Wrecking ball’s next target: Reserve Bank

THE capture of the state is almost complete. It just gets a little harder right at the top. In November 2015 I wrote a column with the headline “What Zuma still needs to break to win”. I said he needed to get his hands on the National Treasury and the Reserve Bank.

Mere weeks later he fired Nhlanhla Nene as finance minister and appointed Des van Rooyen for a few days until he could stand the pushback no more and rehired Pravin Gordhan into the job.

By early on Friday morning Zuma was back in the National Treasury, having fired Gordhan again.

Now, with the Treasury in their pockets, watch the Guptas and the Zumas and their coterie of hangerson go for the Reserve Bank.

Zuma was smart about the latenight cabinet reshuffle.

He left most of the SACP ministers in place, and if he couldn’t have Brian Molefe because of opposition in the ANC leadership, he quickly reached out for Malusi Gigaba as finance minister. It will not end well.

Gigaba has some nice qualities but he is not good with money. He will be awful at the job.

When he was made public enterprises minister in November 2010 he was determined to break free from the constraints the Treasury placed on state-owned company behaviour. He was convinced he could, as minister, leverage the balance sheets of these behemoths to finance great new projects and real growth.

It turned out the balance sheets were largely empty, so he never did anything. But it did not blunt his ambition or his view of himself as a commanding figure who could make things happen merely by saying they would.

I have forgotten how many deadlines he set and then missed for a single unit at Eskom’s Medupi project to start up.

And by the time he left public enterprises he had failed to set SAA to rights, and left behind a 10-year turnaround plan for the airline that has long since been abandoned.

Gigaba doesn’t think much of business and I have heard him say he isn’t interested in public-private partnerships.

He is proud and posturing, though, with a ready smile and easy to talk to.

He doesn’t correct mistakes, because that would first require acknowledgement of the mistake.

He knows nothing about debt markets and he will struggle to understand why the South African Revenue Service can’t collect the taxes he is going to need to keep the government afloat.

The answer is that SARS under commissioner Tom Moyane has lost its best people.

Worse, Gigaba will simply not be able to meet the tightening fiscal targets Gordhan had set himself and which have kept our sovereign debt rating at investment grade.

In all likelihood those ratings will now fall and that will make borrowing money much more expensive. And we borrow a lot.

Interest rates will rise. There is no hint in Zuma’s reshuffle of the radical economic transformation he talks about. Nor is there any chance of it introducing faster growth into the economy.

Gigaba, sadly, is also a welcome member of the Gupta circle. In fact, it was Gigaba who formally switched on the state capture project for them when, on June 8 2011, he revealed to a cabinet meeting his plans to replace the chairmen and boards of Transnet, Eskom and Denel, among others, immediately.

Many of the new board members were Gupta proxies and they quickly took control of the procurement operations of the boards they sat on. He was no doubt following orders. Zuma takes a close interest in these matters. Now Gigaba is finance minister. A reward for loyalty.

He will look around for help. His deputy, Sfiso Buthelezi, is also new to the Treasury, although he has some business experience. More likely is that he will turn often to Brian Molefe for help and advice, particularly on raising money in the markets.

I’m afraid I can’t see many of the senior and seasoned people in the Treasury staying on now that Gordhan has gone. For the next two years this is going to be an entirely new world. And the Reserve Bank? Watch out for attacks on it for keeping rates too high, for being “owned” by foreigners.

As I said back in 2015, there were two things Zuma had to break.

The Treasury controls all the money and it is now well and truly captured.

The Reserve Bank goes one better. It prints the money.

Gigaba has some nice qualities but he is not good with money. He will be awful at the job