Daily Dispatch Gigaba in with big fish
IT IS hard not to warm to Malusi Gigaba, the new Finance Minister. He is astute, affable, seemingly unflappable and apparently forthright.
He also does not shy away from calling a staffer to order as was the case with his new economic advisor, Wits professor Chris Malikane, after the Marxist economist’s offering in the Sunday Times last weekend about radical economic transformation. It came complete with a definition: nationalise white owned banks, mines and property without compensation.
Ideological content aside, Malikane’s timing could not have been worse.
Gigaba was about to set off for the high tower of capitalism to try and entice investors back to SA after the carnage of Finance’s previous roadshow.
Another challenge is to persuade a third ratings agency – Moody’s – not to downgrade this country to junk status.
Gigaba moved quickly to dispel notions of economic policy change and firmly whipped Malikane into line with a stinging rebuke: “A minister cannot be becoming the spokesman of an advisor”.
But as charming and able to crack the whip as Gigaba may be, he lacks the kind of solid muscle that is built up over years and which is necessary for survival when swimming with the sharks of big money.
Fiscal realities exist that hard-nosed investors will not allow Gigaba to sidestep.
Most important is growth, or the lack thereof. This week the International Monetary Fund predicted SA would grow its GDP by only 0.8% for 2017.
While the figure is up from 0.3% of last year, it is set against growth of 5% to 7,5% in countries such as Tanzania, Kenya, Ivory Coast, Senegal and Ethiopia.
And the trouble with marginal growth is that it will reduce government revenue, leaving the new minister with a stark choice: cut spending or raise taxes.
The IMF cited “a decline in commodity prices amid perceptions of weakening governance and rising policy uncertainty” as reasons for last year’s economic slump.
Little has changed, if anything the political landscape is more unstable. How exactly Gigaba intends walking South Africa through this minefield is uncertain.
He has a further challenge: baggage. The perception exists that he is a Gupta crony, not so much because he celebrated Diwali at the Gupta’s home, but because it was under Gigaba that Home Affairs studiously and over several years refused to authorise the custom’s port that would allow the Oppenheimer’s VIP terminal at OR Tambo airport to be fully operational.
Co-incidently the Guptas are intent on acquiring this same terminal. It was also here that a Gupta family member was recently reportedly prevented from leaving the country with a green suitcase full of minerals, possibly diamonds.
For all his affability Gigaba is clearly hardworking and ambitious. He is also youthful. If he wants to succeed as finance minister and perhaps beyond, he will have to win the respect of investors and the markets. He will also have to choose his company carefully. Success in finance is never like winning a popularity contest.