The last Thursday of March 2017 saw the president of South Africa Jacob G. Zuma, as afforded in constitutional right, reshuffling his cabinet. One of the key results of that is a new finance ministry team, namely Minister Malusi Gigaba and his deputy Sfiso Buthelezi.
The new minister of finance made his first official statement in this position and it is worth unpacking:
1. Gigaba made his departure point of the statement the January 8 ANC statement, which identifies “the most urgent task of speeding up the building of a national democratic society where all South Africans enjoy an improved qualify of life, especially the working class and the poor”. The significance of starting with this is the centrality of it and the fact that he acknowledges it remains an unfinished historic mission.
2. He recognised the politicised and contested space of the cabinet reshuffle as it unfolds in various narratives, yet he will not be side-tracked, meaning regardless to what is being said of him being a Zuma lackey etc, he will not be hoodwinked to get involved. This means he is acutely aware of the balance of forces in and outside of the ANC, yet he will be focused on delivering his new assignment.
3. He was pragmatic and humble to rightly and duly pay homage to his predecessors who are all ANC deployees that have done great work, particularly since SA inherited from apartheid a bankrupt Treasury. Many fail to appreciate how governments function. It ought to be about the work and not the personalities, though you must recognise the contribution and roles of those who occupy the leadership positions.
4. For Gigaba, the implementation of ANC policies as articulated in conference resolutions, captured in the 2014 Elections Manifesto and the subsequent pronouncements of the president, remain fundamental as the guiding light. It is important to appreciate this aspect of the statement because the finance minister tells us treasury will be geared to fulfil what was agreed by the leader of society (ANC) at its conferences confirmed in its manifesto and underscored by the sitting SA President. The cardinal message remains – radical transformation of the economy. Therefore Treasury will play a leading role in this quest.
5. He dispelled the accepted contradiction between inclusive growth and radical economic transformation, when he categorically asserts there can be no economic progress in which the majority of SA’s people are left behind. That majority, needless to say, is black.
6. Gigaba’s understanding of Treasury as an anchor for economic growth:
He proceeds to outline what Treasury’s tasks and functional role must be:
His prism of Treasury is an anchor in true economic growth.
§ As key enabling institution for progressive change. With this he shares his epistemology of what the role of Treasury is in our current context and history.
§ He argues its expertise warrant being marshalled in support of national development. Meaning Treasury must always focus on national development, not sectoral development, not development geared towards a slice of the South African Society defined in orthodoxy of big business.
§ He told us Treasury’s capabilities must be arrayed as part of an effective democratic state. This unequivocally calls for a realignment of Treasury’a capabilities to confirm the functional outflow in practice of the democratic state. By implication it’s capabilities can’t be aligned to an undemocratic state.
§ Perhaps the core of his visionary outlook on Treasury is the assertion that its professionalism must be nurtured in support of a policy orientation that reflects the urgent need for change. This suggests Treasury hitherto may not have been that sensitive to this necessity for change.
§ He is bold to dare assert that Treasury for too long shares a perception as belonging primarily and exclusively to orthodox economists, big business, powerful interest and international investors.
The use of the word orthodox implies unquestionable or inflexible, meaning there is a perceived inflexibility on the part of Treasury that stymies the desired outcomes for a democratic SA. Gigaba makes this observation not as a novice but as one who has 14 years of Cabinet experience. This is not just a swipe at his predecessors but a critical and undeniable reality Treasury has come to depict over the length of our democratic sojourn. He told SA and those who engage it economically this perception has to change because this is a people’s government.
Treasury as an institution belongs to all South Africans:
§ Gigaba reminded us Treasury is no different to other institutions of the democratic state and belongs to all. It does not exist for the exclusive use and benefit of some with power and vested interests.
Therefore, it’s policies, management and communication must be accessible to all South Africans.
§ In my understanding, this also hints that he will look to see if Treasury in human resources and management confirms the demographic reality of the South African society. It will be important to see who makes up top management of Treasury in a demographic sense. He cautions that Treasury cannot benefit some with power. I interpret power in this sense to imply both political and economic power.
Investment Grade Rating
§ He reiterated that SA and its Treasury remains committed to maintain investment grade ratings with global credit rating agencies. He cites it as a necessary important aspect whilst he identifies and qualifies the rating agencies in what I will call categories of credibility and non-credibility. We all know recently some agencies were fingered and found guilty of forms of manipulation. Some like Moody’s were made to pay over R11,7-billion for its role in the US 2008 financial crisis. They were fined for issuing false credit ratings that eventually led to the market crash. In 2016 Standard & Poor Global Ratings also paid about R26-billion in fines on similar charges. We know Moody’s, S&P and Fitch account for the majority share (96%) of the ratings agencies market. Clearly these are not credible rating agencies and SA can’t be beholden to them.
§ He cautions that the work of rating agencies should not impinge on the creative means for SA to pursue its policies to achieve its outlined development objectives. With this he says SA must have the courage – meaning the boldness – and the space to implement policies of its appropriate choice for its particular challenges and aspirations.
§ Treasury hitherto, it appeared, was highly sensitive to only comply with rating agencies, appeasing their interests as final arbiter on the functionality of the SA economy. It means hitherto that rating agencies appeared to lead the SA economy and not the other way around. The notion of space suggests the obligation on the part of the State to create and claim that space for itself.
Governments in budget living
§ He reminded us that SA must rely on its own resources and live within its means. This aspect engages the stringent measures to ensure there is no spending where there is no budget. It’s always advisable to spend what you have and to do without if you don’t have budget. In my assessment, one of the key successes of his predecessors remains the undeniable fact that they mastered this aspect.
§ I would add as a means to ensure we stay in budget we must find it necessary to keep accounting officers directly liable for over-expenditure and reckless expenditure. Gigaba tells us whilst we recognise the complexities of the global economy, SA must remain firstly committed to its primary stakeholders – namely the people of South Africa.
Slow Pace of INCLUSIVE transformation
§ Gigaba recognised the prudent work done in balancing the competing priorities and constituencies. Yet he reiterates the growing consensus that the pace of transformation remains slow and in many instances superficial. This means the ANC in economic transformation is seen as too conservative in fear of not upsetting the opposing interests and confirmed constituencies.
§ He reminded us of the NDP’s articulation on growth as not just growth but inclusive growth to attain prosperity and equity. He recognises the expansion of the social wage that occurred in recent times yet he categorically states the ownership of wealth and assets remains concentrated in the hands of a small part of the population.
He categorically identifies this small group when he talks of the deracialising of the SA economy as an imperative for change.
Economic Policy – 9 point Presidential plan remains central.
§ He confirmed that the intention is to accelerate the implementation of the President’s 9 point plan for economic growth and job creation.
His Outlined Programme of Action & Top Priorities:
1. Engaging stakeholders: he identified the key stakeholders, defined in big and small, the establishment and black industrialists, meeting and aspiring, managers and professionals, organised labour, civil society, the tripartite alliance and opposition.
2. He highlighted a few positive aspects that confirm SA as being in a good position to attain growth.
3. He will work with parliament to approve the 2017 MTEF and ensure its effective and efficient execution, including achieving the fiscal objectives approved by cabinet in January 2017.
4. Work with colleagues to reinforce the alignment of the budget to the development objectives as set out in the NDP and other policy documents.
5. Continue the work with business and labour to ensure SA has faster growth for the creation of more work and business opportunities for the people. The word job does not feature, but work opportunities are preferred. This means there is also a migration on what constitutes a job in the narrow sense. In direct alignment with the ANC’s 2014 election manifesto, state procurement will be used strategically and vigorously to ensure localisation, promotion of black-owned, women-owned enterprises and SMME’s and to facilitate industrialisation. He identifies Treasury as procurement catalyst to promote opportunities for the designated groups. Preferential procurement used as a tool for genuine productive capacity growth.
6. Commits to work with the central bank to take steps to strengthen and transform the financial sector to serve all South Africans.
7. Work with provincial and local government spheres to strengthen financial management not as an end in itself but as a means to an end. SA has spheres, not levels, of government that interacts in delivery of services.
Gigaba concluded in reiterating why he entered politics and committed himself to serve SA and its people.
He pleaded that his critics afford him space and judge him on his performance. He reminded us the choice is ours to either remain in retreated factions, camps of vested interest or to seize the moment and make South Africa work.
Clearly this first statement sets the tone for Treasury and its new leadership. We must caution ourselves not to make Gigaba a convenient messiah as his predecessor became. We must also accept that the road is not easy and that the contesting interests remain complex, yet we must hope that radical economic transformation can be realised.
We must wait to see how the senior management of Treasury adjusts to his leadership and whether the influence of former ministers will spill into the Treasury.
I am assured that we have in Gigaba a minister that knows what needs to be done to transform our society. Definitely no messiah, but one who can make a contribution. I can only pray he is given a chance to show us he is capable to lead Treasury as he led other ministries before.
Clyde N. Ramalaine