Junk status: ANC dissent ‘worrying’
National Treasury is looking to fill the position of outgoing director-general Lungisa Fuzile as soon as possible. The vacancy was advertised on Friday and the closing date for applications is April 28. “I doubt it will appoint somebody in an acting position,” said the source. “The speed with which it is going about this indicates that Treasury wants to appoint somebody to whom Lungisa will hand over. I think they will appoint somebody by end-May.”
Treasury spokesperson Mayihlome Tshwete declined to say who might replace Fuzile, who is set to exit on May 15 after 20 years’ service in the department.
In another development, Christopher Malikane, associate professor of economics at the University of the Witwatersrand, has become Finance Minister Malusi Gigaba’s economic advisor.
Tshwete confirmed this, but was unable to say if Malikane’s position was a full- or part-time role.
City Press was unable to reach Malikane for comment this week.
Malikane was a member of the National Planning Commission from 2010 to 2015.
He obtained his doctorate in economics from the New School for Social Research in New York in 1997, according to the National Planning Commission website.
This week, Gigaba spent an hour telling business and labour leaders how seriously he viewed the rating downgrades, by S&P Global and Fitch Ratings, at a special meeting at Nedlac, the consensus-seeking body comprising government, business, labour and civil society.
According to one attendant, Gigaba mentioned the “discordance of messaging emanating from ministers”.
The source went on to quote Gigaba as saying: “Our view is that the downgrades must not be taken lightly. We must not think that we can just go and pick up the rand if we say things like ‘imperialism must fall’.
“On this issue only Treasury must speak on behalf of government,” Gigaba apparently said.
This follows a recent comment by Water and Sanitation Minister Nomvula Mokonyane that “the rand can fall, we will pick it up”, and a Sunday Times report citing a WhatsApp group operated by the president’s son, Edward Zuma, in which he made light of the downgrades and Black Business Council president Danisa Baloyi apparently said: “Who really cares?”
An agenda circulated at the Nedlac meeting listed three items: “assessing the context” of the downgrades; “discussing a potential action plan to ameliorate the negative effects”; and “developing a positive message to the international investors that South Africa is a viable investment destination”.
Some in the ANC and its alliance partners are weary of international credit rating agencies and confused about how to react to the country’s downgrades to junk status.
Nic Borain, a political and investment analyst at BNP Paribas Securities SA, said the different views expressed by the alliance and ANC exposed divisions over the downgrades.
While some senior ANC members had shown ignorance about the gravity of the situation, Gigaba, he said, had done well to calm the storm and shown a good understanding of the crisis.
Borain said party members’ utterances that the downgrades did not matter were causing instability and uncertainty for investors.
SA Communist Party (SACP) spokesperson Alex Mashilo said President Jacob Zuma’s explanation for having axed Pravin Gordhan as finance minister – to advance radical economical transformation – was confusing, given that, after the first downgrade, Zuma said there was no policy change.
The SACP also has a problem with the lack of definitive consultation on radical economic transformation, said Mashilo. “To some people, radical economic transformation means recklessness, deepening Guptarisation.”
Sizwe Pamla, spokesperson for labour federation Cosatu, said the body was unsure if government and the ANC took the downgrades as seriously as they should.
“We have cause for concern because of the nonsensical utterances by some Cabinet members,” Pamla said.
Pamla said although the trade union was happy with the ability of members of the economic cluster, the cluster’s nonmembers, who are still in key Cabinet portfolios, were giving Cosatu a reason to worry.
“Generally, Cabinet is full of economically illiterate people who fail to appreciate the seriousness of the situation,” he said.
Citing Mokonyane as an example, Pamla said some parliamentarians were reckless and lacked the capacity to deal with South Africa’s junk status, adding that it was the workers who would feel the pinch most.
“Workers will be confronted with this reality at the taxi and bus ranks when the inflation and interest rates hit.”
ANC Youth League secretary-general Njabulo Nzuza said credit rating agencies were colluding. He added that although the league was worried about the effects of the downgrades, it was more concerned about the politics that seemed to have fuelled the decision.
“The agencies are compromised and seem to be pursuing a political agenda,” he said.
“Radical economic transformation and fiscal discipline can coexist. Radical economic transformation talks to the issue of policies which are pro-poor.”