ANALYSIS-Zuma cabinet shifts focus to S.Africa's problems

Mon May 11, 2009 10:22am EDT

* Focus on delivering on domestic priorities

* Markets unfazed by new finance minister

* Foreign policy takes a back seat

* Potential clues to succession



By Marius Bosch

JOHANNESBURG, May 11 (Reuters) - President Jacob Zuma's cabinet reflects a shift in focus to helping millions of poor South Africans without alienating business and investors in the most difficult economic climate in nearly two decades.

While trying to involve all groups in the diverse nation, Zuma has clearly set his priority as trying to deliver on the promises of the African National Congress at home rather than on South Africa's role beyond its borders.

Both aspects marked a big change of substance as well as style from the years of his old rival Thabo Mbeki, who was pushed from the presidency last year.

Financial markets have shown tacit approval of Zuma's appointment of Pravin Gordhan as finance minister with Trevor Manuel moved from that ministry to head a powerful new planning body. Both appointments have been seen as signs of continuity in policies favourable to business.

Similarly, investors have taken the appointments of trade unionists and the head of the South African Communist Party to the cabinet in their stride.

"The appointments reveal Zuma's talent as a consensus builder -- a leadership skill that was noticeably absent during the Mbeki years," said Razia Khan, Regional Head of Research, Africa at Standard Chartered.

South Africa's rand currency ZAR=D3 weakened 1.7 percent on Monday, but it was pushed lower by weaker global equity markets and traders said the currency was unaffected by the cabinet changes.

The new administration shows a break from past foreign policy under Mbeki, who tried to give South Africa a high-profile diplomatic voice both within Africa and on the world stage.

The little known Maite Nkoana-Mashabane was appointed as foreign minister -- re-named as international relations and cooperation in another indication of the change of emphasis.



BREAK FROM THE PAST

"It seems to be in this case a relatively low-key appointment ... which probably reflects the focus on issues for the Zuma government onto domestic politics, particularly around delivery and economic policy agendas rather than external politics," said Mike Davies, Middle East and Africa analyst at Eurasia Group.

Mbeki was heavily involved in foreign policy despite facing criticism at home and abroad for his soft approach to the crisis in neighbouring Zimbabwe and relations with other states out of favour with the West.

Zuma's ruling ANC forced Mbeki out as president in September last year in the final act in a bruising battle for control of the ANC. Only 12 ministers from Mbeki's cabinet were included in the new cabinet.

Zuma has made health, education, crime, land reform and job creation priorities for his government, 15 years after the end of apartheid.

Although the ANC won an election landslide in April, many South Africans said it was running out of time to deliver on its promises.

The task is complicated by the fallout of the global financial crisis. The South African economy is probably already in its first recession in 17 years.

"Only time will tell how this improves service delivery which is likely to be key for the Zuma administration, given its insistence to the electorate that this administration will be a break from the past," said Nomura analyst Peter Attard Montalto.

"And herein lies Zuma's balancing act. On the one hand he must show effective change to the electorate, on the other he must show the market that conservative and prudent policy-making is still in place."

The cabinet list could also give clues to the presidential succession since Zuma has said he will only serve one five-year term.

Tycoon Tokyo Sexwale, who concentrated on his business interests under Mbeki, joined the cabinet as minister responsible for housing.

Nomura's Montalto said Sexwale and deputy Public Enterprise Minister Enoch Godongwane could both be candidates for the presidency in five years' time.

"These appointments may suggest a slight side-lining of Zuma's potential successors on the right of the party, but their participation in government -- given their links to business -- is a positive in our view. Given Zuma's previous comments that he will serve only one term, we think these two will be interesting to watch". (Editing by Matthew Tostevin)





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