Gordhan leaves a mixed legacy

News that public enterprises minister Pravin Gordhan will retire and will not return to government after the May 29 elections is neither surprising nor especially distressing. The minister has taken a lot of strain over the years and has in recent years looked ever more exhausted, with reports he was becoming more marginalised within the government. And while his contribution to SA’s democracy is immeasurable, the legacy he leaves in government is a mixed one.

The spectacular work Gordhan did to build the SA Revenue Service and establish it as an independent, world-class institution was and still is his signature achievement in government. During his tenure from 1999 to 2009 he turned around SA’s tax administration and its tax compliance culture, helping to restore public finances to health and so enabling the government to finance sizeable increases in social spending while cutting its debt. He also deserves the nation’s thanks for the heroic battles he waged against corruption and state capture, especially after he was returned to office as finance minister in December 2015, following Nenegate and the debacle over the “weekend special” Des van Rooyen. Gordhan’s leadership, often at great personal cost, was crucial.

Yet the legacy for SA’s public finances of his two stints as finance minister is more problematic. And he has a great deal to answer for as public enterprises minister.

Gordhan may have come out publicly to fight Jacob Zuma’s gangster state later. But we should not forget he was Zuma’s first finance minister in 2009-14. The health of public finances began to deteriorate in that time, with debt climbing from a low of 26% of GDP on the eve of the global financial crisis in 2008-09 to 40% five years later. And the crisis itself cannot be blamed: SA didn’t take that much of a hit and bounced back well. But it went on a spending spree that, as it turned out, the economy could not afford. And while Gordhan put in some restraints from 2012, and he clearly was under pressure from his cabinet colleagues, he must ultimately bear some responsibility for the slide.

Likewise with his second stint as finance minister, from 2015 until he was ousted in 2017 to be replaced by Malusi Gigaba — by which time SA’s national debt had climbed to more than R2-trillion and over 46% of GDP.

Now it is at 75% of GDP. And Gordhan is not blameless for that either. SA’s key state-owned enterprises were ailing before he was appointed President Cyril Ramaphosa’s public enterprises minister in 2018. But he has presided over a collapse since then, one which has come at huge cost to the economy and to the fiscus. During his tenure Eskom’s energy availability factor has plummeted from over 70% to hardly more than 50%. Transnet’s rail and port services have fallen apart. And Gordhan, with his state-led view of the world, has remained insistent that failed and irrelevant enterprises such as SAA and Denel must be rescued.

He can at least be credited with supporting reforms, however belated and lukewarm, to open up the energy market and the logistics market. He has at least tried to limit the corruption and rent-seeking. It is a mixed legacy, but there is still much in it for SA to appreciate and to applaud.