South Africa Appoints Insider Mogajane as Treasury Head

(Bloomberg) -- South Africa named Dondo Mogajane as the director-general in the National Treasury, appointing an official from within the department's ranks two months after President Jacob Zuma replaced a respected finance minister and his deputy.

Mogajane, who has been acting in the position since May 16 after Lungisa Fuzile left, will take up the position immediately, Communications Minister Ayanda Dlodlo told reporters in Cape Town Thursday after a cabinet meeting. Fuzile's resignation sparked concern that all three top finance positions would be filled by people from outside the Treasury.

S&P Global Ratings and Fitch Ratings Ltd. cut the nation's debt to junk after Zuma fired Pravin Gordhan as finance minister and Mcebisi Jonas as his deputy on March 31, replacing them with people with little finance experience. Rating companies cited concern about policy continuity and political instability as reasons for downgrading the country.

Mogajane's appointment “should be seen as a positive by the market,” Carmen Nel, a strategist at FirstRand Ltd.'s Rand Merchant Bank unit, said by phone from Cape Town. He “is seen as a Treasury insider, which should inspire some confidence in policy direction and implementation.”

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Zuma replaced Gordhan with Malusi Gigaba, the former home affairs minister, but had told party officials that he had favored Brian Molefe, a former chief executive officer at state-owned power utility Eskom Holdings SOC Ltd., as finance minister, a person with knowledge of the matter said in March.

Molefe resigned from Eskom in November because of being implicated in a graft ombudsman's report for favoring members of the Gupta family, who are in business with Zuma's son, in awarding contracts. Molefe denied wrongdoing and Zuma has challenged the findings. Molefe's reinstatement at Eskom last month was rescinded after two weeks.

Speculation in parliament and local media last week that Molefe would be appointed as head of the Treasury prompted Gigaba to tell reporters at a briefing that he wasn't in line for any government position. In April, analysts warned that while Molefe served as a Treasury deputy director-general almost 14 years ago and would be familiar with its workings should he get Fuzile's post, it wouldn't go down well with ratings companies given the governance allegations.

Mogajane joined the Treasury in 1999 and served as chief of staff to Gordhan between 2010 and 2014. He was chief operating officer of the Treasury until mid-2015, when he was appointed a deputy director-general.

“It's positive that someone is appointed who has been there already, who knows the processes and has the institutional knowledge,” Christie Viljoen, an economist at KPMG LLP, said by phone from Cape Town. “It's also better than if someone was appointed just from a political perspective.”

--With assistance from Amogelang Mbatha and Rene Vollgraaff

To contact the reporter on this story: Paul Vecchiatto in Cape Town at pvecchiatto@bloomberg.net.

To contact the editors responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net, Ana Monteiro