South Africa

Dawie Roodt’s warning about South Africa’s new government

Dawie Roodt

Renowned economist Dawie Roodt said it is unlikely that South Africa’s new government of national unity (GNU) will last five years.

Roodt made these comments during an interview about President Cyril Ramaphosa’s new national executive.

Ramaphosa announced South Africa’s new national executive during a televised address on 30 June 2024.

This announcement followed the President’s election by the National Assembly on Friday, 14 June 2024, and Ramaphosa’s inauguration on Wednesday, 19 June 2024.

The cabinet included ministers from many of the parties involved in the government of national unity, including the ANC, DA, IFP, PA, PAC, and Good.

The market initially reacted positively to the news, with the rand breaking through the R18/USD on Monday morning. However, it weakened significantly since then.

The same happened in the equity market, with the JSE All Share Index initially rallying but giving back its gains towards the end of the day.

Investec chief economist Annabel Bishop highlighted that South Africa’s recent government changes are not expected to alter the path of strengthening economic growth.

“That is, we continue to expect modest but accelerating growth over a five-year period,” Bishop said in a macro-economic outlook note.

“The appointment of the ministers and other executive positions of government has seen the ANC retain the key positions for the economy. The business-government collaboration will remain in place, strengthening factors of production.”

Investec forecasts economic growth of 1.0% year-on-year for 2024, slightly down from the previous forecast of 1.1% growth.

It revised its economic growth forecast because of revisions to historical data and a poor first quarter.

However, the financial institution continues to forecast that South Africa’s growth will approach 3.0% year-on-year by 2029.

Dawie Roodt’s view on the new cabinet

Finance Minister Enoch Godongwana
Finance Minister Enoch Godongwana

Roodt said his first reaction to Ramaphosa’s announcement was that South Africa’s cabinet had become even bigger.

This was expected as the President had to satisfy many new groupings in the new government of national unity.

He was disappointed that Gwede Mantashe remained the Minister of Mineral and Petroleum Resources as he performed poorly in his previous term.

He welcomed that Enoch Godongwana remains Finance Minister because it creates stability in the most important portfolio.

Roodt was also upbeat about Barbara Creecy’s appointment as the new Transport Minister and Parks Tau’s appointment as Minister of Trade, Industry, and Competition.

“Broadly speaking, I am happy with the new national executive, except for one or two exceptions,” he said.

“The ANC remains the dominant political party and will not compromise on things they feel strongly about. I don’t expect significant changes as far as policy is concerned,” he said.

However, the DA and smaller parties can make a difference by improving the efficiency of the state.

The financial market reacted positively to the news of the new government of national unity and the new cabinet.

However, he argued that it was more of a sigh of relief because the country dodged a bullet of an alliance between the ANC and the left-leaning EFF or MK parties.

He said it would take time to see if the new arrangement between the ANC and the DA, which had very different ideologies, could work.

“What I witnessed over the past two weeks during the cabinet negotiations is a lot of political fighting,” he said.

He questioned whether the two parties, with opposing political views, could work together and steer South Africa into a strong growth trajectory.

“I really hope it is going to work. However, I don’t think this new government will last five years,” Roodt said.