‘Jellyfish’ fails to impress investors
Gigaba’s waffling about the mining charter and Reserve Bank has won him no new friends
Finance Minister Malusi Gigaba’s backhanded style of politicking, replete with doublespeak, did not win over investors during meetings in London this week, where many were left frustrated by his dithering.
Pravin Gordhan’s straight-talking, market-calming shoes would be hard to fill for most politicians, but even with the lower expectations of the inexperienced Gigaba, he elicited mixed feelings from investors following his tepid responses to the worrisome issues of credit-rating downgrades, the new mining charter and the public protector’s surprise foray into the realm of economic policy.
Sources say some investors were exasperated by Gigaba’s waffling.
Gigaba’s particular brand of politicking has served him well in the past, making it hard to know whether he was with the Thabo Mbeki or Jacob Zuma camp until the time came for him to deftly jump ship and align himself to Zuma.
He may well be stretching his sea legs once more. Recent reports claim that Gigaba supporters are compiling a dossier with evidence to demonstrate that he has taken decisions that did not favour the interests of the politically connected Gupta family.
But the obscuring haze does not work too well for a finance minister who is expected to steer a country out of economic turmoil.
“The biggest problem is that, every time you try to make sense of Gigaba or give him the benefit of the doubt, you are trying to square a circle. He is not there to be innovative; he is there to push an agenda,” said Ralph Mathekga, a political economist and author of the book When Zuma Goes.
“He tries. With investors, you can see he tries. But he is a man who fundamentally has been put there to not do what he is trying to do … It is the opposite of his mandate.”
Peter Attard Montalto, an emerging markets analyst at Nomura, said: “The minister has needed to have something new to offer investors but it was too early [in light of] next week’s meeting with Zuma for that to be the case. As such, investors continue to watch and wait for a rabbitout-of-a-hat moment, but at this stage they are not holding their breath.”
On Thursday last week, Gigaba led a press briefing about how the government would stimulate inclusive growth.
Meanwhile, that morning the rand had already slid 20c against the dollar after the mineral resources minister, Mosebenzi Zwane, released the new mining charter that is expected by its many critics to cause economic havoc. Mining stocks lost R50-billion on the day and a furious Chamber of Mines announced it would seek an interdict.
Asked about the charter, Gigaba said he welcomed the release of the document but urged the minister to meet with industry to iron out concerns.
On Monday, the public protector, Busisiwe Mkhwebane, recommended remedial action that would seek to change the Reserve Bank’s mandate and move its focus away from protecting the currency.
This shocked the markets. Again the currency took a hit and prompted ratings agencies to warn that such a move would put South Africa at risk of further credit-rating downgrades.
Quizzed on the public protector’s pronouncement on economic policy in an interview with Bloomberg, Gigaba failed to say whether he would support the Reserve Bank and rather emphasised the need for the independence of both offices to be respected. Investors were unimpressed, with some reportedly describing it as a “car crash” interview.
Soon after taking over the reins at the national treasury, Gigaba had to defend his appointment of adviser Chris Malikane, who has openly advocated for nationalising the Reserve Bank and for the state to control money creation.
“The timeline of Gigaba tells you he is always shown to be in contradiction with what he is saying and what he is doing,” said Mathekga.
For example, Mathekga said, during his tenure as public enterprises minister, Gigaba waxed lyrical about enhanced governance, yet all the while state capture was taking root at the entities under his wing.
When he was appointed to the finance ministry, the South African Communist Party and others lamented that Gigaba had been placed there simply to do the Guptas’ bidding.
Emails forming part of the Gupta leaks revelations show how in one instance Ajay Gupta called in a favour for early naturalisation from Gigaba, then minister of home affairs, who dutifully obliged.
Yet, pressure from investors appears to have been instrumental in Gigaba recently appointing long-serving treasury official Dondo Mogajane as director general of the treasury. All eyes are now on who Gigaba will appoint to the key job of chief procurement officer.
Attard Montalto said his concern about the public protector’s recommendation on the Reserve Bank’s mandate is more about how and why it occurred.
“For me, it was about creating a political context much wider than the Reserve Bank, where for instance constitutional change on land can be discussed and resolutions passed to that effect at the [ANC’s] policy conference.
“As such, it doesn’t really matter if the Reserve Bank change occurs or not for those pushing for it. It’s about the wider context — the same, even, with the mining charter,” he said.
“Ultimately, the aim is to shift policy in the long run and, in the short to medium run, keep hold of power and win the [party’s] elective conference.”
This is why it is difficult for Gigaba, Attard Montalto said. “Even if he doesn’t agree to the change and will push back against it specifically, if you are seen trying to prevent this space for wider constitutional change, then that can be politically damaging.”
He said he believes Gigaba understands the threat of dabbling in the Reserve Bank’s independence, but the political context meant that, in particular, the Bloomberg interview did not go down well with investors.
Mathekga said Gigaba finds himself in an untenable position with little room to manoeuvre, try as he might. He said the dossier Gigaba supporters are reportedly compiling is an indication that he, like others, is thinking about life beyond Zuma — but this will be to no avail.
“You may be reluctant but you are still stranded on Jacob Zuma’s ship — you have no allies outside; you are just moving with him,” he said.
Mathekga said he didn’t think Gigaba was deliberately being ambiguous on key issues — he was simply improvising.
“But, unfortunately, he is the type of finance minister … you can’t work because he can’t push back. You can’t work with a jellyfish minister — it can’t work; it’s designed not to work.”
The treasury did not respond to a request for comment.