BANKING ON TITO MBOWENI
Having sound financial management knowledge and a positive international profile counted in his favour – Kotze
NEW finance chief in the country Tito Mboweni has less than two weeks to prepare for his maiden Medium Term Budget Policy Statement (MTBPS), but economists and analysts are already giving him the thumbs up.
Taking on one of the toughest jobs in the land, economists believe Mboweni is an old hand in the finance family, and will not be lost in the sector. The markets are already warming to him. The rand steadied this week after his appointment after weeks of havoc.
Mboweni admitted after he was appointed that the job begins in earnest and jokingly told the media at Tuynhuys at his swearing-in ceremony, that austerity measures begin now.
The 59-year-old became one of the youngest governors of the Reserve Bank in 1998 when he was 40-years-old.
This was after he had served as labour minister from 1994 where he introduced a number of policy reforms in the labour environment.
Mboweni’s political career was crafted in exile politics of the ANC when he skipped the country to join the party in Lesotho in 1980. He studied economics and was part of the ANC’s economic transformation team.
In 1997, he became head of policy development in the ANC to realign the policy matters of the party.
After he formally joined the South African Reserve Bank (Sarb) to succeed Chris Stals in 1999 after serving as adviser for the year, he quit all his roles in the ANC.
Head of politics at Unisa Professor Dirk Kotze said Mboweni has the depth needed for a finance minister.
He has done it all and has a good international profile.
Kotze said it was not a difficult task for President Cyril Ramaphosa to pick Mboweni after the departure of Nhlanhla Nene.
Other than Minister of Public Enterprises Pravin Gordhan who could have gone back to the National Treasury, Ramaphosa had to settle for Mboweni because of his track record.
“The other consideration was that you cannot have someone with no financial management. At the same time, you need someone with a high international profile. The fact that Mboweni is the former minister of labour and governor of the Sarb counted in his favour,” said Kotze.
Parties have complained that there have been five finance ministers in three years. Trevor Manuel was the longest serving, with a 16-year tenure.
Peter Attard Montalto of Intellidex, a leading South African financial services research house, said a strong figure was needed to fix the National Treasury and drive the country’s macro-economic policy. Mboweni is also urged to look at the public purse as debt is rocketing.
The national debt is close to 60% to the country’s gross domestic product and is the biggest single expenditure item in the budget.
Mboweni’s big task is to manage the fiscus in a sustainable way.
Despite Mboweni having been out of politics formally when he led the Sarb, he returned to the ANC when he was elected to the National Executive Committee (NEC).
He has been serving both in the NEC and National Working Committee over the past few years, and was in touch with policy decisions of the ANC. However, the task for Mboweni is to grow the economy. The economy has not grown above 5% in the last decade, and the International Monetary Fund (IMF) and World Bank have revised growth forecasts down to 0.8% and 1% respectively.
The World Bank’s growth forecast was revised from 1.4% to 1%. The IMF’s revision was down from 1.1% to 0.9%.
But Kotze said Mboweni would not have a problem trying to fix the South African economy. What is commendable is that Ramaphosa is a hands-on president with the grasp of macro-economics and policy and he will make a great team with Mboweni in stimulating the economy.
The ANC has also backed the appointment of Mboweni, saying this was the right choice.
It said he will continue with the policy trajectory of the party and implementing government policy as directed by it.