Recently-appointed Minister of Public Enterprises Pravin Gordhan is moving quickly in South Africa. He is seeking to rationalize the financial commitments of state-owned enterprises (SOEs) and promising large personnel changes: “Virtually every entity that we are supervising, or are responsible for, is going to have changes as far as the board is concerned.” Ramaphosa has also suspended the commissioner of the South African Revenue Service (SARS) because “its leadership had lost all credibility.” He replaced him, at least temporarily, with Mark Kingon, who has had more than thirty years of experience at SARS.
Critics of former President Jacob Zuma’s administration saw SOEs, ranging from the national power company to the flag carrier South African Airways, as nests of corruption. Complaints that the Gupta brothers, notorious Zuma cronies, had “captured” the state often focused on the mismanagement of SOEs and the suspicion that the brothers were benefiting from corrupt contracts. Soon after becoming leader of the Africa National Congress and president of South Africa, Ramaphosa promised to clean up SOEs.
From that perspective, his appointment of Gordhan as minister of public enterprises is encouraging. Gordhan has held many high offices in government and served twice as finance minister. His international reputation for competency was on display when Zuma replaced him with a less competent crony and the Rand’s value fell dramatically in response.
The hallmark, at least thus far, of Ramaphosa’s appointments has been a focus on competence, a clear departure from those in his predecessor’s later years. The international financial rating agencies may start to react positively as soon as March 23, when Moody’s will issue its next credit rating, which is currently one notch above junk status.