ANALYSIS: Mboweni's back - and this is what he's bringing | Fin24
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ANALYSIS: Mboweni's back - and this is what he's bringing

Oct 09 2018 20:59
Ferial Haffajee, Fin24

The 59-year-old Tito Mboweni, an avid avocado farmer and ardent proponent of a wealth tax, took up the baton of Finance Minister from Nhlanhla Nene, who fell on his sword on Tuesday afternoon and resigned.

The appointment was, arguably, an ace move by President Cyril Ramaphosa, who went with a tried and trusted appointment – someone who will immediately fit into the vital role.

Mboweni knows the markets well – in fact, he is a special advisor to Goldman Sachs, an investment bank synonymous with the idea of capital markets. He will be able to carry off this month’s medium-term budget policy statement with aplomb.

Mboweni knows Cabinet well, as he was democratic South Africa’s first labour minister. From there, he went on to succeed Chris Stals as governor of the SA Reserve Bank in 1999, when he was 40 years old.

He served in that role for 10 years.

Two essential systems

Mboweni is, therefore, a co-architect of two essential South African systems: the labour market and monetary policy systems.

Given his firm grasp of economics, this alone eminently qualifies him for the role as 8th finance minister of democratic South Africa*. The new minister has a Masters in Development Economics, a field that South Africa, with its massive unemployment and poverty levels, can benefit from. And he has been out of government and in the private sector long enough to understand intimately the issues the private sector faces with the state’s macro and micro-economic management.

The biggest economic conundrum of the moment is land, or, more specifically, coming legislation to expropriate land without compensation. Here, Mboweni will be helpful. Like Nene before him, Mboweni is an avid farmer. He farms avocadoes in Limpopo – the province of his birth – in Tzaneen, which is rapidly becoming a hotspot in the global production chain of that super-food.

As one of the ANC’s first post-exile policy bosses, Mboweni was as an early proponent of a wealth tax, which earned him few friends in the markets. But, by Tuesday evening, as news of his appointment filtered through, it was clear that he was a market darling.

The markets may be in for a surprise if Mboweni believes in everything he tweets.

In April this year, Mboweni tweeted: "The state must own 40% of mining companies, start a State Bank, implement appropriate land use planning and create a sovereign wealth fund. That is Radical Economic Transformation.”

None of those policy positions features on Ramaphosa’s economic stimulus plan announced a fortnight ago – which will make for interesting Cabinet discussions. Mboweni is a man very certain of his certainties.

Mboweni is an ebullient and charismatic figure. He is funny and loves a good fight; while he started his political life as a student activist who fled to exile, he developed a taste for life’s finer things as he ascended various offices. He is said to have had an affinity for the governor’s mansion as Reserve Bank boss.

As governor, he also exhibited a touch of vanity: if you wanted to get your camera shuttered as a photographer, it was to take a pic of him without permission.

In February, Mboweni tweeted that he was not available for a Cabinet position, but that he was available to become an advisor. By last night, he got an SOS call from Ramaphosa and rescinded that decision.

He will hit the ground running – Mboweni has 14 days to present a vitally important medium-term budget statement and three days in which to digest and comment on a decision by Moody’s Investors Services on whether or not they will downgrade South Africa’s investment rating status.

** Technically, this is the tenth term served by a finance minister. However, since some ministers served more than one term, Mboweni is the 8th individual minister to serve.

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