Move over, here comes Tito

A tough nut, Mboweni is likely to make the trea­sury the undis­puted cen­tre of eco­nomic power and pol­icy

Mail & Guardian - - News - Ma­tuma Let­soalo & Lyn­ley Don­nelly

In­tel­li­gent, in­de­pen­dent and ar­ro­gant. These are some of the words used in the cor­ri­dors of power to describe the new fi­nance min­is­ter, Tito Mboweni. The out­spo­ken former Re­serve Bank gov­er­nor made a spec­tac­u­lar re­turn to gov­ern­ment this week af­ter Pres­i­dent Cyril Ramaphosa ac­cepted Nhlanhla Nene’s res­ig­na­tion as fi­nance min­is­ter.

One of Mboweni’s pri­or­i­ties will be to turn around the trea­sury and make it the sin­gle driver of eco­nomic pol­icy, ac­cord­ing to Busi­ness Unity South Africa pres­i­dent Sipho Pityana, who was in ex­ile with Mboweni in Le­sotho and worked un­der him as the direc­tor gen­eral of the depart­ment of labour af­ter 1994.

In an in­ter­view this week, Pityana said he strongly be­lieved Mboweni would adopt a dif­fer­ent ap­proach to the pre­vi­ous fi­nance min­is­ters in man­ag­ing the econ­omy.

“My view is we are likely to see a trea­sury that re­oc­cu­pies its right­ful po­si­tion at the cen­tre of eco­nomic pol­icy de­ci­sions. Dur­ing the pe­riod of Pravin Gord­han, Malusi Gi­gaba and Nhlanhla Nene, the trea­sury was fight­ing for a place un­der the sun and there was a lot of hos­til­ity from other gov­ern­ment de­part­ments. The cen­tre of eco­nomic pol­icy had shifted to no-man’s-land, par­tic­u­larly af­ter Pravin’s term. “That would be the first ma­jor shift. Tito would want to make sure that ev­ery­one un­der­stands the struc­tural role of trea­sury and the im­por­tance of hav­ing an eco­nomic cen­tre in the state sys­tem.

“If the se­cu­rity cen­tre in the state sys­tem ul­ti­mately is your de­fence, the eco­nomic cen­tre is trea­sury. Once you don’t have trea­sury as your eco­nomic cen­tre, the cen­tre of your eco­nomic strat­egy and pro­gramme sit in no-man’s-land and that’s where con­fu­sion comes,” said Pityana.

It did not make sense to have the depart­ment of eco­nomic de­vel­op­ment, trade and in­dus­try and the trea­sury driv­ing dif­fer­ent eco­nomic poli­cies, he said.

“I know he [Mboweni] feels strongly about this and he would want to per­suade the pres­i­dent and other eco­nomic min­istries. There are too many eco­nomic min­istries. That’s part of the con­fu­sion. He will want to make sure that there is an align­ment on what is the coun­try’s eco­nomic strat­egy.”

De­spite Mboweni’s tweets ear­lier this year, which in­cluded the call for the state to own 40% of all mines and to create a state-owned bank and a sovereign wealth fund, Pityana said he did not ex­pect him to push a rad­i­cal line. In­stead, what is ex­pected is some­thing of a known quan­tity — a man of knowl­edge and acu­men, with ex­pe­ri­ence of fi­nan­cial mar­kets, who un­der­stands the bud­get­ing process, the pres­sures on the trea­sury and the im­por­tance of an in­de­pen­dent Re­serve Bank.

“Na­tion­al­i­sa­tion [and other things] are po­si­tions that he never ad­vanced when he was at the Re­serve Bank. He be­longs to the gen­er­a­tion that per­suaded the ANC that na­tion­al­i­sa­tion is not a good idea, of­ten re­fer­ring to it as the ‘n’ word.

“We had a group­ing that was called Merg [mi­croe­co­nomic re­struc­tur­ing group]. It was very left wing in its ori­en­ta­tion and pushed strongly the agenda for state-owned [en­ti­ties] and na­tion­al­i­sa­tion. He [Mboweni] was among the first to break from the idea of that po­si­tion and the over­stated po­si­tion about the role of the state. He al­ways be­lieved in a devel­op­men­tal state, which was dif­fer­ent from state own­er­ship of as­sets of the econ­omy,” said Pityana.

Dur­ing his years as Re­serve Bank gov­er­nor, Mboweni was known for his lik­ing for for­mal­ity and cer­e­mony, which was epit­o­mised by his well-cut suits. He was also known for hold­ing the line on the Re­serve Bank’s man­date on mon­e­tary pol­icy.

It was for this rea­son that, to­wards the end of his term, in 2009, he found him­self in the crosshairs of the ANC’s al­liance part­ners. They wanted to aban­don in­fla­tion tar­get­ing and to re­write the cen­tral bank’s man­date to fo­cus on eco­nomic growth and job cre­ation. It was at a time when Ja­cob Zuma’s new pres­i­dency was flush with the prom­ise to labour al­lies of a more ex­pan­sive eco­nomic pol­icy.

Cosatu, de­spite its less than sunny his­tory with Mboweni, has now of­fered him its “sup­port as work­ers” and said it hoped “that he can pro­vide the nec­es­sary lead­er­ship to kick­start our flail­ing econ­omy”.

But this “con­di­tional ac­cep­tance”, as po­lit­i­cal an­a­lyst Ralph Mathekga has put it, may be short-lived, par­tic­u­larly given that Ramaphosa, in his bid to unify the ANC and right the list­ing econ­omy, needs to bring fac­tions and in­ter­est groups to­gether. Mboweni’s his­tory with labour “is a big thing”, Mathekga ar­gued.

The role of fi­nance min­is­ter comes with the near-im­pos­si­ble task of balanc­ing po­lit­i­cal pop­ulism and the wants of a bloated Cabi­net with the need for fi­nan­cial pru­dence and a prag­matic ap­proach to eco­nomic pol­icy. These pres­sures are even more acute now. The econ­omy is in re­ces­sion, the bud­get is stretched and, with a debt level at about 50% of gross do­mes­tic prod­uct, rat­ings agen­cies have been call­ing for more fis­cal con­ser­vatism.

Nene re­ferred to the trade-offs fac­ing the gov­ern­ment, in­clud­ing how it will deal with the ris­ing pub­lic-sec­tor wage bill. These un­palat­able choices now face Mboweni.

“He’s go­ing to need a great deal of [po­lit­i­cal] pro­tec­tion from Pres­i­dent Ramaphosa, pro­tec­tion that the pres­i­dent him­self doesn’t have,” Mathekga said.

ANC na­tional ex­ec­u­tive com­mit­tee mem­ber Ngoako Ra­matl­hodi, who men­tored Mboweni while he was at the then Univer­sity of the North (now Lim­popo) and dur­ing their ex­ile years, said he was con­fi­dent Mboweni would do a good job.

He re­vealed that, at first, Mboweni did not want take the job. “He was re­fus­ing to go [to be­come the fi­nance min­is­ter], he told me. But they [ANC lead­ers] had to pre­vail upon him that we in the ANC are cadres. Even if it means los­ing in­come, some­times you can be called to come serve the coun­try. It shows you the cal­i­bre of a man that he is,” Ra­matl­hodi said.

He de­scribed Mboweni as one of the bril­liant cadres of the ANC and as some­one who would take good care of the pub­lic purse.

The ANC has adopted a res­o­lu­tion to na­tion­alise the Re­serve Bank, de­spite the likes of gov­er­nor Le­setja Kganyago ex­press­ing se­ri­ous mis­giv­ings about the necessity of such a move and the pos­si­ble high cost to the gov­ern­ment.

Mboweni fa­mously clashed with ac­tivist share­hold­ers who wanted the bank na­tion­alised dur­ing his term, in­clud­ing Ger­man Michael Duerr, who at­tended one meet­ing in leder­ho­sen. But there is some sym­pa­thy for Mboweni be­cause he was deal­ing with peo­ple who were seen by some as play­ing to the press gallery.

The fight boiled down to what the value of the bank would be if its share­hold­ers were bought out, and whether the value of the bank’s gold and for­eign ex­change re­serves should be in­cluded when valu­ing the share price.

But an­a­lysts and econ­o­mists be­lieve Mboweni will stead­fastly de­fend the bank’s in­de­pen­dence.

SHA SHA: Pres­i­dent Cyril Ramaphosa con­grat­u­lates newly ap­pointed Fi­nance Min­is­ter Tito Mboweni, who is ex­pected to make his pres­ence felt re­gard­ing eco­nomic strat­egy. Photo: Reuters/Su­maya Hisham

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