Financial Mail - Investors Monthly
Carefully walking a tightrope — but also sounding a warning
Gordhan’s ‘inclusive growth’ is merely a substitute for Zuma’s ‘radical economic transformation’. But the president is interested in none of that. He is under too much pressure and he wants to replace the finance minister
This is how it works here. Sometime relatively early every February, the president gives a state of the nation address. Effectively it is the opening of parliament in the new calendar year.
The president uses the address to declare things. This time it was the Year of Radical Social & Economic Transformation. By way of comparison, for instance, 2011 was the Year of Job Creation.
Then, a few weeks later in February, the finance minister delivers the national budget for that year. In it, he is supposed to not so much echo the president but to give some substance to what the president said, to make the president’s speech sound not only reasonable and thoughtful, but affordable too.
Any alien listening to finance minister Pravin Gordhan’s budget would have thought he had done a pretty good job. He twice mentioned the word “radical”.
Here was one of them: “. . . President [Jacob] Zuma articulated this in the state of the nation address, rightly emphasising the radical nature of the socioeconomic transformation we need”.
For a nonalien, sadly, the gulf between Zuma and his finance minister never seemed wider than it did on Wednesday. Gordhan was careful to touch all the right buttons but the two men live in different worlds.
For Gordhan, what would be “radical” would be an ANC cabinet minister actually implementing a promised policy. In other words, “do your job properly”, “implement policy”, “actually help the poor” are radical and transformative notions.
For Zuma “radical” is a word appropriated from the Left to make himself more popular as his time in office (in both party and state) runs out. It is also something he uses to counter strident left-wing opposition to his deeply improper relationships with a handful of rich business people.
Zuma, for instance, wants his friends to be able to buy a bank. That would be “radical”, in the way he sells it, because not many blacks in SA own banks.
Gordhan, who doesn’t want Zuma’s friends to own a bank, would rather see “radical transformation measures” in the finance sector — like making sure that ANC programmes really do create jobs, that transformation “must be mass-based” and must “entrench open, transparent governance and the rule of law”.
He substitutes “inclusive growth” for Zuma’s “radical transformation”. Basically they mean the same thing, but one implies some measure of prudence.
Zuma is interested in none of that. He is under too much pressure and he wants Gordhan out. So the question is, did Gordhan do enough yesterday to save himself in any forthcoming cabinet reshuffle?
We all know the story. This is his second stint in the job, having been brought back into treasury after Zuma famously tried and failed, in December 2015, to install a patsy as finance minister to please his cronies.
Since then, Gordhan has fought an uphill battle against Zuma, the cronies, many members of cabinet, the police and the National Prosecuting Authority. Little wonder he received a standing ovation merely for stepping up to the podium. Lesser men would have fallen long ago.
Now the SA body politic is alive with rumour and speculation. At the end of the year the ANC will elect a new leader. Zuma will not be a can-
didate. But what will happen then? What will happen before ? What will happen later this week?
No-one knows. Zuma is said to carry a master plan in his head, but don’t believe that. He is making it up as he goes along.
Facing the resurrection of some 780 counts of fraud against him should he lose the protection of his office, Zuma has looked around for a suitable successor. And he has settled, with almost no imagination, on Nkosazana Dlamini-Zuma, who happens to be an ex-wife and the mother of some of his children. This is the ANC veteran he packed off to run the AU Commission for the past four years, to keep her out of domestic politics.
In his sylvan view of the world, what mother would put her children’s father in jail? And he may well be right. Dlamini-Zuma remains indisputably fond of him.
But Zuma has been naughty while she has been away. His friendships with the Gupta family and a range of their political favourites in the higher echelons of provincial ANC politics are an unsettling inheritance for Dlamini-Zuma. That, in turn, leads to further complications, as some of these provincial power brokers think about putting their own hands up for his job. Dlamini-Zuma would look after Zuma, they’d agree, but would she look after them too?
There’s no knowing for sure, which is why, to get back to the point, Gordhan has to go. Zuma needs a minister in the treasury who will give ministers and cronies the money and the contracts they want. Call it “access” and it sounds progressive and correct. In turn, these people — all satisfied and sated — will help him get Dlamini-Zuma elected.
Never mind the debt ceiling. Never mind fiscal consolidation, argues “radical transformation” Zuma. Let’s just go for it.
And he has just the man for it: Brian Molefe, former deputy director-general in national treasury, former CEO of the Public Investment Corp, former CEO of Transnet and, until recently, CEO of Eskom.
Molefe’s a good manager, there’s no doubt. He inspires love and loathing. He gets things done. He has a swashbuckler’s approach to danger. For Zuma, he’d be the perfect man to replace prudent old Gordhan. But there’s a problem, as always.
Last year former public protector Thuli Madonsela produced a report of what we South Africans call “state capture” — the ability of families like the Guptas to get Zuma to do their will — that was particularly harsh on Molefe. He facilitated the fire sale of a rich and Eskom-tied coal mine to the Guptas and made repeated calls to the Gupta household during the period around the transfer of the mine.
It got to him. He broke down in tears at a press conference and resigned from Eskom a few days later. Zuma likes Molefe, and knows he could do what is required. But he doesn’t know if he can take the pressure of public life.
This is because there is pressure — and then there is public pressure. How would he stand up to a grilling in parliament, or to insults from the Left? There are already photographs of the houses that he owns doing the rounds online. This is as he becomes embroiled in a deeply shady row over which branch of the ANC he belongs to (he has to belong to one so that Zuma can make him an MP and bring him into parliament and then, possibly, into cabinet).
Three branches have claimed him so far. It is a joke and it will all be agony to a private man like Molefe. The fact is that while Zuma may want Molefe now, he is living on his nerves and is easily distracted.
The wider strategy has to be to get Dlamini-Zuma elected ANC president at the end of this year, probably against the opposing candidacy of deputy president Cyril Ramaphosa.
Ramaphosa should, on paper, be a strong contender. He is the deputy, after all, and very experienced; a great negotiator; and supposedly incorruptible as he is already exceedingly rich.
One school of thought is that Zuma could send Ramaphosa to treasury (a plausible replacement for Gordhan) and make Dlamini-Zuma the deputy president, thus positioning her more perfectly for the ANC’s vote in December.
Or, perhaps, with her as deputy, he could step down early as head of state and allow her to contest the ANC job as a sitting or acting president of the country. But for that scenario to stand a chance, Ramaphosa would have to go quietly.
Scenarios like this arise because Ramaphosa has been so helpful and quiet a deputy to the outrageous reign of Zuma that some people suggest Zuma has something on him; that he can be blackmailed. I doubt that’s the case, but Ramaphosa needs to begin to show his hand much more forcefully than he is doing — or he will not have the required momentum by the time the December conference gets to vote.
Everybody knows broadly what is going on. The infighting in the Zuma government and the Zuma ANC is at close quarters — office to office, face to face. In his budget speech Gordhan tried to warn Zuma while he also tried to support him.
“Our growth challenge is intertwined with our transformation imperative,” he said. “We need to transform in order to grow, we need to grow in order to transform. Without transformation, growth will reinforce inequality, without growth, transformation will be distorted by patronage.”
Whether or not Zuma was listening is moot. He wouldn’t care much anyway.
What he would have noticed, though, was a remarkable gap in all the tributes that finance ministers make as they amble through their budget speeches, thanking this minister for her prudence, congratulating that one on a programme completed.
Not once did Gordhan mention the name of Tom Moyane, commissioner of the SA Revenue Service, a Zuma appointee for whom Gordhan has no regard or respect whatsoever. Moyane knows almost nothing about tax. He is a former prisons commissioner, and a close Zuma confidante whom Gordhan has been unable to move.
If anything, Gordhan’s failure to mention Moyane was a direct challenge to Zuma. He was, he’d admit, being deliberately rude and he made a point of reminding the president that tax revenues this year are short R30bn, reflecting slower wage growth and bonus payouts — “among other factors”.
This may well have been Gordhan’s last budget. Those “other factors” — Moyane’s inability, in Gordhan’s view, to run a successful revenue service, constant infighting and Zuma’s cronies’ influence over policy — will make taking the final call from Zuma that much easier.
He’ll leave behind him the finest team of public servants in the country and a sovereign rating still, just, in the black. Let someone else come and mess it all up.