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JOHANNESBURG — Finance Minister Malusi Gigaba is regularly criticised for focusing more on his fashion sense than the economy of the country. In this piece, Errol Horwitz has a simple message for Gigaba. That is, use your opportunity to improve the country or go down in history an part of the infamous clique of Zuptoids. It’s another sharp message for Gigaba from Horwitz – Gareth van Zyl
By Errol Horwitz*
South Africa’s economic rollercoaster ride continues unabated. On November 24, 2017, credit agencies Moody’s and S&P will likely further downgrade the country’s credit rating.
Gigaba is in New York meeting with investors who buy South Africa’s debt. He has been tasked with a mission impossible to persuade investors all is well in the kingdom of kleptocracy. With a further downgrade looming, Gigaba will confront skeptical investors that even the first spin doctor, the serpent in the Bible, would be hard pressed in convincing them that, despite South Africa’s deteriorating fiscal position, there is little risk in the government’s ability to repay its external debt.
Adding to the doom and gloom of the economy is Gigaba’s recent disclosure of a shortfall this year of over R50 billion in tax collection. By fiscal year-end there is every expectation the number will be billions more. To make fiscal woes even more difficult for Gigaba to explain away is the recent Reserve Bank’s Financial Stability report signaling that the financial decay of parastatals could lead to them defaulting on debt obligations. If so, it would cause a chain reaction analogous to a falling row of dominoes with disastrous consequences to an already ailing economy. Adding to the mix is deep investor concern of the pervasiveness of corruption by those in power who brazenly exploit state resources and steal. All told the mother of all fiscal witches’ brew diabolical concocted that would even keep Nicolás Maduro of Venezuela up at night.
The task of stirring South Africa’s fiscal witches’ brew is left to the elegantly attired man himself, Malusi Gigaba, as finance minister. If it was simply a question of “clothes maketh the man” Gigaba wins hands down as the beau of the ANC government – a fashionista sporting ultimate de rigeur to winning over the hearts and minds of moneyed investors. If it was that simple even the superlatively inconsequential Des van Rooyen could win-over the same investors provided Gigaba was willing to reveal to Van Rooyen his closely held secret – details of his designer-suit master tailor.
When Zuma offered Gigaba the finance portfolio he could not have been happier. It was a giant step forward for him, and one that in principle bode well in fulfilling his ambition to ultimate leadership of the ANC. Little did Gigaba know that even the best laid plans “often go awry”. His decision on taking the job was driven by blinding ambition, power and prestige. It could not have been otherwise, as he was intellectually unequipped and unqualified to do the job. History will not be kind to Gigaba whose deep flaws have contributed to South Africa’s economic and fiscal decay.
Whatever substantive factors could be dredged-up to justify Gigaba’s position as finance minister they were overshadowed by his previous ministerial portfolios. There is no question that Gigaba opened the door to state capture when as “not-ready for prime time” minister of public enterprises he fired boards of SOE’s and replaced them with Gupta proxies. He then went on to become minister of home alone affairs, and offered the hand of special treatment to the Guptas by approving work permits for Gupta foreign nationals, and Gupta citizenship applications, the latter cloaked in controversy.
No matter how much Gigaba professes otherwise, it is time for him to wake up and smell the Gupta stench. Foreign investors smell it, and will be reluctant to buying South African debt at a fair rate until Gigaba comes clean. He obviously has not done so, because he was forced to pay 75 basis points higher than two weeks ago. The higher rate adds a furthers R25 million South Africa’s payment on debt, coupled to bond obligations is now paying R350 million more in interest payments. Why is it so, because investors hold all the cards. It’s either their way or Gigaba’s nothing-to-show-junket enjoying class treatment on his homeward bound flight.
One thing is sure, however, Gigaba will not pass up the opportunity, while in New York, to spend thousands of dollars on a new designer suit. If only Gigaba would realize that fancy designer suits are no substitute for the skills Nene and Gordhan would have brought to the negotiating table on selling South Africa’s debt at a reasonable and affordable rate. As far as Gigaba was concerned he could sit quietly next to Nene and Gordhan learning from the old masters engaging in the art of negotiation. Although it would be unorthodox Gigaba could offer his obscenely expensive designer-suit to start the auction, and in doing so, drop the interest rate of South Africa’s debt by hopefully a point. At least it could be argued there was some justification in bringing Gigaba along to New York, other than simply for the ride.
- Errol Horwitz was a political activist in the 60’s, and returned to South Africa a few years ago, after residing abroad for more than three decades.
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