Gigaba’s action plan echoes past policies
• Proposes new dialogue on Mining Charter • Includes pledge for sustainable wage deal
Finance Minister Malusi Gigaba tabled an “inclusive growth action plan” on Thursday in response to the recession in SA, promising reform of stateowned enterprises (SOEs), fiscal prudence and a new dialogue on the Mining Charter.
However, the minister faced a barrage of questions around corruption and whether the plan was significant enough to reignite confidence.
Gigaba’s plan contained little that was new, but did include a commitment to time frames in which several cardinal decisions would be made.
In a broad sweep, it echoed President Jacob Zuma’s ninepoint plan, introduced in the state of the nation address in 2015, with similar focuses on energy, reforming SOEs, broadband roll-out and encouraging private sector investment.
While the nine-point plan was lauded, there has been little action in its implementation.
Instead, state-owned companies have come under increasing scrutiny for poor governance, their reliance on government support has risen and the private sector has remained on an “investment strike”, looking increasingly for opportunities outside SA.
In a warning to his cabinet colleagues that they had better get on board, Gigaba hinted strongly that if the latest plan was not implemented, there was a possibility that the government would need to borrow money externally from the World Bank and the IMF.
The plan includes 14 action items and 45 interventions that require the involvement of about 12 different stakeholders.
Most deadlines are set for March 2018 and include choosing a new CEO for South African Airways (to be done in July); introducing legislation to regulate the appointments of the boards of SOEs; privatisation of noncore state assets; and a framework for public participation to raise equity.
It also includes a pledge to reach “a sustainable wage agreement” with public servants, recapitalising the SAA and the South African Post Office
and unspecified state support for Eskom, on which Gigaba said there was a “deep appreciation” of the weakness of the power utility’s balance sheet.
Gigaba said he supported further engagement with business on the Mining Charter and wanted to see new mining regulatory legislation finalised “in a manner that reflects the interests of civil society, labour and industry” by the end of 2017.
But, he said, “there’s an understanding at an [ANC] alliance level that privatisation is not the answer”.
Gigaba said the new plan came about after months of intensive engagement with interested parties and the Cabinet to create “a map forward”. But labour disputes this, saying it had not been consulted and had tried unsuccessfully to meet with Gigaba since their last engagement at Nedlac in April.
DA finance spokesman David Maynier called Gigaba’s plan a “disappointment”, charging that it did not contain any new ideas “capable of restoring business confidence and stimulating private-sector investment in SA”.
Most economists were sceptical. While agreeing that it looked good on paper, the big question was whether it would be implemented. BNP Paribas economist Jeff Schultz said: “Most of the interventions outlined today are not new to SA. Policy makers in SA have never been short of solid economic plans.… What we have sorely lacked, though, is implementation of these initiatives.
“As always, therefore, the proof will be in the pudding and the pressure will be on for Gigaba to already show some deliverables by the time of the October medium-term budget.”
Prof Raymond Parsons of the North-West University School of Business and Governance said the acid test for the plan was “whether it will boost confidence in the economy by producing real outcomes”.
Argon Asset Management economist Thabi Leoka said the plan was operational, but did little to stimulate growth. Although the plan was feasible, Leoka said, the question was whether it would be achieved.
“It would be more believable if the Treasury just did what it said and spoke about it after the plan was implemented.”
The task ahead calls for coordination across government departments, which has not been successful so far.