Dear new Finance Minister, these issues need your urgent attention

From Trevor Manuel to Enoch Godongwana, there have been nine South African Finance Ministers. Now all eyes are on who will be the next Finance Minister.

From Trevor Manuel to Enoch Godongwana, there have been nine South African Finance Ministers. Now all eyes are on who will be the next Finance Minister.

Published Jun 23, 2024


South Africans have experienced an eventful past two months, from the elections to establishment of a government of national unity, and the seventh parliament which included the swearing-in of Members of Parliament, electing a new speaker and the inauguration of the President.

Now all eyes will be on the new Cabinet of the seventh administration, especially the new Finance Minister.

A history of South African Finance Ministers

From 1994 until present, there have been nine people that have held the office of Finance Minister including:

– Derek Keys (1992 - 19 August 1994): Keys served as Finance Minister in the transitional government for both FW De Klerk and Nelson Mandela.

– Chris Liebenberg (19 September 1994 - 4 April 1996): Liebenberg was Finance Minister in Nelson Mandela’s Government of National Unity.

– Trevor Manuel (4 April 1996 - 10 May 2009): Manuel was Finance Minister under Nelson Mandela as well as Thabo Mbeki’s first and second terms as President. He was also the Finance Minister for Kgalema Motlanthe after Mbeki resigned.

– Pravin Gordhan (11 May 2009 - 25 May 2014 and 13 December 2015 - 31 March 2017): For the two periods that Gordhan was in office as the Finance Minister, Jacob Zuma was President.

– Nhlanhla Nene (25 May 2014 - 9 December 2015 and February 27 2018 - 9 September 2018): Nene served as Finance Minister for Jacob Zuma and Cyril Ramaphosa.

– David van Rooyen (9 December 2015 - 13 December 2015): Van Rooyen was the Finance Minister for Jacob Zuma. He was served as Finance Minister for only four days.

– Malusi Gigaba (31 March 2017 - 257 February 2018): Malusi Gigaba held office as Finance Minister when Jacob Zuma was President.

– Tito Mboweni (9 October 2018 - 5 August 2021): Mboweni was the Finance Minister for Cyril Ramaphosa.

– Enoch Godongwana (5 August 2021 until present): Godongwana held office as Finance Minister under Cyril Ramaphosa.

Key areas that the new Finance Minister needs to focus on

While the name of the new Finance Minister was unknown at the time of writing, there will be a number of issues that will be on their plate when they take office.

Sanisha Packirisamy, Economist at Momentum Investments, said that a slow growing economy needs to be top priority for the new Finance Minister.

Data from StatsSA showed that the economy weakened by 0.1% for Q4-2023 after dropping by 0.3% in Q3-2023.

Following results of the 2024 elections, Chifi Mhango, chief economist of the Don Consultancy Group said that the challenge remains on transforming the economy towards a higher sustainable economic growth rate trajectory.

Thys van Zyl, CEO, Everest Wealth said that the issues of junk status and greylisting needs attention before the end of the 2025 financial year to secure more foreign investments for failing infrastructure.

“In my opinion this is the most important appointment and his support to the Minister of Trade and Industry is as important as the president and the speaker,” van Zyl said.

“The challenge will be that these two ministers need to be compatible and have the same goal and not be politically motivated should the appointments be candidates from different parties.”

According to Packirisamy, the following measures could bring stability and growth to the SA economy including:

– Clarity on policies that have been delaying fixed investment spend. For example regulation 28, nationalisation or prescribed assets

– Commitment to furthering reforms started under Operation Vulindlela (water, energy, logistics, broadband, tourism/visas)

– New areas of economic focus.

“It will be more difficult to announce the former given the multiparty governing structure that will need time to debate these contentious issues before making any clear policy decisions on them,” Packirisamy said.

“Nonetheless, a lot of work has already been carried on out during Operation Vulindlela's first term and we are more likely to see a renewal of their term to conduct further work.”

In order for there to be economic stability and growth the new minister should scrap policies that have political motivation and or points and rather focus on new policies that will safe South Africa’s economy and the consumer, according to van Zyl.

Van Zyl said: “Job creation, infrastructure development, and less taxes - it’s too expensive to do business in South Africa and that scares me because we have the work force but not the invitation. They should start an initiative that says South Africa is ready and open for business.”

According to Packirisamy, other than transforming the economy there are other issues that require attention.

“Limited new revenue avenues and rising social demands on the fiscus will need to be addressed in order to maintain the country's primary surplus in the medium term and to ensure that the debt ratio stabilises,” Packirisamy said.

Following the signing of the National Health Insurance Bill by President Cyril Ramaphosa in May, a number of people were looking to the Finance Minister for information on how the new health system would be funded.

While the funding of NHI will be an issue that requires attention from the new Finance Minister, according to Packirisamy South Africans may not hear any news about it any time soon.

“We are unlikely to see any major updates by the time of the medium-term budget. NHI updates will likely come in the way of an update on phase one and two, focusing on primary health care delivery by the state,” Packirisamy said.

What about the basic income grant?

Another big issue that will have a major impact on SA consumers is the basic income grant.

According to Packirisamy, the extension of the Social Relief of Distress Grant runs to March 2025.

This buys government time to respond with details on a more permanent structure, including a viable funding model and details on who would be eligible for the grant.

Casey Sprake, Investment Analyst: Fixed Income, Anchor Capital said that SA faces a major unemployment problem that continues to be a challenge for the country's economic and social development.

Data from the StatsSA, Quarterly Labour Force Survey shows that SA’s unemployment rate has risen to 32.9% in Q1-2024 from 32.1% in Q4-2023.

Packirisamy said that there a number of solutions that the new Finance Minister can propose to solve the issue of unemployment.

“Expanding youth employment schemes on scale, furthering reform to enable small business development and general structural reforms to grow the economic pie further to support a higher level of jobs,” Packirisamy said.

“The president has previously highlighted a focus on job-enhancing areas of the economy such as tourism and agro-processing. An update in this regard would be beneficial.”

IOL Business