South Africa

Parliament: Gigaba endeavours to put his stamp on his finance ministry

By Marianne Merten 9 May 2017

Finance Minister Malusi Gigaba displayed his political suss and salesmanship at his first appearance before Parliament’s finance committee on Tuesday. He talked radical economic transformation – “Even the ruling party has not yet resolved what it means” – inclusive growth, fiscal prudence, “driving the growth story” and National Treasury playing its part in restructuring the economy. “Whatever the name you call it – accelerated growth, radical economic transformation or inclusive growth – we want to address the plight of the people,” Gigaba told MPs. By MARIANNE MERTEN.

It was a political address weaving together returning South Africa to investment grade following the recent downgrades to junk, boosting economic growth for job creation and redressing inequality in line with the National Development Plan (NDP). Thrown into Finance Minister Malusi Gigaba’s first appearance before Parliament’s finance committee on Tuesday was a dollop of relief that France did not vote for a right-wing National Front president as this would have impacted negatively on Africa.

It also was an astute, and elegantly articulated, picking of threads from across the political and international developments to interlace these into a narrative for South Africa. And right now much of it is about radical economic transformation.

It’s an issue that has confronted Gigaba since his appointment to head the finance portfolio in President Jacob Zuma’s controversial midnight Cabinet reshuffle, amid questions from many circles as to whether his appointment is meant to pave the way to ease the tightly held national purse strings, be it for a nuclear build programme or tender finance for a politically connected few.

After four “interesting” weeks in the job, Gigaba has the matter down pat: government would maintain fiscal discipline and prudence, would not spend what it has not got, but would focus on collecting more revenue, increasing economic growth and therefore job creation. It was unsustainable that 10% owned 42% of South Africa’s wealth, and surely private business realised transformation was not just political.

That (inequality) should worry us. That is unsustainable. Radical economic transformation is not the headache… The biggest headache is the unsustainable inequality.”

Invoking former president Thabo Mbeki’s “two nations” discourse – dating back to 1998, reflecting persistent post-apartheid racial fault lines, it describes South Africa as one part relatively prosperous, the other poverty-struck – Gigaba said there’s nothing to be feared from the debate about radical economic transformation to enable all South Africans to be entrepreneurs, participate in the economy and own economic assets.

It’s a discussion. We might have views [that are] extreme left but, ultimately, how do you get the majority of South Africa to be employed, to participate in the economy to own assets… The discussion is not closed. We don’t bring an artificial means to close it,” said Gigaba. “The debate around what is meant by radical economic transformation is ongoing. That debate will be (finalised) in a manner that takes all South Africans’ interests at [to] heart.”

From where I sit, there’s no contradiction,” Gigaba told MPs, adding that discussions would be finalised at the July ANC policy conference and at the party’s national conference in December.

Discussions may well be appropriate in an ANC branch, or at a conference. But the mix of adopted economic programmes, be it the New Growth Path, the Industrial Policy Action Plan (Ipap) or NDP, alongside the radical economic transformation rhetoric amounts to a public contestation of economic orthodoxy from circles within the government meant to implement official policy. This unsettles investors, ratings agencies and others. It’s politely referred to as “policy uncertainty”, a longstanding hallmark of commentary on South Africa.

It is in this context that comments by Gigaba’s adviser, Professor Chris Malikane, including “taking up arms” for radical economic transformation, have raised eyebrows. On Thursday DA MP David Maynier asked about “mixed messages” from the finance ministry, but Gigaba stood by his adviser, an academic. “The opinions of the adviser are that of the adviser. The minister is not schizophrenic,” he said, adding later: “I am the minister. Not my adviser. Not the director-general… It is my views, policies, that prevail.”

According to Gigaba, National Treasury needed to be “strong” if it was to fulfil its socio-economic mandate, and do its bit to restructure the economy. And so the finance minister returned to quote at length from his first public statement of April’s Fools Day: “For too long, there has been a narrative or perception around Treasury that it belongs primarily and exclusively to ‘orthodox’ economists, big business, powerful interests and international investors. With respect, this is a people’s government.”

As on April 1, on Tuesday Gigaba said government’s multibillion-rand procurement budget would be used to encourage economic transformation as “one of the measures to address the plight of South Africans to participate in the economy…” But, at least for now, he told MPs: “I agree fully with the view we need to balance what we like to achieve with the fiscus.”

His comments came as the watchdog on public spending, the Standing Committee on Public Accounts (Scopa), was briefed on persistent conflicts of interest across national departments by the Office of the Auditor-General. The committee decided to call repeatedly transgressing departments before it, including SAPS, Justice, Correctional Services, and the Department of Trade and Industry, Public Works and Public Enterprises.

While since August 1, 2016 the new public service and administration regulations ban civil servants from doing business with the state, implementation of this alongside disclosures from state employees’ close relatives doing business with government are expected to continue to be monitored.

At the finance committee, it was left to outgoing Finance Director-General Lungisa Fuzile at his last parliamentary briefing before leaving National Treasury on May 15 to provide the technical and policy details. Yes, government guarantees to state-owned entities might be a concern for some. But of the total R400-billion in guarantees, Eskom was allocated the biggest share, or R350-billion. To date only a little more than a third has been drawn as Eskom’s new coal power station build is running behind schedule.

There would be no policy change, Fuzile said, as MPs really did not have that many questions on the National Treasury’s strategic plan.

But the political change at the helm has already had an impact, not only with the radical economic transformation rhetoric and raised eyebrows over an adviser’s commentary, but also closer to home.

The minister appeared annoyed when EFF Chief Whip Floyd Shivambu brought up Norma Gigaba’s recent comments on her role at Home Affairs in a recent interview with eNCA. “I was also working at Home Affairs,” said Norma Gigaba in the television interview posted on YouTube, citing her information technology work experience. “We did the transformation together… I wanted to help him. There were long queues and I know IT and I know most of the time their systems are slow.”

The minister told Shivambu it was a cheap shot to involve one’s family in politicking when it should be politicians engaging politicians. No company where his wife was involved had received a tender from Home Affairs. “People bring issues to her, she brings issues to me. She’s also a citizen,” Gigabla said. “She does not see to influence my work. My work is my work.”

But, perhaps inadvertently, Gigaba’s comments highlight the role of political connectivity in government. Against this stands the frustration about government service (non)delivery by those without access to the personal contact details of the political elite.

Like the raised eyebrows over his adviser’s comments, the saga over his wife’s public statements is a controversy Gigaba does not need, given the questions raised about radical economic transformation rhetoric, investor uncertainty, junk status downgrades and a domestic economy expected to grow somewhere around the one percentage point.

Gigaba will have to put on the best of his political salesmanship. DM

Photo: Home Affairs Minister Malusi Gigaba hands over birth certificates to newly born children at Baragwanath Hospital in Soweto during the Early Birth Registration campaign in partnership with Procter and Gamble. 02/12/2016 Kopano Tlape GCIS

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