Global Players: Trevor Manuel, Financial Minister, South Africa

“Our economy won't become ideological, it will stay rational”

- Trevor Manuel in an interview to Italy's Il Sole 24 Ore newspaper

____________________________________________________

There are a variety of superlatives that can be attributed to finance ministers. Many of them earn their stripes when the business cycle is on an upswing, which gives the government enough leeway and resources to introduce policy initiatives. Rare are those who manage to keep their reputations intact even during economic downswings, when tough and unpopular decisions need to be made. Trevor Manuel, South Africa’s long-serving finance minister, is one among those few.

Having presented 13 budgets so far to the South African people, Manuel, who served as chairman of the IMF's board of governors, is seen as a director and guardian of the country’s economy. Ever since his appointment as finance minister in 1996, Manuel has pulled South Africa out from the jaws of bankruptcy, and encouraged steady growth. His handling of the global financial crisis has reined in more applause. Economists have called his 2009 budget practical and efficient, with its aggressive push to stimulate the economy, increase tax cuts and ramp-up spending on infrastructure.

But Manuel was not always involved in economic affairs. Prior to his rise on the global financial stage, he was a political activist for three decades, a role that resulted in a brief exile and a few years of house arrest. In 1991, Manuel was appointed to the ANC’s economic planning desk despite his lack of economic training and in 1994 the World Economic Forum selected Manuel as the “Global Leader for Tomorrow.”

A globally respected figure in the finance arena, 56-year old Manuel’s future in the new ruling African National Congress (ANC) seemed uncertain after the recent April 22nd elections. Thabo Mbeki’s presidency was toppled by Jacob Zuma, an internal party challenger, and reports abounded that Manuel was set to leave the cabinet. The last time rumors such as these surfaced in 2008, the Johannesburg Stock Exchange (JSE) crashed 4% within minutes. But it turned out that Manuel hadn’t truly resigned. When the explanation was given, the markets recovered just as quickly.

Manuel now appears to be slated as the head of the Zuma administration’s newly proposed institution to monitor government performance. He is already ranked number four on the ANC’s parliamentary list, which highlights a person’s standing in the party. But with status often comes controversy, and speculation about his appointment is rife. The Congress of South African Trade Unions (COSATU) has often clashed with Manuel in the past. More recently, it called on the ANC to remove Manuel from the party saying that his 2009 budget allocation did not protect workers.

With South Africa teetering under the pressures of the global recession and a budget deficit that amounts to 5% of the GDP, Manuel’s reassuring presence aided by years of experience will be welcomed especially by nervous foreign investors. South Africa sees recession looming on its horizon after a 1.8% annualized decline in the last three months of 2008. Jobs are being slashed by the thousands in mining and manufacturing, the country’s key sectors. In such a scenario it is unlikely that the government will let go of Manuel. On the contrary, as Tony Leon, former leader of the Democratic Alliance, South Africa’s opposition party, pointed out to the Financial Times, “They’ll hang on to Trevor Manuel for dear life. He is the lightning conductor for the international community. He’ll give the government international credibility.”

Image Credit: IMF under public domain