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Could Tito Mboweni Be The Turning Point?

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Tito Mboweni inherits Africa’s recession-hit country as president Cyril Ramaphosa chases growth.

If the performance of South Africa’s currency in the week since Tito Mboweni was picked as finance minister is any good, Africa’s only economy in official recession might be on to a good thing.

The rand, Africa’s most freely-traded currency, gained more than 5% against the dollar in the week since the former central bank governor replaced Nhlanhla Nene who quit after lying about his dealings with a business family, the Guptas, accused of bribing government officials including former President Jacob Zuma.

The former labor minister brings a no-nonsense approach analysts say will be needed to take Africa’s second-largest economy out of a largely self-inflicted second recession in less than a decade amid graft allegations. He will need to rein in government spending, six months before elections that may drop the ruling African National Congress’ (ANC) support below half for the first time since the dawn of democracy in 1994.

“Fiercely independent and often regarded as a bit of a maverick, Mr Mboweni is nevertheless likely to emerge as one of Mr Ramaphosa’s more inspired decisions,’’ says Gary van Staden, analyst at Cape Town-based NKC Research.

“He is certainly among the more highly-regarded choices the president could have made and we expect him to add momentum to the decisions of the job summit and economic stimulus package.’’

Mboweni served four years as labor minister in former President Nelson Mandela’s government where he developed the first post-apartheid labor law. At the South African Reserve Bank, where he was the country’s first black governor, Mboweni spent a decade, and built a reputation as a conservative banker and defender of the country’s newly-adopted inflation-targeting regime.

His major achievement was building the country’s foreign exchange reserves from less than $10 billion to $40 billion when he left in 2009 after two terms deemed by most as successful.

READ MORE: One on One With Naledi Pandor SA Minister of Higher Education

“The economy is now in a safe pair of hands. It is someone senior both in the ANC and in the government as he served as a minister of labor previously. What is also important is we have ratings agencies watching us and this will bode well for them,’’ says independent economist Mike Schussler.

Mboweni takes charge of an economy that was in recession in the first six months of the year, hobbled by nine years of poor management under Zuma which left business confidence shattered. With the economy barely growing during the period, the country lost its investment grade rating from Standard & Poor’s (S&P) and Fitch Ratings.

Only Moody’s maintained its rating above junk and the company deferred a decision after Mboweni’s appointment, fanning hopes it will give him time to mend the country’s finances and present a credible growth plan.

But economists say it might be too late for a country that needs to cut spending while chasing economic growth.

“I am afraid we have overplayed our hand on the numbers,’’ says Dawie Roodt, an economist at Efficient Group in Johannesburg.

“The fiscal numbers are unsustainable and the debt numbers in particular are terrible. From a numbers point of view, I am afraid this is a downgrade.’’

The new minister has a full problem tray as he comes in: unemployment is sitting at 27.2% as companies grapple with soaring costs inflated by a weak rand, falling government revenues in a country where 17 million people depend on government grants, and weak business confidence.

But his appointment may provide the turning point the country desperately requires, according to Van Staden.

“The former Reserve Bank governor can be a difficult personality, but his skillset and deep understanding of financial markets are likely to see him embrace a market-orientated policy framework with a no-nonsense attitude and dedication to economic growth and social development. We expect the appointment to have a positive impact on the credibility of the Ramaphosa administration.’’

It is credibility Ramaphosa has been building and one he will need quickly, according to Ravi Bhatia, a director at S&P which rates the country’s debt junk with a stable outlook. Its next rating decision is scheduled to be announced on November 23.

“He will have to get up to speed quite quickly,’’ Bhatia said pointing to the country’s Medium Term Budget Policy statement released in October. “He will have to push through measures that will deliver growth. We want to see growth being delivered and the fiscal line being controlled.’’

– Godfrey Mutizwa

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Why Zimbabwe Is Not There Yet

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Despite the ample investment opportunities in Zimbabwe, post-election setbacks challenge its economic recovery

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First African Elected Female Head of State Urges Women to Be Bold

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Ellen Johnson Sirleaf has an iconic status in Africa and the world. As the first elected female head of state in Africa, she served as the leader of Liberia for two elected terms.

Those terms saw Liberia’s slow and steady march from what was considered a pariah state to a country with what the Mo Ibrahim Foundation calls a “trajectory of progress” that has helped transform its economy, survive the shock of Ebola, and restructure public institutions to respond to the needs of the people.

READ MORE: The People’s President

It is only fitting that FORBES WOMAN AFRICA gets to meet the Nobel Peace Prize winner in Rwanda, a country known for its high representation of women in Parliament, and where Sirleaf is awarded the Ibrahim Prize for Achievement in African Leadership at a special ceremony.

Q. Please share your thoughts on the African Union (AU) self-funding reform goal, the Kaberuka Proposal.
The dependency of the AU on external sources has been the subject of debate for many years, and the thinking of our leaders is that it is better to finance our operations by ourselves and alleviate pressure and dictation from these external sources. On the other hand, we know that to have financial autonomy, every country must be able to contribute consistently. So, the crux of the reform is to change the payment formula and make sure everyone knows they have to pay their part.

When it comes to the Kaberuka suggestion, it meets our objective of financing our organization ourselves. However, it does place a burden on the poorer states… So, our position with the Kaberuka plan is to study it some more so when we commit, we do not fall into arrears. We want to see the reform implemented, and for it to include cost-reduction in structural aspects such as travel and positions etc., thus reducing the burden on poorer countries.

Q: Will Africa really be able to tackle illicit financial flows? And with women being conspicuously absent from financial decision-making, yet being the greatest losers on such issues, how do we tackle these discrepancies?
We have to become more accountable and pass stringent mandates in institutions, as well as instill practical capacity to understand the complexities of these financial transactions. Also, we must implement a legal system that will enforce against such flow violations.

Access for women is difficult even in the case of legitimate flows. Even with a growing manufacturing sector and agri-industrial activities usually manned by women, access is still limited, for rural women particularly.

There is a big effort being put in by different regional institutions; in Liberia’s case, GIABA, the Intergovernmental Action Group Against Money Laundering in West Africa, has been analyzing the flows and determining what is illicit.
But it is up to women to stand up and put other women in leadership roles, because the record is clear: women are more credit-worthy when it comes to financial transactions, and this suggests the more women there are heading these institutions, the more we can be assured that regulatory laws will be more effective.

READ MORE: ‘Women’s Leadership Is Under Attack Globally’

Q: What are your plans? How would you encourage young women to follow in your footsteps, or even create their own path?
We are establishing the Ellen Johnson Sirleaf Presidential Center for Women and Development. The activities will center around five themes that will promote women in business; women in leadership; women in fragile states; women in migration; and education for women and girls. We will use the life experiences of women who have excelled in these areas. For the young women, I say to all, be self-confident and pursue your goals…Let us be bold as women.

– Interviewed by Laura Rwiliriza

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Prosecution And Praise For Jacob Zuma

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It proved a day short on time in court and big on political posturing and speeches. The former president of South Africa Jacob Zuma’s appearance lasted a mere 10 minutes, on April 6, and the trial postponed until June 8 – yet he managed to make political capital out of his day in court in Durban.

On a bright sunny day in the coastal city of Durban in the KwaZulu-Natal (KZN) Province of South Africa, the former head of state stood trial in his own court. Almost 10 years ago, 10 days after this day, 18 charges on 783 counts of fraud, corruption, money laundering and racketeering were dropped against Jacob Zuma by former National Prosecuting Authority (NPA) boss Mokotedi Mpshe.

This decision was said to have been based on the recordings of the so-called ‘spy tapes’, which were presented to Mpshe by Zuma’s legal team. And almost a decade later, Zuma stands trial in the same court for the same charges which were reinstated by now NPA boss Shaun Abrahams.

The court was packed to full capacity with only 25 journalist allowed inside. Media came from all over the country, the continent and the world. Night vigils and pickets were held outside the night before the court case and on the day the case took place, led by different organizations supporting the former president. These organizations included Transform RSA, Black First Land First led by Andile Mngxitama, student groups from various KZN universities and members of the African National Congress (ANC) ruling party who claimed not to be operating under the party’s name.

The National Executive Committee (NEC) of the ANC made an announcement a week before the trial that members of the party who liked to support Msholozi, as Zuma is affectionately called, could do so in their own personal capacity and not wear any party regalia. However, ANC members who attended actually did the opposite and when asked if they were defying their own party, countered “you cannot have an ANC without Jacob Zuma”.

Thousands of supporters in front of the Durban High Court chanted struggle songs and praised Zuma.

Zuma addressed the crowds after spending close to 15 minutes inside the court room.

“I keep asking them what have I done for them to keep trying to bring me down but they have no answers but one day they will,” he said.

Among the top-ranking ANC officials in KZN was the province’s MEC for Economic Development and Tourism Sihle Zikalala who vowed to aid in defending the former president.

What is clear is that the ANC in KZN is still divided, with its members committing to prove Zuma’s innocence and unseating current president Ramaphosa before the 2019 elections. On the other hand, some others are calling for his prosecution by the court of law.

This case may take years to be concluded and political wars in the province may not augur well for the ANC.

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