Mcebisi Jonas unplugged – Prescribed assets, Eskom, Tito’s blueprint and more…

It is not every day that a former Deputy Finance Minister in the ANC government publicly agrees with former DA leader Helen Zille. That is exactly what Mcebisi Jonas did when she said little would come right until the culture of corruption was defeated in government and its associated institutions. He argued that he did believe that the South African state, in partnership with the private sector, could take measures to turbo-charge the country out of its present troubles. In a conservation with Professor Mark Swilling of Stellenbosch University at the Cape Town Press Club, he said something had to be done fast..By Donwald Pressly*.The first matter which immediately had to be settled was resolving the Eskom trouble. "My view is a very simple view. We … don't have (the luxury of) time. Government should come with (a plan) that transitions us quickly out of the mess we are in… both in terms of growth numbers and corruption." He identified Eskom – a power-supply monopoly – as the biggest problem facing South Africa at present. Owing to uncertainty, corruption and mismanagement, Eskom was at the brink "and with it our economy". Eskom's debt was almost R500bn. A further R160bn was needed to complete capital projects. One could not wait "for a bigger plan that you are going to draft." The first step in dealing with this was issuing a set of robust proposals "to get out of the mess as quickly as we can"..___STEADY_PAYWALL___.In his book – After Dawn, Hope After State Capture – Jonas says state owned enterprises "must become smart growth enablers". Eskom should be broken up into three entities – generation, transmission and distribution – while the renewable energy aspect should be expanded. State owned enterprises should generate revenue "rather than draining resources from the budget". Their executives should be depoliticised. A central oversight unit over SOEs should be set up..SA needed to find a couple of mechanisms to fund state driven projects including establishing an Infrastructure Fund. However, he spoke out against using prescribed assets from pension funds to plug the debt of state owned enterprises, including Eskom. "As soon as you start moving in the direction of prescribed assets… you are going to slide into another debate. Once you start threatening pensions… it raises all sorts of concerns." He said there were countries which had to fund state pensions from their budgets and "I don't think we want to get into that space"..Zille, a member of the audience, argued that when talking about investment to achieve economic growth, one could not marginalise "the critical issue of state corruption". One could not wish its influence away. There was no such thing as a "capable" but corrupt state. One could not under-estimate the blockages caused by corruption of the state sector. Until one got the culture right which recognised meritocracy, lack of corruption and accountability in the public service, one was dead in the water. This also meant that the notion that "access to a politician, is access to resources"..The audience clapped for Zille. Jonas declared that she had made "fair comments". The point he was making in his book was that "because of state capture and corruption… state management had now gone to "the (other) extreme". Now under the watch of the Auditor General, the public service was avoiding taking decisions. There was the distinct danger that because there had been so much corruption, there was a move in government to "over-control". So he concurred, he said, with the comments made by Zille..Mark Swilling, distinguished professor of sustainable development at Stellenbosch University, said the mistake being made under current circumstances was "tightening up controls" in government which incentivised risk reduction "rather than innovation". He and Jonas – who famously rejected a R600m bribe from the Guptas to take the job of Finance Minister – believed an Infrastructure Fund set up in partnership between government and the private sector was a way to turbo-charge the economy out of its current troubled waters..Asked what he made of Tito Mboweni's economic plan, Jonas – who will take up the post of chairman of MTN later this year – said there was the danger that such plans led to a whole range of processes but the substance of the plan was not considered. "Every time there is a plan there are a range of discussions about processes. You don't deal with the content." Some of the points in the plan were valid although he believed there should have been a greater emphasis on the macro-economic side of the argument..Jonas repeated a number of times that he did not believe South Africa was actually short of money – it had a fiscus of about R1.5trn. But he believed that 60% of state spending – at least – was misdirected. He insisted that the setting up of an Infrastructure Fund was the way to go. This could be a new institution where corruption was rooted out, an institution which would build the trust of the SA community. Swilling said he agreed with Jonas that there was not a problem of a shortage of funds. He argued there was a build-up of surplus cash among DFIs (development finance institutions). Swilling argued: "The(ir) credit committees are moaning (instead) that not enough fundable proposals are being presented. There is a build-up of surplus cash that is not connecting with viable pipelines of bankable projects. What does that tell you?".The use of prescribed assets by state institutions was to raise cash – something that was not needed in SA, he said. What was needed, Jonas and Swilling argued, was for the setting up of a new accountable, uncorrupted state institution which could leverage private sector funds – which were available for the right projects – to carry out large scale infrastructure projects..Significantly Jonas did not refer directly to President Cyril Ramaphosa in his conversation with Swlling. He did say that there was a dearth of leadership across the political board – in all South African political parties. He argued in his book that civil society needed to build "new obsessions". These included fighting for inclusive growth where jobs were put at the centre of economic policy. This obsession should tackle "constraints on competitiveness and investment". Another obsession was the need for quality public education and training. A key element in achieving the latter was relaxing visa requirements for the importation of scarce "and critical skills". Jonas argues that there also needed to be an obsession with "stronger, more capable and less corrupt state". In the book, he seemed to differ with Zille who argued that there could not be "capable" and "corrupt" state in the same sentence. He acknowledged, nevertheless, that there was a danger that "a muddling through" policy would continue and if "reformers" in the ANC continued to lose the battle against "those who consolidated their power under the old state-capture order". If SA did not embrace the new obsessions, there was a danger of the continuation of the trends of the last decade: rent-seeking, corruption, declining state capacity and reduced investor confidence and fixed investment, economic stagnation, growing unemployment and inequality and increased social tensions..Donwald Pressly is a veteran political and financial journalist. He is acting chairperson of the Cape Town Press Club.

Mcebisi Jonas unplugged – Prescribed assets, Eskom, Tito’s blueprint and more…

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