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Inside Treasury boss’s mind: ratings, nuclear, radical transformation

May 10 2017 19:10
Matthew le Cordeur

Cape Town – Outgoing National Treasury director general Lungisa Fuzile on Tuesday offered insights into rating agencies, land transformation, nuclear energy and radical economic transformation days before bidding farewell to his colleagues in Pretoria.

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Engaging with UCT Graduate School of Business director Mills Soko at an event on Tuesday evening, Fuzile opened up on key issues he faced while leading Treasury civil servants during some of their most challenging years.

During his tenure, Fuzile had to keep morale high despite the removal of ministers Nhlanhla Nene, Pravin Gordhan and deputy minister Mcebisi Jonas – political moves that sent shockwaves across the country.

1. Radical economic transformation

On radical economic transformation, Fuzile said the “radical” addition to the term “economic transformation” is a recent political move that offered nothing new.  

“Those who have studied marketing will know this: just by adding 'new' to a product, how it gets perceived by the people who receive it... to be different,” he said.

Without the “radical” included in the term, he said that economic transformation must occur to ensure the economy grows at accelerated rates and provides opportunities to those previously excluded.


2. Why rating agencies are important

Fuzile said people are lost in translation when they say Treasury is too friendly to rating agencies, adding Treasury is simply trying to protect the country from becoming a failed state.

“We want to ensure the current generation does not bequeath to future generation a country that is so indebted that it loses its fiscal sovereignty.

“Once we are on an IMF programme, then your policies are not made by the so-called policy makers. The Parliamentarians will just go there almost symbolically, because the bulk of the budget has to be now drawn in a way that meets the requirements of the lender.

“When you are on a programme, you now get told that ‘thou shalt do 1,2,3' and not ABC. You don’t want to put yourself in that situation. Better impose tougher discipline on ourselves, rather than have that discipline imposed on us, so that we have the flexibility.”


3. Land redistribution

Fuzile, a passionate cattle farmer, said those who want land redistribution to be increased and fast-tracked are wasting valuable energy that should be focused on the practical steps that are actually required for the good of the economy's transformation.

“When we talk about the redistribution of land outside the parameters of our Constitution and what other laws allow, then you are on a road to nowhere. It diverts attention… from solving the real issues.

“For example, some of the land that has been redistributed already may not be used as effectively and productively as it should.

“Therefore, you may need programmes to skill the people who have the land to assist them in whatever way necessary and possible to put that land to productive use.

“This is not to suggest that accelerated redistribution of land is irrelevant and unnecessary. It has to be pursued with a lot of energy and lot of vigour, and dare I say, within the framework of the law."

However, he said that if it occurs outside the parameters of the law and before certain systemic issues are resolved, then it will become a failure for generations to come.

“Redistributing land then becomes a failure in terms of food security, agricultural production, and agricultural employment," he said. "You can’t do that.”


4. Nuclear requires rigorous due process

Fuzile said the Department of Energy’s court loss over the nuclear procurement programme was indicative of government not being transparent enough and not following due process rigorously.

“The problem we create for ourselves ... is to deal with something as big (and) as important as (nuclear), with all the good intention in the world, … in ways that are not sufficiently transparent."

The court ruling highlighted the importance of due process, he said. “Always insist that due process is followed. Our Constitution requires it.

“When the drafters of our Constitution proposed the clause (217 of the Constitution), they may not have known that there would have been nuclear. Now that there is nuclear, sound and good, let’s take it through the process that our own laws require it (to). When you’ve done that, you leave no room for speculation and questions.

“You must always have rigorous due process for everything and anything you do in government. We have learnt this with many processes in government, that when they get dragged to court, if you have not followed due process – have not followed processes that create a good enough paper trail that demonstrates you have applied your mind – then courts find against us.”

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