Young guns must think of post-Zuma era
It has been only four months since President Jacob Zuma’s “night of the long knives” cabinet reshuffle and already, he has a finance minister problem.
Zuma keeps making the same mistake, thinking that by appointing a loyalist, he can rely on his personal relationship to manipulate the minister into giving him and his friends what they want.
But as soon as finance ministers land in the chair, the inevitable happens: they very quickly become aware that their job, like all senior management jobs, is a complicated process of keeping dozens of balls in the air at the same time. The affiliations and responsibilities pull them in different directions like crosscurrents in a stormy sea — and this effect is seldom more acute than in the finance ministry.
Nothing demonstrates this better than the way the Eskom crisis has unfolded.
When Finance Minister Malusi Gigaba released his 14-point plan to revive the economy, one of the surprise issues was the sudden need for “soft support” for Eskom.
Point eight of the plan was entitled “energy” but essentially it was announcing the need for an emergency package for Eskom. It says the finance ministry is going to approach the national energy regulator to encourage the organisation to hike electricity tariffs and it intends to review the speed of the electricity rollout to reduce Eskom’s financial pressure.
Interestingly, none of this urgency was visible from Eskom itself, so it’s obvious the Treasury is keeping closer tabs on the state of the organisation than the organisation itself.
When Eskom did release its results, after a week’s delay, it tried to pretend that everything is under control, pointing out that it still makes a profit. But in some ways, that just illustrates how misleading an audit can be. As every accounting student is told in lecture one, financial statements are a moment in time and they reflect a version of the truth at that moment.
It’s increasingly clear that Eskom’s problem is not only its past but its future. The critical issue here is the “cost to completion” of the Medupi and Kusile power stations.
The cost overruns have been mind-blowing. The board-approved price for Medupi finalised in April 2007 was R69.1bn. In July 2016, the cost to completion was being estimated at R135bn. Kusile is even more expensive: its cost to completion is about R180bn. In that context, it’s easy to see why Eskom’s R20bn in cash is actually not as impressive as it seems and is also why Eskom was talking loosely about raising R300bn over the next five years.
So, now the one thing Eskom doesn’t need is a leadership crisis, but the Gupta leaks have complicated the issue and handed Gigaba his first real test. His choice was essentially to go with the existing leadership and fend off the banks that were demanding chief financial officer Anoj Singh get booted, or comply with their request and alienate the Zuma state-capture camp.
To his enormous credit, he chose the latter. Such are the pressures of the job; you seldom get to do what you want.
It’s gradually becoming clear that Zuma made another miscalculation. During the reshuffle, he was obviously looking at ways to temper the inevitable backlash and one thing he seized on was youth. There have been occasional comments floating around about the age of ANC leaders, so he sought out two comparatively youthful leaders, Gigaba and now Police Minister Fikile Mbalula, both of whom had been leaders of the ANC Youth League.
But this, it turns out, is something of a double-edged sword. Precisely because they are young, Gigaba and Mbalula need to think of their careers beyond the Zuma administration.
Both will have to play a tricky game for the next year or so, ostensibly supporting the president but at the same time not losing sight of the post-Zuma situation.
Hence, both will be looking for ways to differentiate themselves from the increasingly unpopular Zuma administration, which is in its last phase. And they have some latitude in which to do so because Zuma will have to find something better than a bogus Russian intelligence report if he wants to fire yet another finance minister.
Although the background parting of ways between Zuma and Gigaba has happened very quickly, actually it is Mbalula who faces the more difficult decision. The Gupta leak e-mails demonstrate such obvious malfeasance he really is in a corner politically. When it comes down to it, he will face such a political backlash if he tries to halt the investigation, he will destroy his career instantly.
In fact, as I have pointed out, he may have a discreet incentive to allow it to continue. Making sure that your friends get contracts from state enterprises may be a tricky issue to bring to court. But taking taxpayers’ money intended to start a farm and blowing it all on a relative’s wedding?
That is pretty much a giga-prima facie case.
FINANCE MINISTERS … VERY QUICKLY BECOME AWARE THAT THEIR JOB … IS A COMPLICATED PROCESS OF KEEPING DOZENS OF BALLS IN THE AIR
BOTH WILL BE LOOKING FOR WAYS TO DIFFERENTIATE THEMSELVES FROM THE INCREASINGLY UNPOPULAR ZUMA ADMINISTRATION