AR­MAGED­DON

CityPress - - Business And Tenders - JUSTIN BROWN justin.brown@city­press.co.za

State fi­nances face stormy times as the pri­vate sec­tor braces it­self for a pos­si­ble switch in fi­nance min­is­ters amid splut­ter­ing tax col­lec­tions, low growth, tax hikes and deep sus­pi­cion re­gard­ing the nu­clear build.

Prince Mashele, a se­nior re­search fel­low at the Univer­sity of Pretoria, said at a PwC post­bud­get speech event on Fri­day – where Fi­nance Min­is­ter Pravin Gord­han was con­spic­u­ously ab­sent – that, de­pend­ing on which ANC fac­tion dom­i­nated, the next two to three weeks would be cru­cial in de­ter­min­ing what would hap­pen in the fi­nance min­istry.

Fol­low­ing the swift swear­ing-in of for­mer Eskom CEO Brian Molefe as an ANC MP this week, Mashele pointed to the pos­si­bil­ity of his be­com­ing ei­ther fi­nance min­is­ter or deputy fi­nance min­is­ter.

Ex­plain­ing his non-at­ten­dance at the PwC event, Gord­han said he was lead­ing a Na­tional Trea­sury del­e­ga­tion in a meet­ing with Ned­lac – the na­tional con­sen­sus-seek­ing body com­pris­ing busi­ness, govern­ment, labour and civil so­ci­ety – to dis­cuss the bud­get.

Mashele said that once Molefe was in­stalled at Trea­sury, he was likely to sign off on a nu­clear deal with Rus­sia that would mean South Africa would never again en­joy the ben­e­fit of cheap power prices.

“You grand­child and great-grand­child will pay through the nose [for the nu­clear deal],” he added.

The plan by the Gup­tas, who are close al­lies of Pres­i­dent Ja­cob Zuma, to in­stall their pre­ferred can­di­date as fi­nance min­is­ter was put on hold – but not aban­doned – when for­mer fi­nance min­is­ter Nh­lanhla Nene was re­placed by Des van Rooyen, whom the pres­i­dent re­luc­tantly axed af­ter pres­sure from the busi­ness sec­tor, be­fore Gord­han was placed in the po­si­tion.

“They want Molefe to en­ter Trea­sury,” Mashele said, adding that Gord­han was “un­der siege” from Zuma and the Gup­tas, who were fight­ing court bat­tles with him.

“Some­thing has got to give. Ei­ther the min­is­ter’s group has to give, or the pres­i­dent’s group must give.

“If the min­is­ter’s group gives, then all of you here are go­ing to be in se­ri­ous trou­ble ... It must be the pres­i­dent’s group that must give. They are not go­ing to give with­out a fight,” Mashele said.

Iraj Abe­dian, CEO of Pan-African Cap­i­tal Hold­ings, said nei­ther the rich nor the poor were happy with the lat­est bud­get speech.

“This is a re­flec­tion that the South African econ­omy has, for the past 10 years, been al­lowed to slide,” he said.

At the PwC event, the au­di­ence was asked if any­one was happy with the bud­get speech. No hand was raised.

Ned­bank chief econ­o­mist Den­nis Dykes said there was po­ten­tial for the lo­cal econ­omy to grow at 2.5%, given the global cir­cum­stances, but it was only ex­pand­ing at 1% be­cause of low busi­ness con­fi­dence and ex­tremely “weak pol­icy” in many parts of govern­ment.

“Some of the poli­cies on the ta­ble are ab­so­lute show stop­pers. There is no way that any­one is go­ing to in­vest be­cause they know they are go­ing to lose money,” Dykes said.

Mashele said Zuma’s def­i­ni­tion of rad­i­cal eco­nomic trans­for­ma­tion, as ex­pressed in his state of the na­tion ad­dress, dif­fered from Gord­han’s def­i­ni­tion in his bud­get speech.

“If you look at what Zuma de­fined as rad­i­cal so­cioe­co­nomic trans­for­ma­tion vis-à-vis what the min­is­ter said, these two def­i­ni­tions are worlds apart.

“Zuma’s def­i­ni­tion seems to be the klep­to­cratic one, which says that we need to have black peo­ple get­ting wealthy from white folks in the coun­try. But the min­is­ter says that is not the def­i­ni­tion in­vestors want.

“The def­i­ni­tion that in­vestors want is growth be­cause if you do not grow the econ­omy, then it is too small for all to share.”

Kyle Mandy, PwC’s tax pol­icy di­rec­tor, said: “If you do not get the growth that will bring the tax rev­enues with it, you can­not con­tinue to ex­tract fur­ther taxes out of the econ­omy with­out do­ing sig­nif­i­cant dam­age to it.”

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