By Agnieszka Flak and Serena Chaudhry
PRETORIA (Reuters) - Jacob Zuma was sworn in as South African president Saturday after a remarkable political comeback and quickly highlighted the challenges he faces as the continent's biggest economy heads towards recession.
The prospect of Zuma taking the oath of office before heads of state was unthinkable during the turbulent years when he was nearly ruined by graft and rape charges, crises that might have buried many politicians.
Promising to help South Africans realise their dreams, Zuma, 67, took a sober view of the country's economy which may already be in its first recession in 17 years.
"We must acknowledge that we find ourselves in difficult economic times. Jobs are being lost in every economy across the world," Zuma said in his inauguration speech.
"We will not be spared the negative impact, and are beginning to feel the pinch."
Former South African leader Nelson Mandela, praised globally for his struggle against apartheid, attended the presidential inauguration ceremony, in a huge political coup for the charismatic Zuma.
During the ceremony, air force jets flew over the presidential offices where he will have to make tough decisions after winning a wide mandate to lead with the ruling African National Congress's (ANC) landslide April 22 election victory.
While South Africans respect the ANC for its anti-apartheid struggle, they are growing impatient with the rampant poverty, crime and an AIDS epidemic Zuma has promised to tackle.
He must now juggle the interests of the union and communist allies who helped him rise to the top, with those of foreign investors who fear he will steer the economy left.
INVESTOR ANXIETY
Investors are eager to see who forms Zuma's economic team and are especially interested in the fate of respected Finance Minister Trevor Manuel, praised for his fiscal management.
Speaking to reporters ahead of the swearing in ceremony, Manuel expressed confidence in Zuma's abilities.
"Frequently people look for experience. But what matters is attitude and aptitude," he said. "The mood is very buoyed. Feeling very strong. There's a big wave to ride."
Stacking the cabinet, to be named Sunday, with loyalists could hurt the credibility of Zuma, who has said ANC officials should not expect positions just because of their loyalty.
He will be under pressure to make a clean break with what critics say was the autocratic leadership of his rival Thabo Mbeki, who was ousted from the presidency by the ANC.
In a reminder of their fierce power struggle, Mbeki was booed at the inauguration ceremony.
Thousands cheered Mandela, looking frail at 90, as he was transported on a golf cart before being helped to the podium.
His appearance will be seen as a huge vote of confidence in Zuma, who spent 10 years with him in Robben Island prison during apartheid.
President Robert Mugabe of Zimbabwe also attended the ceremony. One of Zuma's major foreign policy challenges will be trying to help strengthen Zimbabwe's new unity government which has been tasked with rebuilding the ruined country.
"GIVE ZUMA A CHANCE"
Zuma has said he will consult widely before making major policy decisions, an approach that may ease opposition fears the new administration will stifle dissent. He wants to be seen as moderate, especially at a time of economic uncertainty.
But he may have to accommodate allies like firebrand ANC Youth League leader Julius Malema, who said ahead of the inauguration the ANC was indebted to the working class and the new government's performance will be watched closely.
Zuma's political career has been fraught with trouble. Corruption charges were dropped just before the election after an eight-year legal battle. He was acquitted of rape charges in 2006, but his image has not recovered.
He has three wives and 19 children. A local radio station said he appeared at the inauguration with his "senior" wife.
The former head of ANC intelligence is known for his mediation skills, which could now help him prevent ANC power struggles which led dissidents to form a breakaway party.
"We have to give Zuma a chance. He must prove that he knows where he's coming from, he must remember the days when he joined the ANC as a young man," said Jabulile Hadebe, a mother of four, wearing earrings covered with images of Zuma.
"He knows what he wants and he's not afraid of fire. That's what makes him strong and encourages people like me."
(Writing by Michael Georgy; Editing by Sophie Hares)
