Almost exactly a year ago a fresh-faced Tito Mboweni, then
the newly appointed finance minister, delivered his first Medium-Term Budget Policy
He launched into his new role with gusto. At the embargoed
press conference two hours before he took to the podium in the National
Assembly, he treated journalists to some economic straight-talking they hadn’t
seen or heard in ages.
He spoke of government having reached a crucial turning
point and of difficult decisions that can’t be put off any longer. He crucified
Eskom for being the single biggest danger to the fiscus and national economic
stability and he openly and honestly questioned the value of a national
airline. The impossibly high public sector wage bill was unsustainable, he said,
and extolled the value of private equity partners in failing state-owned
Mboweni unrestrained was – and remains – quite a sight.
The consensus in October 2018 was that he was exactly the
type of minister President Cyril Ramaphosa needed and that, in tandem with
Pravin Gordhan at the department of public enterprises, they might just be the
duo that could right the ship of state.
Mboweni, after all, doesn’t have to worry about a political
constituency (his ego is a big enough constituency and needs constant
attention), he doesn’t need the money and he doesn’t want to be president. He
can actually do the dirty and get the job done. He is unencumbered by the
constraints of ANC palace politics and the stifling of lateral thought induced
by alliance contestation.
The theory went that with Ramaphosa’s political protection
and support, Mboweni and Gordhan can break some bones and forge on into a brave
new post state capture world, clearing the decks and making sober economic
This theme – and the same determined rhetoric by Mboweni –
continued in February when he tabled the budget proper: Eskom is a danger, the
public sector wage bill is too high, and we can’t continue down the same road
On Wednesday South Africans got more of the same, but in the
year that’s elapsed since Mboweni’s maiden appearance tabling a policy document
in Parliament, not a lot has changed.
His speech in the National Assembly, his press conference
and National Treasury’s (excellent) budget policy book tell the exact same
story he told South Africa in February and last October.
Treasury’s diagnosis of the country’s structural economic
dilemmas is spot on.
Eskom remains the economy’s biggest threat, the public
sector wage bill is astronomical (for every R1 000 spent by government,
R340 goes to paying civil servants), GDP growth is tepid and deteriorating, the
debt-to-GDP ratio is ballooning, the budget deficit is increasing and
expenditure on debt repayments is the single fastest growing line item in the
But Mboweni and Treasury, and presumably Ramaphosa, also
knew this a year ago. And both Mboweni and Treasury admit that, as far as Eskom
is concerned, progress in its unbundling “has been limited”. And
still there’s no clear plan on restructuring its crippling debt.
The budget policy book is laced with phrases and language
which seems very close to admitting defeat in government’s efforts to save the
country from a very precarious position: “We have not moved as rapidly … urgent
action needed … (progress) mostly unrealised … significant decline … modest
employment … gradual recovery … risk skewed to the downside … “
South Africa was in a dangerous place in February, and
things have deteriorated considerably.
Both Mboweni and the group of excellent bureaucrats at 40
Church Square in Pretoria – as well as the SA Reserve Bank and SA Revenue
Service – know exactly what needs to be done.
A profligate state needs to be reined in urgently and non-core
public assets must be sold off. The private sector also needs to be invited to
invest in and own public goods and services, such as harbours and energy
But in the year that’s passed since his first Medium-Term Budget
Policy Statement Mboweni’s worst fears before he came into the job – red tape
and political quicksand – have come to pass.
Almost every single one of the most urgent structural
reforms are absolute anathema to ANC policy.
The culling of an ineffective public sector, selling of
state assets and the introduction of (limited) private equity haven’t managed
to gain traction in the new dawn. Government and ANC gridlock has meant we’ve
sunk even further into the morass of inefficiency. Nothing is getting done,
political decisions take precedent over sound economic policy and fears over
infighting restrains urgency.
“Options to stabilise the fiscus are limited … revenue
options are constrained,” Treasury declares, and adds that recovery is
possible if reforms are “enacted with speed and determination”.
When, during the press conference, Mboweni was asked whether
the fact that his message hasn’t changed in 12 months means he has admitted
defeat, he replied: “We don’t admit defeat, Mbowenis don’t easily admit
defeat … we trudge on, we keep walking on.”
South Africa has been trudging along for far too long, Sir.