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By Alec Hogg*
Most of my first eight waking hours today were spent in Committee Room M514 within the South African Parliamentary precinct in Cape Town. It’s one of numerous venues where those of us who obsess about this stuff are given Treasury documents ahead of their public release at 2pm on Budget Day. What we call ‘lockup” because it is a place shut away from devices – with even a toilet visit requiring being escorted by a SAPS officer.
‘Lockup’ is a half-yearly journey to reacquaint myself – and those we serve at BizNews – with the state of our nation’s finances. Fascinating though it is to work through the documentation and attend an off-air press conference with the finance minister and his lieutenants, it’s not exactly a happy occasion. Indeed, it’s been a decade and a half since left uplifted, ie with a sense that our country’s money is being properly managed.
My internal scale didn’t quite get into the positive today. But after years of decline, it finally feels like we’re on the right path.
Let me explain. It’s two years since Enoch Godongwana replaced enigmatic Tito Mboweni as SA’s minister of finance. Having known Tito since 1992 when he was number three in the ANC’s economics department, provides an affinity for the former SARB Governor, dagga farmer and occasional JSE-listed company chairman. Tito completely understands the numbers. But, perhaps because of political imperatives, when finmin he seemed to often throw ‘hail mary’ passes in his efforts to to balance the books. None of which landed.
In the years after superstar Trevor Manuel and before Tito, we had well-intentioned but hopelessly idealistic Pravin Gordhan, then a ponderous Nhlanhla Nene; followed by Pravin again and then the simply awful and hugely out-of-touch Zuma-injected Malusi Gigaba.
Back to the behatted Godongwana, by contrast with all his predecessors up to Manuel, he possesses powerful political capital. He is close to the president and knows how to twist the arms of the right people in the ANC. He clearly also possesses a keen intellect and an even more important ability to see things for what they really are. Which tells us Enoch is the exact package South Africa needs right now. It really showed today.
Never before in my recollection, has an ANC finance minister dared to drop the stated revenue number. Today, Godongwana did exactly that. Instead of fudging his way through another ‘fine balancing act’, he announced a R21bn cut to allocations made in February’s Budget. It was the rational thing to do – revenues will be over R50bn below what was expected six months back. But the ever-ballooning debt mountain proves how, not since Manuel, has an ANC finance minister paid that nicety much attention.
Godongwana told the lockup press conference he now calls himself “Mr Austerity”. When we bumped into each other on leaving, when he asked my thoughts, I teased him that anyone suggesting that kind of moniker clearly has a poor command of arithmetic.
Seen in its entirety without the cutesy marketing labels, the SA state is still having to meet bills that are 20% more than the tax that is flowing into the Treasury. But at least this year will mark the first “Primary Budget” surplus since the Manuel years. This means the first time in 15 years that the national books balance after we remove that 20c in every rand spent on interest. As anyone who stops paying their home loan knows, unpaid interest adds to the capital owed. But small steps. A Primary Surplus is a start, although hardly a cause for celebration. Or reason for being called “Mr Austerity”.
Much more important, though, is Godongwana’s realistic appraisal of where SA finds itself, and a determination to apply some hard lessons learnt from the continued bailouts of State Owned Enterprises. Eskom in particular – where February’s R254bn took the total taxpayer subsidy since the Manuel era to over R500bn.
It was notable, too, that at the lockup presser, Godongwana handed delivery of the opening statement to his youthful deputy David Masondo, whose contributions in previous events have been either spare or naive. This time Masondo was clearly a lot more comfortable and obviously properly informed. He spoke about the need to introduce competition for Eskom and Transnet, about the dire state of the nation’s financial position, about the need to stop increasing the state’s debt whose servicing (ie interest payments) is crowding out resources for more worthy causes like education, security and policing.
Whether Gondongwana is tee-ing up Masondo to succeed him is not even vaguely up for discussion right now. But should that time arrive, the younger man is clearly on the right page. Listening intently when his boss explained why Transnet’s proffered begging bowl will not be filled with: “First we negotiate a Road Map that will benefit the entire logistics sector, not just Transnet. Then we will decide what support to provide Transnet itself. Those discussions are a three-month process. Not a cent until then. In the meantime, Transnet has debt redemptions to meet……”
Godongwana explained this different, tougher, more mature approach to both Transnet and Eskom comes from learnt experience: “For the past 15 years, we concentrated on how to save Eskom when we should have been looking at a different question of how to ensure a consistent supply of electricity to the economy. In the past when Eskom came for money, it was a case of paying up or simply losing electricity. No more. Whatever public money the SOEs receive in future comes with strict conditions.”
Conditionality in our time, in our country? Who would have thought, that this country is often described as a nation of ‘no consequences’.
Cynics may counter that this is not the result of the ANC’s wishes, but because it has been forced. And, like the International Monetary Fund found with errant developing nation lenders, talking about conditionality and actually applying it is a journey in itself. Also, with interest sucking up 20c in every Rand of taxes – and a true budget deficit that should include this, we are a long way from balancing the books.
All true. But for one who has so often left the Parliamentary precinct shaking my head at the continued insanity of delusional idealists, this time there is a distinct feeling that the ANC is at the point Maggie Thatcher said all socialists reach – when they run out of other people’s money to spend.
Which also looks to me like a country growing up. A Young Democracy starting to realise that much as we all wish for a better, more equal world, achieving it requires more than wishes. It only comes through following a long, disciplined path. If I’m right, and we have indeed reached such a reality, this is indeed a cause for celebration. Because we can finally hope that the long decline is being arrested.
*Alec Hogg is the editor of BizNews
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