The African National Congress retained power in South Africa’s April 22 general election with a slightly reduced, but still overwhelming, majority in the parliament which, as expected, elected ANC leader Jacob Zuma president of the country.

Since Zuma, who as a former guerilla leader without deep policy experience, had won the party leadership in 2007 with the support of the labor federation and the communist party and since the foibles of his personal life had received wide coverage, business leadership has worried about political stability and policy continuity under a Zuma government.  Hence the considerable significance attached to his cabinet appointments.

On May 10 President Zuma announced a cabinet which is carefully balanced to reassure nervous economic stakeholders while rewarding his key supporters.  Reaction in the South African and international press has been generally favorable, stressing continuity especially in economic policy.  Zuma has rewarded his supporters in the communist party and the labor federation with cabinet posts.  It should, however, be remembered that membership in the communist party was a common expedient for ANC leaders during the liberation struggle and does not necessarily imply serious ideological commitment.  Zuma will certainly be under pressure to move to the left (meaning primarily greater government control of the economy and accelerated social spending) from a new generation of leaders in important parts of his coalition such as the influential ANC Youth League and the labor federation, some of whom are intemperate and radical in their hostility toward the status quo.

While Zuma’s appointments did not bear out earlier concerns of a leftward lurch, they do represent a decided change in emphasis.  His electoral campaign assures a greater emphasis on poverty alleviation, service delivery and crime prevention and a less internationalist approach to foreign economic and foreign policy.  The degree to which South Africa will, or will be able, to turn inward will be watched closely.  Zuma’s key appointment was that of former finance minister Trevor Manuel as head of a new National Planning Commission to coordinate policy-making and develop a National Plan.  Manuel’s appointment serves the dual purpose of retaining the well-regarded former minister in the cabinet and aspiring to a well-coordinated policy apparatus. Skeptics have questioned whether creating a super-cabinet committee in fact will make for smoother policy-making or lead to bureaucratic infighting.  Manuel’s replacement at Finance, Pravin Gordham, who originally came out of the South African communist party, has led the South African tax collecting agency where he earned a formidable reputation with business as a no-nonsense manager.  The Financial Times quoted him as saying the new arrangement would create “more cohesion and greater balance.”

The economic team includes a new cabinet-level ministry, the Department of Economic Development, headed by Ebrahim Patel, former secretary general of the South African Clothing and Textile Workers Union.  The department is intended to focus on economic policy-making and will require coordination with the Finance Ministry which controls the budget, and with the Department of Trade and Industry.  Patel has been one of the strongest critics of the investor-friendly policies of the past decade.

The new Minister of Trade and Industry, Rob Davies, also a member of the communist party, is along with Manuel a known quantity, having previously been deputy minister of Trade and Industry and having written widely on economic policy.  It is unclear what priority the department’s international functions will have under the new arrangement and which of his two deputies will have those responsibilities.  Obviously, the external business community will watch carefully how these duties are distributed. The press is reporting that Davies wants to raise external tariffs from their applied levels to their bound levels.  This could increase tariffs on manufactured goods from the average applied rate of 10.5%  to the average bound rate of 30% and tariffs on textiles and clothing could rise to their bound rate of 35.9%.

Other significant appointments included the replacement of Foreign Minister Nkosazana Dlamini-Zuma (who becomes Home Minister) with Maite Nkoana-Mashabane, former ambassador to India and Malaysia and a Limpopo provincial leader (and the renaming of the ministry as International Relations and Cooperation).  This appointment has caused some disquiet because she is a relative unknown with slim foreign policy credentials and therefore could signal a lower international profile for South Africa.  Prominent businessman and former Gauteng premier, Tokyo Sexwale, was named as Minister of Human Settlements (housing) and has resigned from his investment company.

Blade Nzimande, the Secretary General of the South African Communist Party, was appointed
Minister of Higher Education and a new Department of Basic Education was created, led by Angie Motshekga, a former teacher and provincial education official.  Buyelwa Sonjica’s Ministry of Mining and Minerals has been spit with Susan Shabangu, formerly the deputy minister, who achieved notoriety for hard-line comments on police treatment of criminal suspects, became the new Minister of Mining with Sonjica as Minister of Water and Environmental Affairs.  The replacement of Barbara Hogan as Minister of Health by newcomer Aaron Motsoaledi (the well-respected Hogan became Minister of Public Enterprises) has been greeted with disappointment because Hogan had in her brief tenure reversed the course of her discredited predecessor, Tshabalala Msimang.   President Zuma moved his former wife, Nkosazana Dlamini-Zuma, from Foreign Affairs to Home Affairs. The new Minister of Defense is Lindiwe Sisulu, former Minister of Housing, daughter of close Mandela associate Walter Sisulu, and a colleague of Jacob Zuma in the military arm of the ANC in exile.  One of the more interesting appointments was that of Pieter Mulder, leader of the opposition Freedom Front, an Afrikaner nationalist party, as Deputy Minister of Agriculture.

The cabinet has been expanded from 28 to 34 ministers, who, with their 27 deputies, constitute a large and potentially unwieldy body.  Some early commentary warns of turf wars and delays in decision-making.  The heavy emphasis on planning is significant in a government apparatus that has suffered from a lack of capacity and has been criticized for inadequate delivery.  It remains to be seen whether high-impact policies such as Black Economic Empowerment, which helped to create a very wealthy black elite without having a major impact on the poor, will be altered.   And that raises the very interesting question of the role of the black business elite, which greatly prospered in the Mbeki years, under Zuma with his significant debt to labor.  Certainly labor’s protectionist preferences will clash with those of globalized business, including labor’s active skepticism about foreign direct investment and opposition to privatization of state-owned enterprises.  Indeed, the labor federation has already filed a court challenge to the British telecom Vodafone’s attempt to take a position a local cell phone company.

If the Zuma government is best characterized as a labor government seeking to perfect the “developmental state,” it remains to be seen whether it will seek a “hard” developmental state that maximizes government control and intervention or a “soft” developmental state that promotes a healthy private sector in a mixed economy.  The ultimate imponderable is how the Zuma government will react to the global economic crisis, which combined with the collapse of commodity prices, has sent the South African economy into recession.  Expectations raised by Zuma’s populist electoral campaign are unlikely to be met in his government’s early years.  This could either strengthen the hand of the labor federation or cause Trevor Manuel to advocate strenuously for an open economy. Time will tell.

J. Daniel O'Flaherty is Vice President of the National Foreign Trade Council.