Finance Minister juggles both the books and the politics
- David Everatt
South Africa’s Finance Minister Pravin Gordhan delivered his medium-term budget with a lot more than balancing the books on his mind.
The Conversation Africa’s Charles Leonard asked David Everatt how well the beleaguered minister scored on managing the political sums.
Pravin Gordhan went to talk to the protesting #FeesMustFall students outside Parliament before delivering his medium-term budget speech. Was it clever politics or political grandstanding?
Both. Plus one thing otherwise completely lacking – leadership. He also called on students to stop burning and return to class and exams - another missing message. Leadership and courage – going out to meet the students, face to face, which has been one of their key demands. One wonders: why is he the only minister willing to do so?
Clever politics. Sure, he’s showing that he has broad-based support, which I suspect will have grown as a result of meeting the students, and basically saying to others, “come get me if you dare”. That message of course goes to the National Director of Public Prosecutions, Shaun Abrahams and the police unit, the Hawks, who have laid rather spurious charges of fraud and theft against him, as well as President Jacob Zuma and his political allies in the African National Congress. They see Gordhan as an obstacle to their alleged attempts at state capture.
What does the medium-term budget tell you about South Africa’s political landscape?
The fact that Gordhan kept mentioning the risk environment, and kept repeating the dangers posed by state-owned enterprises, speaks volumes about the crony capitalist environment in which he is operating, and by which he is constrained.
In his speech Gordhan said: “What we seek - and more - can be done. If we collectively make the right choices; support confidence and investment in our economy; create a predictable and stable policy and political environment; and put the national interest first. It’s up to us.” Is this a plea for his numerous enemies to back off?
Quite clearly, at a political level, he was saying pretty much that. But I think at base he is caught between a desire to grow the economy and meet his government’s National Development Plan’s goals, and those of his cabinet colleagues who seem to ignore the plan and have little interest in economic growth.
What is missing is the need for the private sector to come to the table without preconditions so that the R500 billion - R600 billion “cash pile” they are said to be holding onto can be mobilised to stimulate domestic investment.
Second, while it is important to be sensitive to the ratings agencies criticisms, South Africans cannot allow them and the country’s old capital to determine and drive economic policy. It’s time for Gordhan and the government in general to lead, rather than follow, on economic policy.
Gordhan has to balance between development and growth – did he pull it off?
He did not. We have neither growth nor development. The social development indicators, for example for health and education, are appalling especially in terms of access and quality for the poor. This is particularly true for people who live outside the cities. There is no clear policy to address social and economic inequality – or the implications of inequality for growth and development.
The minister allocated a massive R17.6 billion more than projected for post-school education and training over three years. This is in addition to the R16 billion added in February. The money will be used to subsidise the fee increases for poor households. Do you think he would have pleased the students?
No, because the demand has escalated to free post-school education for all. But there is a need to be sensitive to the broader ramifications of this increase. South Africa’s economy is not growing, and is not expected to grow in the short to medium terms. On top of this there are no tax increases (yet…). Increased funding for post-school education therefore means less for others – such as schooling, health, housing – further contributing to inequalities.
Gordhan has indicated a cut in spending on civil servants. Are we heading for a clash with the powerful public sector unions come wage negotiations?
I think he was talking about a freeze on posts – already in place in many departments – and not replacing retirees. The real challenge will be meeting the goals of the National Development Plan with a depleted civil service, and one disheartened by our current, unpleasant politics.