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How does Gigaba stop this endless cycle of expenditure, waste and corruption?


Judith February is executive officer: Freedom Under Law.

Malusi Gigaba has an uphill battle to convince us that he is a good leader who acts with integrity. Is he prepared to salvage his tattered reputation by looking beyond his compromised boss who is, one way or the other, on his political deathbed yet still desperately moving the chess pieces?

A lot can happen in a year. Ask Pravin Gordhan.

In 2016, Pravin Gordhan was Minister of Finance, attempting a delicate and complex economic balancing act while facing fraud charges brought against him by the Hawks. Then speculation was rife that Gordhan would not retain his position.

The rest is history.

President Jacob Zuma subsequently fired Gordhan in a devious midnight reshuffle. No reasons were provided, apart from an alleged threadbare “intelligence” report no doubt cooked up by one of Zuma’s dodgy backers somewhere.

While Gordhan is now a backbencher MP and doing the speaking circuit warning against the complete capture of the state, it is a travesty of South African political life that sees the lightweight Malusi Gigaba take the parliamentary podium on Wednesday to deliver his first Medium-Term Budget Policy Statement (MTBPS). To be sure, Wednesday will be as much about politics as economics.

In previous, more stable post-apartheid years, the MTBPS was largely an understated affair with a few tweaks made to the Budget. The entire process is aimed at ensuring maximum budget transparency (something for which South Africa has been renowned) and provides an overview of income and expenditure over the next three years. It was a process built on painstaking number-crunching within the National Treasury and led first by Trevor Manuel at Finance, and twice by Nhlanhla Nene and Gordhan. Poor old Des Van Rooyen never had the chance to deliver his own MTBPS, his tenure was so short-lived.

Gigaba is Zuma’s man. He has spent most of his time trying to fend off allegations that he has a close relationship with the Guptas and that he has facilitated state capture, specifically as Public Enterprises minister.

Leaving aside the near impossible economic conditions, Gigaba faces a crisis of confidence. After all, no compelling reasons were given as to why Gordhan and his deputy, Mcebisi Jonas, were axed. The incontrovertible conclusion to be drawn from Zuma’s unaccountable act was that Gordhan and Jonas stood as a bulwark to his State Capture project. Added to that, National Treasury and SARS have over the years held the line against excessive waste and corruption and have largely enjoyed the confidence of citizens and the broader business community. Theirs has been the mammoth task to provide accurate financial information and to make the trade-offs necessary to retain South Africa’s fiscal credibility. If we are to meet our increasing social needs, proper economic management of finite resources is crucial to our country’s long-term stability and prosperity.

The raw economic facts are that Gigaba has little to work with. Projected 2017 growth figures will have to be adjusted downwards from 1.3% to somewhere around the 0.5% or 0.6% as predicted by the IMF, World Bank and the South African Reserve Bank. The IMF cited “political uncertainty” as one of the main reasons for this. Low growth inevitably means revenue targets will fall short. Analysts predict this might be by as much as R45- to R50-billion for 2017/2018. Might taxes then have to increase in February 2018?

And then there is expenditure. Gordhan was committed to cutting wasteful expenditure but there has been slippage, most notably the R3-billion recent bailout of SAA. Add to that Eskom and other State-owned Enterprises that are seen as “cash cows” for those who would milk the state through corrupt tenders and the picture looks rather bleak. How does Gigaba stop this endless cycle of expenditure, waste and corruption? After all, his predecessor was fired precisely for trying to bring about some discipline to the recklessness within SoEs. Furthermore, it is abundantly obvious from the recent logic-defying Cabinet reshuffle that Zuma is now relying on his ally, the inept David Mahlobo, to push through the nuclear deal. How will Gigaba deal with this pressure, one wonders, and the myriad other social spending pressures he will inevitably have to deal with such as #FeesMustFall and other developmental needs?

In 2016 Gordhan was clear as to where he stood on the proposed nuclear deal. It is worth remembering Gordhan’s words during the 2016 MTBPS when he said, “Further expansion of electricity generation capacity will be guided by the Integrated Resource Plan and the Integrated Energy Plan.” Eskom would take the lead in the nuclear power initiative but work closely with National Treasury to ensure the programme was in the best interests of the country. Gordhan then also issued a timely reminder that procurement should happen in terms of s217 of the Constitution and be “transparent”. He went on to add, “Our approach to energy security and to meeting climate change commitments also includes a substantial renewable energy programme. Contrary to the views of some, these are sound and sensible long-term investments.”

Gordhan warned ominously: “Lions that fail to work as a team will fail to bring down even a limping buffalo.”

The Zuma years have been extraordinary, not only for governance failures and corruption but for the staggering mismanagement of the economy. The state has continuously and unwisely propped up failing SoEs and the debt to GDP ratio has ballooned from around 27% in 2008 to a predicted 53-55% in 2017.

From Gigaba and his deputy Sfiso Buthelezi, himself also compromised, we have heard that South Africa may well consider approaching the IMF with a begging bowl to assist us in meeting our financial obligations. The duplicity of this is astounding. The same Cabinet members railing against “white monopoly capital” are comfortable asking for loans from multinational financial institutions? The irony is not lost on us. Yet, how much lower could the Zuma government take us? We would in essence be borrowing to fund endless bailouts of SoEs choking on their own corruption and waste. It’s worth remembering that borrowing costs and creates a vicious cycle of dependency. And ultimately the average citizen will have to pay for such folly. So this is what “Radical Economic Transformation” looks like, it would seem.

Any finance minister needs credibility, a strong revenue collection service and an equally credible National Treasury. As part of his relentless assault on our democratic institutions, Zuma has made serious attempts to emasculate both SARS and National Treasury. It cannot be said that SARS Commissioner Tom Moyane has not inserted himself into the previous conspiracy against Gordhan and himself has questionable links to the Guptas.

When students marched on Parliament ahead of the MTBPS last year, Gordhan did what few of his Cabinet colleagues could do. The President certainly could not. It is worth recounting that sweltering day on 26 October 2016 when students marched on Parliament demanding that #FeesMustFall.

As the crowd of students swelled outside, Gordhan, flanked by his deputy, Mcebisi Jonas, and other Treasury officials, walked outside to address protesters personally and accept their memorandum. It was a politically astute move by someone principled enough to care and understand the gravity of that political moment. In one simple move Gordhan showed up the political bankruptcy of President Zuma. For Gordhan’s was an almost presidential act. He went to listen, though hearing and listening would need to happen against the backdrop of limited resources and competing priorities.

It’s what leadership and integrity look like. Gigaba has an uphill battle to convince us that he has either. Is he prepared to salvage his tattered reputation by looking beyond his compromised boss who is, one way or the other, on his political deathbed yet still desperately moving the chess pieces?

He will learn the hard way that being finance minister is about more than the Ermenegildo Zegna suit and a 14-point plan. It’s also about competence and credibility.

Gordhan’s will be a hard, if impossible, act for Gigaba to follow – and judgement will doubtless be unforgiving. DM


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