Why Tito’s a rebel with a cause
Tito Mboweni has gone full circle, from champion of labour to bête noire. He has fought many battles along the way and may now be facing his greatest one yet, writes Caiphus Kgosana
In August 1998, reporters gathered on Prinsloo (now Sisulu) Street in Pretoria to catch a glimpse of the man tipped to become the first black governor of the Reserve Bank.
Tito Mboweni was leaving his job as labour minister to deputise for the reigning governor, Chris Stals, before fully taking over the following August. He made it clear that it would take a while to get to grips with the new job. “I’m told there are 32 floors in this [Reserve Bank] building,” he said. “So I will tell you next August what we are going to do in terms of financial policy for the country.”
It would be a significant moment: Mboweni was going to be the first black man to put his signature to South African banknotes. When it happened, it represented a total takeover by the ANC, now five years in power, of key economic institutions. Some said Mboweni’s elevation was as symbolic as the changing of the flag and the national anthem. A new money man was here — and he was just 40 years old.
His appointment was met with panic, fear and anger in the markets. The rand plummeted as conservative commentators and opposition political parties decried the appointment of an ANC politician as the custodian of monetary policy and one who was seen as being close to labour federation Cosatu.
For black people — given the vote only four years earlier — Mboweni was regarded as larger than life. Banknotes bearing his signature, which first circulated in August 1999, quickly became known as “Titos” in the townships, a cool item to have in your wallet.
In his brief chat with reporters outside the Reserve Bank a year earlier, Mboweni had quipped that one of the biggest challenges was going to be getting people to pronounce his name correctly. He also said: “There’s going to be a different signature on the banknotes, and people must remember it’s new, and there are different reactions to change.”
The markets’ reaction to his appointment had him more worried.
In the same way he was asked to become finance minister during a difficult post statecapture era, Mboweni took over the Reserve Bank at a trying time for the economy. Stals had kept increasing interest rates to contain inflation and stave off speculators in Asia and Russia who were hammering the rand. The previous August, interest rates had hit a high of 25.5% and South Africans were drowning in debt repayment. They were losing their homes, their vehicles, their possessions and their patience.
There was fierce debate in the tripartite alliance over high interest rates. Cosatu was pointing fingers at Stals and the central bank, accusing them of being “impervious to the social consequences of high interest rates”. It was clear that Stals had to go, and a new man who was more acceptable to the alliance had to come in.
The labour federation applauded the arrival of Mboweni, the midwife of key labour legislation. He had nursed the Labour Relations Act and the Basic Conditions of Employment Act through parliament. But the Mbeki administration was steadfast in sticking to inflation targeting and Mboweni had instructions to keep to the 3%-6% target, a mandate he fulfilled. By the end of his first term in 2004, roles were reversed: the markets were begging Mbeki to give him another term, while the unions bayed for his blood.
In an editorial, the Financial Mail celebrated the renewal of his term in office as good for continuity in monetary policy, and the credibility and independence of the Reserve Bank: “Mboweni has as many critics as admirers, but they all agree he deserves praise for having steadfastly remained true to government’s inflation targeting framework — the anchor of monetary policy.”
In the same publication, economist and
How ironic that the man who fought so much for the victories of labour found himself at odds with the unions over inflation targeting, and now again over wages. This time around, however, the unions know him well and have been prepared for battle
corporate finance consultant Nico Czypionka wrote that Mboweni had won over the markets with the way that he fulfilled the mission to ensure the stability of the currency “in the face of huge pressure and resistance from his own political constituency ... How did this come about? Witness the swift metamorphosis from comrade Tito, political activist from the ANC’s Left, to Mr Mboweni, respected and financially conservative governor.”
It was not an overnight metamorphosis. As head of the ANC’s economic planning department in the early ’90s, Mboweni was a known proponent of “renationalising” public entities and even mooted a once-off “reconstruction levy” of 5% on income tax to assist in rebuilding the country.
Mboweni had won the love and respect of the unions by fighting hard for them.
Mbhazima Shilowa, who was Cosatu general secretary at the time, recalls when Mboweni had to face down President Nelson Mandela and most of the cabinet in 1995 over a lockout clause in the Labour Relations Bill, which was being drafted. Business was lobbying Mandela to include a clause that would allow bosses to lock out striking workers. Mboweni was dead against it.
“He told Mandela, if he [Mandela] can’t back him he’s going.”
How ironic then that the man who fought so hard for labour, and won it so many victories, found himself at odds with the unions over inflation targeting, and now again over wages.
This time around, however, the unions know him well and are prepared for battle. Writing in this newspaper last week, Cosatu general secretary Bheki Ntshalintshali warned the National Treasury that any suggestion of lowering the wage bill would be a declaration of war. The unions know that they are dealing with a foe who would not budge back then, and is not going to back down in the battle over the unaffordable public sector wage bill.
The Treasury wants reductions of R160bn in the wage bill, part of R261bn in cuts it has to effect over the three-year medium-term expenditure framework. The budget deficit has skyrocketed to almost 7% and national debt is fast approaching 71% of GDP.
Mboweni has no choice but to go after the astronomical wage bill if the country is to avoid a ratings downgrade.
Shilowa doesn’t understand why the people who were so successful in creating the country’s labour regime cannot now sit around a table and resolve differences over the wage bill impasse. Shilowa singles out President Cyril Ramaphosa, who was leader of the National Union of Mineworkers (NUM), and later ANC chief negotiator at Codesa; Sipho Pityana, director-general in Mboweni’s office at the department of labour and now president of Business Unity SA; Gwede Mantashe, who was also general secretary of NUM; public administration minister Senzo Mchunu, who was a union leader in the day, and current leaders of Cosatu, as those who helped Mboweni set up the labour legislation.
“In the same way we were able to make this raft of legislation through Nedlac, they could also do a social accord. If there was political will, surely in the same way we were able to sit down and negotiate, they could do the same,” said Shilowa.
With the battle lines firmly drawn, the money man has now come full circle with the Left.
Mboweni had told people that he did not want the finance minister job. He was happy on his farm in Magoebaskloof, cooking tinned fish and watching dagga plants grow.
Famous for shooting from the hip, nowadays he is more guarded about what he says or tweets for fear of being scolded by Ramaphosa. But he’s an eccentric, centrist economist who is at odds with some of his own party’s economic policies.
If he had his way, Mboweni would sell off South African Airways (he has questioned why taxpayers must subsidise rich people to fly), and all of Eskom’s cash-guzzling, coal-fired power stations. But he is bound by policy he doesn’t agree with.
Mboweni spends a lot of time on his farm. Rumour in the Treasury corridors is that he has set up a full office and runs the country’s finances from the farm. But few understand how involved he is with the budget process. He is the convener of the finance minister’s committee on the budget. The committee includes Ebrahim Patel, the minister of trade & industry, and Thulas Nxesi, the minister of labour. Finance MECs of all nine provinces are also part of the committee. It is this structure that prepares groundwork for the budget.
He also works closely with those in the engine room of the Treasury to fine-tune the budget that is to be presented to the cabinet for final approval. The budget office is headed in an acting capacity by Ian Stuart. The economic policy unit is also headed in an acting capacity by Mampho Modise, and the asset & liability management unit is under Tshepiso Moahloli (also acting). The experienced hand of Ismail Momoniat, deputy director-general for tax & financial sector policy, assists in the entire process.
Mboweni has several writers who draft speeches for his approval, with the final product bearing strong traces of the finance minister’s own words.
Shilowa says that while he knows Mboweni as a hands-on person, he also knows the minister would not have picked a fight with public sector unions without the backing of the president.
“Today Cosatu will say Tito has gone rogue, but the truth is Tito could not table the budget he did, including issues on labour, unless Ramaphosa had agreed to it. Any finance minister is as strong as the president he serves. If he had gone rogue, the president would sack him. In the same way that [former finance minister] Trevor Manuel could do what he did because he had the backing of [President Thabo] Mbeki.”
Mboweni’s signature might not be on banknotes any more, but he still makes his mark in how SA makes and spends its money. When it comes to the wage bill, it will be nothing short of a miracle if he decides to give public servants not a cent more than he thinks they deserve.