s economy will grow at a baseline average of just under 2% in the next five years. However, growth could rise to 3.5% by 2029 if structural economic reforms are further accelerated. 

Organised business is happy about the return of Godongwana. Khulekani Mathe, the CEO-designate of Business Unity South Africa (the largest business group in the country), said: “The reappointment of Minister Godongwana demonstrates an ongoing commitment by the government to responsible fiscal policies that will reduce debt and free up spending for productive social and economic development.”

A complication for Godongwana and Masondo might be to bring the Democratic Alliance into the process of managing public finances and the economy. The pair will have to work with Ashor Sarupen, whom Ramaphosa has appointed as the second deputy minister in the finance ministry. 

Minerals, petroleum and energy


An appointment that is likely to surprise the energy industry is the return of Gwede Mantashe. Mantashe however will no longer oversee energy as Ramaphosa announced  that the ministry of minerals and energy would be split. Under the sixth administration, Mantashe had the mineral resources and energy minister job and was seen by industry as a major obstacle to ending Eskom blackouts and reforming the energy market. As the minister, Mantashe had powers to procure additional electricity from coal, nuclear, and renewable energy sources. 

However, he continued pushing for coal, instead of embracing renewable energy sources to add more megawatts to the national grid at a time when South Africa’s electricity situation was dire. Only a pitiful 150 megawatts (MW) were added over the past five years due to inertia by Mantashe and his Department of Mineral Resources and Energy, causing great harm to the economy.

Mantashe and the department have only recently woken up to the willingness of the private sector to pump more money into renewable energy projects to possibly supply the national grid.  Now, 22,500MW of solar and wind energy are expected to be connected to the grid over the next five years through renewable energy projects that are set to come online.

Under Ramaphosa's revamped cabinet, Mantashe will head up the minerals and petroleum resources while Kgosientsho Ramokgopa was appointed minister of electricity and energy.

When Ramokgopa was first appointed as electricity minister in early 2023, he had no powers.

The energy matrix in Cabinet was complex as Ramokgopa had to contend with and report to former public enterprises minister Pravin Gordhan (who, at the time, was in charge of Eskom’s governance affairs), Mantashe (who had the powers to procure additional electricity) and Godongwana (in charge of restructuring Eskom’s debt of more than R200-billion).

With his role now revamped to “minister of electricity and energy” by Ramaphosa, it seems that Ramokgopa has the powers to deal with the country’s energy crisis by keeping a close watch on the performance of Eskom power stations, making new energy interventions to end blackouts permanently.

Public Enterprises dismantled


A big announcement by Ramaphosa was the end of the Department of Public Enterprises, which has, for decades, overseen the country’s 700-odd state-owned enterprises (SOEs).

In his evening address to the nation, Ramaphosa said there would “no longer be a public enterprises ministry” and “the coordination of relevant public enterprises will be located in the Presidency during the process of implementing a new shareholder model”.  This is in line with the government’s plans to change the governance of SOEs and for them to no longer report to the Department of Public Enterprises but to their line ministries or even the Presidency. 

Under the previous administration, there was a push to get the National State Enterprises Bill passed into law. This Bill was recently published for comment. In terms of the proposed new law, the President (in this case, Ramaphosa) will be the sole representative of a holding company that will house SOEs and will have the power to appoint its board.

Read more in Daily Maverick: Presidential powers in National State Enterprises Bill flagged as a threat to SOE reforms

The key proposal of the Bill is to house some SOEs under a single state asset management holding company instead of retaining them under the Department of Public Enterprises, which will now be closed.

Another familiar figure in the public sector, Parks Tau, has made a comeback. Ramaphosa appointed Tau as the minister of trade, industry and competition. Tau was once the deputy minister of cooperative governance and traditional affairs, but was better known as a former mayor of Johannesburg. Tau replaces Ebrahim Patel, who retired after the May general election. DM

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