Tito Mboweni, the reluctant politician
President Cyril Ramaphosa on Thursday announced Finance Minister Tito Mboweni's resignation as finance minister.
CAPE TOWN - When Tito Mboweni took on the job of finance minister, he made it very clear that he had not sought the office out. On several occasions, ahead of his maiden Medium Term Budget Policy Statement speech in October 2018, he made light of the way in which he was approached for his portfolio, implying it was less of an ask, and more of a you-don’t-have-a-choice situation.
At the time, Mboweni was working in the private sector, occupying lucrative roles at Goldman Sachs International, and serving as chairperson of AngloGold Ashanti.
South Africa was in trouble - Nhlanhla Nene had just resigned as finance minister after he acknowledged that he had visited the Gupta family on several occasions. Nene was the latest in a succession of finance ministers - including the man who came to be known as “The Weekend Special” Des Van Rooyen - who’s appointment and axing by then-President Jacob Zuma caused havoc in the markets.
Mboweni inherited a mess, with consistently low growth, wide-scale corruption and leakage; his own Treasury staff were battered and bruised following years of uncertainty; the South African Revenue Service (Sars) was a wreck, hollowed out of key talent and a shadow of its former efficient self.
Under his political leadership, Sars rebuilt, and gradually turned itself around. Mboweni took a hard line on tax evaders, often employing one of his favourite catch phrases: “You must render unto Caesar, what is due unto Caesar.”
From the start, Mboweni was clear about his issues with the way government ran, as well as the inefficiencies and the out-of-control spending, once sharing with journalists his astonishment at a procurement deal for bottled water that saw government buying bottles of filtered water at a massive markup.
He set about reigning in spending and he seemed comfortable being a “No Man”, drawing a line in the sand on government expenditure, and holding it.
In a brutal budget speech in February 2019, he laid out the issues in black and white.
“We are borrowing about R1.2 billion a day, assuming that we don’t borrow money on the weekend.”
That rampant borrowing was expanding the debt-to-GDP ratio, and leaving government bonds in peril of being downgraded to junk status (in the event that SA was downgraded, but only in the wake of the first COVID-lockdown in 2020).
Later in his tenure during a webinar celebrating the centenary of Stellenbosch University’s Economics Department, Mboweni likened the state of the South African economy to the yawning maw of a hippo.
“The issue that bothers me is what I call a hippopotamus mouth – wide open. Revenue declining, expenditure going up. And you have to close this mouth. If you don’t close it, what concerns me is that we are headed for a fiscal crisis.”
One of the key components – the central component, really – in Mboweni’s fiscal rightsizing plan was addressing the public service wage bill. In his first Medium Term Budget Policy statement, he flagged the bloated salary bill as a serious concern. Every time the issue came up, he would make one key point – the country simply can’t afford it.
Ahead of that statement, he gave granular details about what he thought should be done, saying: “About 36% of your budget goes to civil service salaries, and you should be worried because the sweet spot should be below 30%.”
The idea to address that was a voluntary early retirement programme, but that did not yield the results he had hoped for.
In 2019, during his national Budget speech, he promised to shift the focus from spending on salaries to spending on infrastructure – a move aimed at firing up the economy.
“The public wage bill is unsustainable. We must shift expenditure to investment.”
In 2020, his decision not to honour the multi-year bargaining council wage increase agreement signed two years earlier infuriated unions, though his stand was endorsed by the Labour Court.
While former finance ministers acknowledged the burden of the public service wage bill, he was the first to stay the course, refusing to budge when it came to union’s demands for a higher than inflation increase, even as the nation struggled through the worst economic crisis since the markets crash of 2008.
He was consistently, unapologetically blunt about the issue.
And in his national Budget this year he doubled down, proposing moderate adjustments to increases that were far below inflation in coming financial years. That would mean salary expenditure would peak in 2024.
“These growth rates can be achieved through, for example, doing away with annual cost-of-living adjustment in the public service until 2023/24, together with measures to reduce head counts, a combination of early retirement and natural attrition, as well as freezing or abolishing of non-critical posts.”
There’s a rich irony to this, as his first stint in the executive was in Nelson Mandela’s Cabinet as democratic South Africa’s first labour minister. As part of that role, he helped conceive of the nation’s labour legislation, which makes provision for collective bargaining and the establishment of labour courts.
Mboweni’s unvarnished style and tendency towards pragmatism over politics might have been a breath of fresh air for some observers and was certainly feted by the markets. But it also meant he sometimes failed to present the kind of united front expected from the executive. He publicly acknowledged, for instance, that he’d differed with Cabinet over lockdown regulations – specifically the ban on cigarettes and alcohol.
“I don’t like the continuous ban on the sale of alcohol and tobacco, but I lost the debate and therefore I have to toe the line,” he said in April 2020.
Insiders say his initial frustrations with government inefficiency grew over his tenure, and over the years he served as finance minister, he would frequently compare the mindset of the private sector with that of the public sector – rarely favourably.
Some proposed initiatives – such as the proposal to allow people to access part of their retirement savings to tide them over while the economy got going – encountered delays.
Increasingly, he would address Parliamentary committees and other events from his farm in Magoebaskloof.
Ahead of his first MTBPS, in a jocular riff about the differences between private sector and government, Mboweni shared a recurring conversation with his boss, President Cyril Ramaphosa.
“The president uses a word – he says I must ‘adjust’, from the private sector to the public sector.”
Perhaps, he never did.