The toughest sell of Gordhan’s career
YOU don’t want to overdramatise these things, but the sound of Finance Minister Pravin Gordhan’s tired voice on the John Robbie radio show last week brought a lump to my throat. It was before seven in the morning in Johannesburg. In Boston, where Gordhan had just landed, it was approaching 1am. He had not slept for many hours.
It wasn’t the distance from this thoroughly decent South African that moved me. It was what he was doing all that way away. In a week, he flew from Johannesburg to London, then Boston then New York then back to Johannesburg. I did that same trip last October under much less stressful circumstances and I was shattered when I got home.
Gordhan spent last week fighting for the survival of our economy. Or, at least, for an economy still worth fighting for, rather than over, as some of his party colleagues seem to want to do. What is more, he was doing this as leader of a team of South Africans drawn from business and the unions.
I think it was a magnificent effort. Not in the 20 years since I came home have I seen a real Team South Africa get down and do work like this. It wasn’t a junket, like Davos. The team took the Tube in London, forswearing the luxuries ministers and dignitaries of lesser integrity would insist on enjoying when overseas.
Gordhan’s sweep was designed to try to convince the foreign investment community — the people we turn to when we need to borrow money — that he can get our finances back under control.
And to plead with these key investors to help us avoid the possible — indeed probable — downgrading of our sovereign debt to subinvestment grade, or junk status, by the international ratings agencies.
In all, just to put things in perspective, government debt is about R2-trillion (that’s two million million rand). To borrow that much, it has to pay a quite hideous amount of interest, as you do when you buy a house. Interest payments are now the fastest-growing item in the country’s national budget.
But our economy is slowing just as the cost of paying the interest on our debt is rising. It is a combination of poor policy, bad luck and even more poor policy.
So in London, Boston and New York what Gordhan did was talk and talk and talk. And to hundreds of people who, although they may never set foot in South Africa, have a serious influence in what happens here. It isn’t a position they sought — we found them. We asked them for money.
Now that they have given us the money we asked for, we curse to the skies that they should want to find out how safe their investment in the country is. Are we wasting it or using it productively? It’s a perfectly fair question.
It is all very well listening to Gordhan and the team, but probably best to get a second opinion, especially as the South Africans will be borrowing a lot for a very long time. We don’t have enough of our own money.
That is what ratings agencies do, some more effectively than others. They are the second opinion. So when Moody’s, one of the Big Three agencies, announced this week it is coming here to check up on the economy, it was met with howls of protest, mainly on the left.
Isn’t it interesting that while the ANC government, which has borrowed feverishly for the past 20 years, talks East, it borrows West?
But even the DA’s shadow finance minister, David Maynier, was driven to new oratorical heights by the prospect. “The ratings agencies are circling us with their claws out,” he told parliament. Or something like that.
But the ratings agency solution is very simple. We don’t borrow money from ratings agencies. We borrow from their clients. Their clients want to know what we’re up to. If we would prefer not to have to entertain Moody’s here, then we should stop asking their clients for money and make it ourselves.
That, sadly, might require way too much introspection from the politicians and the president who throw money — our money — around like it is going out of fashion.
❛ He spent last week fighting for the survival of our economy. Or one still worth fighting for, rather than over