Another Nenegate ghost laid to rest – Treasury DG set for a new 5 year term

The attempted takeover of South Africa’s National Treasury last year, dubbed “9/12” by insiders, is already a distant memory. The Gupta family, instigators of the drama, have done a midnight flit to Dubai while pressure on their political collaborator keeps growing as ANC members share their evidence at Luthuli House. But it’s not the kind of thing citizens should ever forget. A reminder of how close the country came to disaster resurfaced yesterday with news that Treasury General Lungisa Fuzile is set to have his expiring term of office extended for five years. Fuzile was one of four top officials earmarked for rapid redeployment by the “weekend special” Finance Minister Des van Rooyen. Apart from the critical role as custodians of SA’s finances, these four have also made responsible for the final decision on SA’s proposed $100bn nuclear build programme. They, and former Finance Minister Nhlanhla Nene, intimated often the scheme is unaffordable. Nene was fired on trumped-up grounds of a job that never came running the local office of the BRICS Bank – a position predecessor Trevor Manuel says was “15%” of the one he was kicked out of. The now Dubai-based Guptas’ biggest SA investment is Shiva Uranium, a high cost underground mine which produces the raw material that fuels nuclear power stations. You can’t make up this stuff. Fortunately, sanity has prevailed. Fuzile’s new contract is proof. Hope springs. – Alec Hogg

By Franz Wild and Amogelang Mbatha

(Bloomberg) — South Africa’s government is in the process of extending National Treasury head Lungisa Fuzile’s term, a decision that may settle investor concerns over the management of the nation’s finances, according to two people with knowledge of the matter.

In the coming weeks, the cabinet will sign off on Finance Minister Pravin Gordhan’s recommendation that Fuzile’s five-year term be extended beyond its May 15 end, the people said. They asked not to be identified because the information isn’t public yet.

Director-General of the National Treasury Lungisa Fuzile (L), Finance Minister Pravin Gordhan and Deputy Finance Minister Mcebisi Jonas (R).
Director-General of the National Treasury Lungisa Fuzile (L), Finance Minister Pravin Gordhan and Deputy Finance Minister Mcebisi Jonas (R).

“Market preference would be for him to stay because he is very market-friendly and very astute within his role,” Gina Schoeman, an economist at Citigroup Inc. in Johannesburg, said by phone on Thursday. “He does a good job. We would be surprised if it wasn’t renewed.”

Investors have sought signs of stability since President Jacob Zuma roiled markets in December by replacing the respected Nhlanhla Nene as finance minister with a little-known lawmaker. The president reappointed Pravin Gordhan four days later to the position that he held from 2009 until 2014, after pressure from political and business leaders.

Still, an ongoing spat between Gordhan and the head of the country’s revenue authority, as well as concerns over continuity, are adding to unease.

In the two days after Nene was replaced, the Johannesburg Stock Exchange lost 170 billion rand ($11.8 billion) and bonds and the rand plummeted, making the currency the third-worst performer in 2015 among 24 emerging markets tracked by Bloomberg.

Investor Respect

Fuzile has won respect from economists and investors as he’s implemented a spending ceiling and steered South Africa’s budget during a period in which the rand has halved in value against the dollar and its sovereign credit-rating was downgraded to the brink of junk status. The nation risks losing its investment-grade status with Standard & Poor’s due to review its BBB- assessment, which is one level above junk, in June. Moody’s Investors Service put its assessment, which is one step higher, on review for a downgrade last month.

“At this stage where we are facing a possible downgrade to junk status, this isexactly what we need,” Isaac Matshego, an economist at Nedbank Ltd., said by phone on Thursday. “You must take into account that market players and these rating agencies are quite familiar with Mr. Fuzile and he is familiar with them too. He knows what they need and how to appease them.”

The Finance Ministry will make an announcement “as soon as we’re finished on government processes,” it said in e-mailed response to questions on April 21. “It’s a cabinet thing so cabinet is the only one that can speak on it,” Treasury spokeswoman Phumza Macanda said by phone on Thursday. Fuzile declined to comment on April 19. He didn’t immediately respond to phone calls and a text message seeking comment on Thursday.

The cabinet next meets on May 11, government spokeswoman Phumla Williams said by phone, adding that she is unaware of the agenda.

Statement from the Ministry of Finance

I am pleased to announce that Cabinet at its meeting on 26 April 2016, approved the extension of the contract of Mr Lungisa Fuzile Director-General of the National Treasury for a further two years – until May 2018.South Africa is privileged to have the talents and firm commitment of Mr Fuzile available to lead the National Treasury, a vital institution within our democratic state.

His unquestionable integrity and his adherence to the core values of our Constitution make him an exemplary leader in the public service. Since his appointment to the position in April 2011, Mr Fuzile has contributed to strengthening the reputation of the National Treasury as a stable institution with a depth of experience in its ranks. He has had to lead the Treasury at a difficult time, following a period of a recession and low growth after the 2008 global financial crisis.

He has led the team that has advised Government on the difficult choices that are necessary to maintain South Africa’s fiscal sovereignty. He has been instrumental in establishing a budget planning approach that links expenditure to the objectives of the National Development Plan and advancing policies that are aimed at lifting the levels of economic growth. During his time, key development finance institutions such as the Development Bank of Southern Africa and the Land Bank have been successfully turned around.

Under his leadership, improvements to financial management have been put into place, including the establishment of the Office of the Chief Procurement Office, to modernise procurement and ensure better value for money for government.

Mr Fuzile joined the National Treasury in February 1998 as a deputy director in the Intergovernmental Relations division and rose through the ranks to become the head of the division. Before being appointed the Director-General, he was the Head of Asset and Liability Management. In this capacity, Mr Fuzile managed relations with credit rating agencies and investors. Before joining the Treasury, he worked as a statistician, university lecturer and teacher.

We wish Mr Fuzile well in his next term and the entire team at the Treasury and the wider finance family- indeed the public at large- appreciates the sacrifice that his family makes to enable him to continue to serve SA. ”

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