Can Tito walk fighting talk?

PROMISED: DECISIVE ACTION, PARTNERSHIPS

His plans may be scuppered by resistance from in and around the ANC.

There could be a significant “reconfiguration” of National Treasury, if new Finance Minister Tito Mboweni gets his way. In a press conference before his medium-term budget policy statement (MTBPS), Mboweni promised more decisive action to fix government problems and more partnerships with the private sector to increase investment and improve service delivery.

Mboweni is still adapting to a new political life. It therefore remains to be seen whether he’ll be able to walk his fighting talk to fix South Africa or be reined in by the political infighting in the ANC and other alliance partners.

However, his fighting talk is exactly what’s needed. As the very first sentence in Chapter 1 of the MTBPS states: “South Africa finds itself at a crossroads.”

The document paints a grim picture of state finances, seen worsening.

The most notable example is the prospect of SA debt. In the 2018 budget the ratio of debt to GDP was to peak at 56.2% in 2021-22. The new MTBPS projection is at 59.6% in 2023-24 after which it’ll remain at around 59% for the next few years.

This is as close as damn it to the 60% mark, seen as a significant danger zone by rating agencies.

Rising debt also affects government’s interest payments, which is set to increase to 15% of total expenditure by 2022 (between the total wage bill and interest payments, government would use over 50% of its total budget to pay interest and its employees.)

But it’s evident that Mboweni wants to tackle problems decisively. As an example, he has already roped in the army to tackle the Vaal River pollution problem.

Business friendly

Mboweni used the word “partnerships” on numerous occasions, referring to a closer working relationship with the private sector to increase investment and improve service delivery.

He referred to the N3 and N4 highways as examples where the private sector not only built the infrastructure, but are also the operators. “… we have service-level agreements in place with our private sector partners. These kinds of partnerships will be accelerated.”

Referring to the dire state of stateowned enterprises (SOEs), Mboweni said government should be “open-minded” to equity partnerships and to closing some SOEs that aren’t performing.

Can Mboweni survive politics?

Does Mboweni have the authority to implement the changes he proposes?

We’ve seen several finance ministers promising to implement urgent reforms, most of which didn’t materialise.

Mboweni clearly has President Cyril Ramaphosa’s support. It remains to be seen whether Ramaphosa has the political authority to back Mboweni all the way.

Mboweni will also face significant resistance from factions in and around the ANC alliance, where the private sector is often seen as an exploitative economic stakeholder. He won’t make friends in Ramaphosa’s extended Cabinet either.

Hopefully he isn’t “corrupted” by party politics. His decisive approach is critically needed to pull our economy back from the precipice.