JOHANNESBURG — South Africa is still shakingly reemerging from the Zupta years. But if recent developments are to go by, the country’s future prospects are starting to improve somewhat. Today, Stats SA revealed that the economy beat expectations in the fourth quarter of 2017, recording faster growth than anticipated of 3.1%. It sets up South Africa nicely for 2018, especially when considering the return of the humble and hugely competent Nhlanhla Nene as Finance Minister. At a briefing yesterday, he reportedly ditched the excesses that have become the norm with ministers in South Africa while addressing a Fedusa gathering. (The first piece below is republished with permission from Daily Maverick.) – Gareth van Zyl
From Daily Maverick
Newly reappointed Finance Minister Nhlanhla Nene on Monday made his first public appearance since being persuaded by President Cyril Ramaphosa to resume his duties at the Treasury, arriving at the Federation of Unions of South Africa (Fedusa) conference in Pretoria without a blue light in sight.
Nene has the unenviable task of overseeing the recovery of South Africa’s deteriorating economy in a tough economic environment.
Taking to the podium, Nene said he felt like a man who had been kicked out by his wife, only to return home at a later point with his kids asking him where he’d been.
“So I told them that the long and short of it was that I’ve been on sabbatical. We are at a point where we need to look back and reflect on a number of things that have happened. We’ve seen the country going in the direction that some of us began to feel that we are not serving the interests of the generations that will come after us,” said Nene.
The minister went on to articulate how business and consumers had lost confidence in the ability of the economy in recent years. However, according to Nene, there is a renewed sense of optimism coming from the expectation that the new president and his team will tackle three issues linked to the economy. These were: finalising many outstanding policy reforms such as the Mining Charter; acting decisively against corruption in the public and private sectors, and swiftly resolving governance and operational failures at SoEs, in particular Eskom.
Finance Minister Nhlanhla Nene at #FEDUSA conference: We should not be borrowing for consumption. We need to borrow for investment. We need to reduce our borrowing to sustainable levels. We need to be borrowing for the right reasons.
— National Treasury (@TreasuryRSA) March 5, 2018
Once done with his speech, Nene offered to answer questions from the room of trade unionists. He was quizzed on a variety of issues ranging from youth unemployment to SARS’ tax collection shortfall and the status of the nuclear deal.
On SARS Nene said that tax morality needs to be restored but that this can only be done when taxpayers can see value for the money that they are paying to government.
“We’ve seen how tax morality has deteriorated. When that happens it is a sign of loss of confidence in the state when people begin to say, ‘Why must we pay taxes when our taxes are spent in the reckless manner we have seen in the past?’.”
The status of the nuclear deal was also raised by a delegate and Nene did not give a direct answer as to whether the deal would go ahead or not.
“Government has indicated that nuclear remains in the plans as per the energy mix. But as we speak the country was clear that we can only implement this programme on a pace and scale that we can afford,” said Nene.
I like Finance Minister Nhlanhla Nene. He came to a conference without flashing lights, or a multiplicity of high-end German cars in convoy and instead comes in a fairly decent Swedish car. He gives me enormous confidence that South Africa's finance is now in safe hands.
— Rod MacPhail (@rodcampsbay) March 6, 2018
He went on the state that South Africa currently has an electricity surplus and government is also looking towards programmes concerning renewable energy.
According to Nene the current government needed to clamp down hard on corruption in order to inspire confidence in the country’s people and the global market economy.
“You must have seen how some of the law enforcement agencies are actually beginning to find their muscle in order to do what they’re supposed to do which in the past we haven’t seen. We’re getting people charged, we are getting investigations and there are no holy cows when it comes to that.”
Speaking to journalists in a briefing after his speech, Nene joked that he always said that if someone had to call him back to government he would kill that person.
“I tried to fight,” Nene said, with regards to Ramaphosa calling him back to serve in government.
“I tried to resist but I could not because when national duty calls, everything else falls away.” DM
South Africa to raise GDP growth forecasts in October, Nene says
(Bloomberg) — South Africa’s National Treasury will probably raise projections for economic growth this year in its October mid-term budget as the country overcomes governance and financial problems that have lowered confidence, Finance Minister Nhlanhla Nene said.
Newly appointed president Cyril Ramaphosa reappointed Nene to the role last month. When former leader Jacob Zuma fired him and replaced him with a little-known lawmaker in 2015, the move triggered a sell-off in the rand and bonds. Policy uncertainty and state graft concerns saw Fitch Ratings Ltd. and S&P Global Ratings lowered their assessments of the nation’s debt to junk. The economy slumped into a recession in 2017 and has mounted a fragile recovery since.
South Africa’s economy is forecast to expand 1.5 percent this year, compared with the previous projection of 1.1 percent and an estimated 1 percent in 2017, National Treasury said in its 2018 budget review on Feb. 21. Growth will probably accelerate to 2.1 percent in 2020 as measures aimed at creating policy certainty and attracting investment pay off, it said.
“Prospects look good for an improvement in growth forecasts,” Nene told reporters east of Pretoria Monday.
The government will from April 1 raise value-added tax for the first time since 1993 as part of measures to stabilize debt and prevent a third junk credit rating. Higher taxes will raise an additional 36 billion rand ($3 billion) in the year through March 2019 and be coupled with budget cuts totaling 85 billion rand over three years.
The funds will go toward plugging a revenue shortfall estimated at 48.2 billion rand for this year. Concerns about corruption and poor governance, increased tax avoidance and administrative problems at the nation’s tax-collection agency have contributed to revenue shortfalls.
The nation has to demonstrate efficiency in spending to raise tax morality, Nene said. If “resources are spent in a responsible manner, they’re able to make a huge difference in our people’s lives,” he said.