South Africa's Gigaba
tones down "radical" talk amid investor unease
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[May 11, 2017]
By Olivia Kumwenda-Mtambo
(Reuters) - South Africa's finance minister has sought to allay investor
fears over his pledge of "radical economic transformation", toning down
the rhetoric just over a month into the job to talk more of "inclusive
Malusi Gigaba, appointed after President Jacob Zuma sacked his
predecessor Pravin Gordhan in a move that rattled markets, has backed
Zuma's aim of redistributing wealth to poor blacks.
While investors want the ruling African National Congress (ANC) to
explain what is meant by radical transformation, Gigaba has in recent
speeches used language that appears aimed to calm nerves, without
specifying any concrete policies.
Gigaba dismissed calls from one adviser to nationalize banks and mines
and he told parliament's finance committee on Tuesday the objective was
to help poor blacks, whether the transformation was "called accelerated
growth, radical economic transformation or inclusive growth".
"His view is that investors in business should not be fearful when they
hear the word radical and think that it means there is going to be some
irresponsible approach to government programmes," Gigaba's spokesman,
Mayihlome Tshwete, said.
"And on the other side those who hear inclusive growth should not feel
that it's a business term that doesn't relate to the masses of the
BNP Paribas Securities South Africa economist Jeffrey Schultz noted the
change in rhetoric.
"He is trying to calm fears...that it doesn't necessary mean there is
going to be far-reaching changes in the way fiscal policy is conducted,"
"Radical economic transformation sounds so alarming to the investment
community and the term inclusive growth seems on the face of it a little
bit more palatable."
South Africa's credit rating was cut to "junk" after Zuma sacked Gordhan.
Lower ratings typically make it more expensive to borrow and risk
deterring the foreign investors on whom South Africa relies to finance
its big budget deficits.
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South African Finance Minister Malusi Gigaba speaks to journalists
at the World Economic Forum on Africa 2017 meeting in Durban, South
Africa, May 3, 2017. REUTERS/Rogan Ward/File Photo
In a country where unemployment is 26.5 percent, hundreds of people in
townships protested this week over housing and jobs, piling pressure on
Zuma who has faced calls to step down since the reshuffle.
Some analysts said talk of "transformation" was meant to appease ANC
supporters after the party lost key cities - including the capital
Pretoria and economic hub Johannesburg - at local elections last year.
"I think that it is the rhetoric of desperation when you have a hollow
buzz phrase like that without any substantive detail," said Martyn
Davies of Deloitte.
But a cabinet minister said transformation was at the heart of the ANC's
Minister in the Presidency Jeff Radebe told reporters on Tuesday that
"radical socio-economic transformation is not an invention of 2017. This
matter arose in 2012 at the ruling party conference...and is in the
national development plan."
(Additional reporting by Mfuneko Toyana and Joe Brock; Editing by James
Macharia and Robin Pomeroy)
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