South Africa’s new government sparks both hope and fear

By Tim Cocks and Bhargav Acharya

(Reuters) – South Africa’s new unity government drew cautious optimism from industry and financial markets on Monday, but many citizens and political analysts fear the coalition will struggle to deliver economic growth and social change.

President Cyrille Ramaphosa named former leader of main opposition party Jean Steenhuisen to lead a major ministry on Sunday, bringing the Democratic Alliance and other parties into a coalition cabinet for the first time in three decades.

The ruling African National Congress (ANC) was forced to join rival parties to stay in power after losing its majority in the May 29 poll, winning just 40 percent of the vote, the first time it has received less than half the vote in a national election.

The compromise reached left the DA with six ministries, including agriculture, a major sector of the South African economy, which was allocated to Steenhuisen, public works, environment and basic education. He also obtained six deputy minister positions, including finance, trade and energy.

“The weight and distribution of these twelve portfolios is a recognition of the important and vital role that the DA plays in the reconstruction of our country,” Steenhuisen said in a speech.

PARTY INTERESTS

For some, especially business owners, the arrival of an openly capitalist centre-right party was a welcome step forward.

“Businesses are eager to work with the new administration,” Busisiwe Mavuso, CEO of Business Leadership South Africa, said in a newsletter. “They will find in business a partner who is willing to enthusiastically support reforms.”

But she also warned that they could not afford to spoil their optimism, stressing that turning around an economy that has been struggling for a decade was a daunting task.

Jee-A van der Linde of Oxford Economics called Ramaphosa’s cabinet a “business-friendly outcome” but said it remained to be seen whether he could solve South Africa’s economic problems.

The mood was even more reserved among the parties representing workers’ interests.

“Merit does not appear to have been the primary motivation for all (cabinet) appointments,” the Federation of Trade Unions of South Africa (FEDUSA) said in a statement, adding that they “appear to favour the interests of political parties (rather)… than respond to the urgent needs of the South African nation.

Some businesses appear to share this fear, with the South African Chamber of Commerce and Industry warning that key targets “will not be achievable if there is no meritocracy”, while political analyst Daniel Silke has decried the lack of “outside experts in key portfolios who are not beholden to political interests”.

Others also criticized the size of the cabinet, increased to accommodate all coalition parties.

“South Africa already had a relatively large cabinet, and even the DA had already called for significant cuts,” said Markus Korhonen, senior strategic intelligence associate at S-RM.

“Increasing the number of deputy minister positions to as many as 43 will do little to assuage these criticisms,” he added.

(Additional reporting by Wendell Roelf in Cape Town and Kopano Gumbi in Johannesburg; editing by Emelia Sithole-Matarise)