JUDITH FEBRUARY: There’s simply no silver bullet to fix SA’s economy
It’s probably starting on the wrong foot when your important speech is delayed by a week.
Finance Minister and Twitter Chef-in-Chief, Tito Mboweni, may wish he could in fact cook the books when he delivers his Medium-Term Budget Policy Statement (or ‘mini-Budget’) on Wednesday. Mboweni wrote to Speaker of Parliament, Thandi Modise, requesting a week-long extension to 28 October.
As a precursor, President Ramaphosa presented his Economic Recovery Action Plan to Parliament last week. He was upbeat despite the fact that the odds are stacked decidedly against a great South African post-COVID recovery. Ramaphosa declared energy security within two years (on this, it is heartening that Eskom CEO, Andre De Ruyter, seems to be doing some effective spring-cleaning and there is real hope for a turn-around at Eskom), 800,000 work opportunities by March 2021 and then R1 trillion infrastructure investment until 2024. It all sounds good, but really, we have heard it before. Ramaphosa spoke a great deal about ‘implementation’, always South Africa’s Achilles Heel, given the general dysfunction within the state.
A large part of the plan was stitched up at Nedlac though with a distinctly ‘ANC flavour’. At Nedlac, the social partners were keen on agreeing to a plan which would restore business confidence and which would address corruption head-on. The plan, Ramaphosa said, will induce the private sector and others, to invest alongside us (government). “This plan will unleash the capacity of the private sector to build jobs.” The plan, being driven from the Presidency itself and which has at its heart mass employment, has also been welcomed by Cosatu.
As ever, the devil will be in the detail and so all eyes will be on Mboweni on Wednesday afternoon as he delivers the ‘mini-Budget’. It sets out government’s priorities over the next three years and proposes allocations to different departments, as well as the provincial and local governments. It also provides an update on government finances and economic growth, and makes emergency changes to spending.
In previous, more stable post-apartheid years, the MTBPS was largely an understated affair with a few tweaks made to the Budget. The entire process is aimed at ensuring maximum Budget transparency (something for which South Africa has been renowned) and it was a process built on painstaking number-crunching within the National Treasury.
In February, Mboweni was upbeat as he entered the House bearing a little aloe ferox plant and armed with quotes ranging from the Bible to Pliny the Elder. And then the global pandemic and its attendant economic devastation hit. Of course, South Africa was in dire economic straits even before the pandemic.
Listening to Ramaphosa describe our ‘stretched finances’, one could not help thinking that in large part, we are reaping the consequences of a decade of state capture. Former President Zuma, despite having victimhood down to a fine science, has a lot to answer for, as do his corrupt associates who have not yet been held to account. For while Zuma, the wrecking ball, is gone, we now all bear the burden of paying to fix the economy. There was some talk of high-income earners paying a ‘solidarity tax’ to boost state coffers. In ‘solidarity’ with whom? The corrupt and unaccountable who unashamedly still flaunt the proceeds of state capture?
Given that the kitty is bare, the bitter pill to swallow is that clawing our way back will take time. There simply is no proverbial silver bullet.
Our strengths, Mboweni has repeatedly said, are our young people, our institutions and our diverse industrial base. Yet, youth unemployment sits at staggering levels and our institutions need rebuilding. This will take time.
Any Finance Minister needs credibility, a strong revenue collection service and an equally credible National Treasury. Both Sars and National Treasury have been severely weakened over the past decade. Edward Kieswetter, the new Sars Commissioner, has been working feverishly to rebuild the institution, but again, that will also take time.
And then we have state-owned enterprises which represent a further drain on our finances. Of course, it is not only Eskom which is a drain on the fiscus. SAA is in immediate crisis and then there is Denel, the SABC, Prasa and a laundry list of associated corruption and maladministration.
South Africa talks far too much and does far too little. The time for endless discussion on economic policy must surely be over? The challenge is whether the ANC, caught in factionalism and division and addicted to the trough that is SOEs, sees this? As former Minister of Labour and Governor of the Reserve Bank, Mboweni is no fool and is acutely aware of what needs to be done to repurpose the state, specifically National Treasury and other democratic institutions, for their democratic mandate.
As he comes to Parliament this week, the question will be whether his Cabinet colleagues and more importantly, his comrades within the ANC, understand the severity of our economic crisis. While Ramaphosa may have been upbeat last week, his recovery plan has a somewhat ‘last chance saloon’ feel about it.
Judith February is a lawyer, governance specialist and Visiting Fellow at the Wits School of Governance. She is the author of 'Turning and turning: exploring the complexities of South Africa’s democracy'. Follow her on Twitter: @judith_february