Work for jobless youth, not handouts — Enoch

New finance minister hints at plan to invest in employment for ‘young black kids’

New finance minister Enoch Godongwana has drawn an early line in the sand over the question of a basic income grant (BIG), saying he would rather the funds be used to give work to unemployed black youngsters, instead of a handout.

In an interview yesterday, as he prepares to take up the hot seat vacated by Tito Mboweni, Godongwana was careful to tread a diplomatic path on the BIG, which many in the ANC see as a necessary measure amid low growth and a Covid-ravaged economy.

He hinted at far-reaching proposals that would focus on millions of young people who are unable to find work. He said a more thought-out approach is required, something that has been misinterpreted in the party as his opposing the introduction of a BIG.

“People are missing the point [on his BIG stance] … about 4.2-million of these people that are unemployed — using the narrow definition — are young people between 15 and 35 years.

“My argument is that we must invest in them. Even the amount we may spend could be more than a grant,” he said.

“We can’t condemn young people to a cycle of dependence, particularly because these are young black kids.”

Godongwana said he believes the current approach to the BIG creates dependency and does not address fundamental issues affecting youth unemployment.

“That’s my version, and not your white liberals who think that every kid or black person must be kept in perpetual dependence through grants.

“What we need to do is invest in skilling these kids, and obviously they will have some cash which will be a stipend or per diem. And in addition let’s get them better development of skills,” he said.

“There are varied categories including the youth, who need more than just a grant and social support. We must not lump these people together with the rest of the population. We need varied mechanisms to support various people including the vulnerable youth, who need both social support and skills programmes.”

Godongwana’s emphasis on creating work in an economy that has thus far failed to provide employment could put him at odds with ANC leaders who support a BIG. It also suggests that his policy emphases could, like Mboweni’s, be a hard sell in the party.

Godongwana, a former trade union leader and head of the ANC’s economic transformation subcommittee, is regarded as a staunch Ramaphosa ally.

He ticks all the right boxes, policy-wise, and in addition has standing in the party, whereas Mboweni was increasingly regarded as an absent minister who delighted in tilting at ANC economic policies.

Ramaphosa announced he accepted the ‘‘long-standing” resignation of Mboweni, which contradicted speculation that Mboweni was in fact pushed.

Sources in political and business sources said Mboweni had long indicated his wish to leave, but expected a smoother departure.

There has also been unconfirmed speculation that the ANC’s allies pressured Ramaphosa to drop Mboweni.

‘‘We did not put the president under pressure to fire him. We differed with the minister fundamentally,” said SACP first deputy general secretary Solly Mapaila.

‘‘He sent us deep into the clutches of the IMF [International Monetary Fund] and the World Bank, at the expense of our people.”

Godongwana’s views of a BIG comes in the same week that social development minister Lindiwe Zulu was reported to have said the current R350 social relief of distress (SRD) grant should pave the way for the introduction of a BIG.

Zulu said that in general the Covid-19 relief measures are estimated to have reduced the number of households with incomes below the food poverty line, and that research shows that the majority of recipients use the money to buy food.

“We have also highlighted that the special Covid-19 SRD grant should ideally be a stepping stone to a basic income grant,” she said.

“We are currently working on the policy

aspects surrounding this, including the implementation and resource mobilisation aspects related to this grant, working with various stakeholders through a series of consultations and will provide updates on [the] same accordingly.”

Zulu said the first round of the grants had attracted almost 10-million applications, of which over 6-million were approved at a cost of R24bn.

Godongwana also insisted that his proposal will be different from existing initiatives such as Setas, and the Jobs Fund, but did not provide further details.

Commentators said another big test will be Godongwana’s control of the fiscus.

He declined to be drawn on detail, saying he is committed to a sustainable fiscal framework.

“We’ve got to construct a fiscal framework which addresses the developmental needs of the economy. But in a manner the economy can afford,” he said.

“I don’t want to be drawn into words like austerity and all that … I don’t want to go into the details yet because I don’t know what the numbers look like. I will be talking to the nation on Tuesday.”

The matter is especially critical because SA is cash flush at the moment thanks to a cyclical commodities boom that is expected to increase revenue by 10% above forecasts. The worry is that the government could be tempted to spend this money on initiatives that will not reignite the economy, or address structural issues such as high national debt.

Godongwana said he looked at the boom in two ways: It “has helped the fiscus, in a way, to cushion the impact of the new spending pressures that are coming. It has also not been helpful in that on the back of it we have not been able to stimulate the manufacturing part of our economy. That is one of the things one is going to grapple with.”

Godongwana said he is aware he is “coming into a difficult environment. Some have characterised it as the worst fiscal crisis post the democratic transition … There is also the spending pressure that is exacerbated by the Covid-19 pandemic, and therefore the demand for social protection in different forms.

“But what is positive is that I’m coming in at the lowest ebb. I don’t think we’ll be going further down than we are, we can only improve,” he said.

Critics of his appointment have pointed to a scandal in which Godongwana resigned as deputy minister of public enterprises.

This was after it emerged that R100m belonging to the South African Clothing and Textile Workers Union was paid to Canyon Springs, which was partly owned by him and his wife, and then invested in a friend’s company that later went bust.

Godongwana was found to have been paid R1.5m by Canyon Springs over a period of two years, but was cleared by criminal and liquidation inquiries. In 2017 he reached a settlement with the union and paid back the R1.5m.

“I took the job aware that people would dig the dirt to argue that I’m not fit for office,” he said.

“I did the honourable thing at the time and resigned from the government, not because I was guilty [but] in order to protect the office. That’s what an ethical person does. I then went through the exercise of dealing with this matter, both from a criminal and civil perspective. On the basis of my submission on the criminal one there were no charges preferred.

“On the civil matter there was no substantial evidence against me other than the fact that I also benefited in the form of a small amount, which I paid back.”