ANALYSIS: Gigaba disappointingly low on real and specific solutions

2017-10-26 06:30 - Jaco Leuvennink
Finance Minister Malusi Gigaba. (Photo: Gallo Imag
Finance Minister Malusi Gigaba. (Photo: Gallo Images) ~ Gallo Images

Cape Town - Finance Minister Malusi Gigaba delivered a justifiably tough maiden budget message to South Africans. It was all about almost stagnating economic growth and mounting risks to fiscal health.

But he was disappointingly low on real and specific solutions or big announcements.

It was a gloomy picture but as Gigaba himself said, “sugarcoating” will not bring us anywhere. It is also not as if you can hide the figures. The low growth groove, skyrocketing shortfalls and growing debt levels and debtservice costs speak for themselves.

Gigaba was candid in admitting that economic growth is the real problem, and getting growth going will be about the only thing that can boost state income and save the country from its fiscal shortfalls and looming downgrades by rating agencies.

Even raising existing taxes or announcing new ones as a means to balance the books was downplayed by Gigaba.

At the traditional press conference before his speech – this time delayed for quite some time while he briefed his Cabinet colleagues – Gigaba time and again repeated that he cannot yet say what will be done in February on the tax side, because "it is a process" and he just doesn't know yet.

Instead, he stressed the selling of state assets, or part of them, to boost revenue, fuelling speculation that the government is again looking at privatisation. Gigaba in fact said that bringing in “private capital and expertise” to some imploding state-owned entities (SOEs) will bring relief to the government's guarantee profile, which needs to be lightened.

Gigaba's cautious and reluctant lack of willingness to tackle contentious issues with practical solutions is highly disappointing. Perhaps it is just a case of political shrewdness and keeping all his options open until after the coming December election showdown in the ANC. He is, after all, a smooth-talking professional politician who has admitted to having presidential ambitions.

Gigaba knows how to say the right things, referring the hard decisions to "joint decision-making” in some presidential or interministerial committee. One can almost describe his speech as heavy on poetry (from Ben Okri and Amartya Sen - old favourites from the Trevor Manuel era) and slogans, but low on substance.

No wonder a journalist asked him during the press conference what the tough decisions are that he mentioned "had to be made”. In his answer, he mainly mentioned matters like changing the boards of SOEs.

Tired, meaningless slogans

When he tried to motivate the nation to a constructive, energetic joint effort, the old meaningless slogans appeared again.

Apart from the old favourite “radical economic transformation”, look at the following extract from his speech: “We need to engineer a new growth and transformation model. A model that is anchored on a common vision for the economy and its society – that embraces sharing of economic resources provided by our land."

Or: “We need a transformation model that goes beyond mere 'tick-box' compliance towards structural change of patterns of ownership, control, management and production."

And then excusing bad policies and lack of cooperation and trust on the absence of these conditions by saying: “These conditions for growth and transformation will lay a better foundation for better policy designs, discourse and collaboration. ”

Surely making money, progressing and living within your means are not that complicated, even in a country as diverse in means, cultures, opinions, background and whatever, as ours. Just listen to well-intentioned advice and warnings from economists and business experts, Minister Gigaba - even if they differ from you politically or otherwise.

South Africans will have to wait for the main national budget in February for more clarity. Whether Minister Gigaba is the man to provide it, remains to be seen.

* Visit our Mini Budget Special Issue for all the news, views and analysis.

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