Analysis: His tenure started and ended with revenue shortfalls

FORMER President Jacob Zuma, who took office in 2009 with the South African Revenue Services (Sars) having collected R60 billion fewer taxes, left office yesterday with the revenue services staring at an R50.8bn revenue shortfall.

The projected revenue was the highest since the 2009 recession, meaning that the Zuma presidency started and ended with record shortfalls.

Finance Minister Malusi Gigaba said in his MediumTerm Budget Budget Policy Statement that the revenue deficit would be R50.8bn in 2017/18, increasing to R69.3bn in 2018/19 and R89.4bn in 2019/20.

Experts blame the situation to Sars commissioner Tom Moyane and Pravin Gordhan.

Gordhan accused Moyane of repeatedly refusing to be accountable to him as the minister.

The alleged disharmony in the revenue services has seen more than 500 Sars employees leave in last year alone.

Patricia Williams, a tax dispute resolution expert at Bowman’s, said Sars needed to rebuild its specialist tax teams and investigative divisions.

“It can take several years to investigate and assess complex tax areas, and to finalise potential disputes in court… tax avoidance, transfer pricing, profit attribution to permanent establishments and profit-shifting aspects need to be audited by skilled Sars officials,” Williams said.

Zuma also took the flak for the collapse of the country’s economy and good governance in state-owned enterprises.

When he took over, the country’s economy was on an uptick with reduced government debt and improved revenue collection. Today the economy has stagnated with the debt-to-GDP ratio now at 50.7 percent of the Gross Domestic Product (GDP).

The debt-to-GDP ratio was 27.8 percent in 2008.

Admittedly, Zuma was not the beginning and end of South Africa’s economic woes. But most are saddled with his fingerprints.

For example, the International Monetary Fund last month slashed South Africa’s growth forecast for the next two years, highlighting political uncertainty as hindering investments in the country.

Rating agencies S&P Global Ratings, Moody’s Investors Service and Fitch Ratings have also downgraded South Africa’s sovereign credit rating and Zuma’s actions – most notably the firing of former finance ministers Nhlanhla Nene and Pravin Gordhan – were a major trigger.

These agencies have pointed out the deadly combination of political ructions, questionable leadership, the poor state of state-owned companies and policy uncertainty.

Yet despite this, Zuma’s presidency had flashes of pragmatism. It was under his leadership that the ANC decided to enhance planning, monitoring and evaluation under a full ministry in The Presidency to improve service delivery through better policy making and decision making.

However, most of his ministers showed scant disregard for accountability.

If the move to improve planning, monitoring and evaluation was genuine, then the South African Social Security Agency social grants debacle would not have happened.

And the rot at Eskom would have been nipped in the bud. Lynne Brown is still Minister of Public Enterprises.

Secondly, Zuma heeded the pleas of many who said, if the ANC’s priority was to create decent work opportunities, there should be a stand-alone Department for Small Business Development.

In a country where unemployment stands at 26.7 percent, small medium and micro enterprise and entrepreneurship should be at the centre of efforts to stimulate economic growth and job creation.

The jury is still out on the department’s performance.

Thirdly, the National Development Plan (NDP) was supposed to be Zuma’s ultimate legacy.

The plan, a product of a 26 experts advisory body called the National Planning Commission appointed in May 2010 identified a number primary challenges for the country.

These included unemployment, poor quality of school education for black children, poorly located and inadequate infrastructure, poor public health system and poor public services.

Yet the NDP had all the hallmarks of a pie in the sky from the beginning. It set ambitious targets that could not be reached in a shrinking world economy. These included growing the economy by 5.4 percent per year, and reducing unemployment to 6 percent by 2030. As Zuma bid the country goodbye on Wednesday evening, progress on the earmarked challenges has been indifferent, to say the least.