EDITORIAL: Dondo Mogajane has big shoes to fill
The directors-general of the Treasury have made a significant contribution to SA’s fiscal and economic health
The directors-general of the Treasury in the democratic era have been an impressive bunch that made a significant contribution to SA’s fiscal and economic health and to its standing in the eyes of investors.
New director-general Dondo Mogajane, whose appointment the Treasury announced on Thursday, steps into big shoes. He follows former directors-general Maria Ramos, now CEO of Absa; Lesetja Kganyago, now governor of the Reserve Bank; and the highly regarded Lungisa Fuzile. But Mogajane has the advantage of having worked with his predecessors — and a solid CV and reputation.
That he is a Treasury insider will be a relief to the market, coming as it does after weeks of speculation about whether a Gupta-linked person would be installed in this crucial post. Not only is he an insider who first joined the Treasury 18 years ago, but he worked closely with ousted former finance minister Pravin Gordhan, serving as his chief of staff from 2010 to 2014.
The director-general is the accounting officer of the Treasury and its executive head, so who sits at that desk is, arguably, at least as important as who occupies the minister’s office. But while every such appointment matters, this one may matter more than most to SA’s standing in the eyes of investors and to business confidence levels that have been hammered by the fraught political environment.
Finance Minister Malusi Gigaba has been at pains to reassure markets he is a good guy committed to policy continuity and holding the fiscal line. He has recovered from some early blunders and has gone out to talk to business, investors and ratings agencies. They have been reassured that he is at least saying all the right things.
But the circumstances of his appointment have cast a shadow over his credibility, with President Jacob Zuma’s shock firing of Gordhan seen as an attempt to strip the Treasury of its independence and open the public purse to looting and state capture.
So too have the question marks over Gigaba’s relationship with the Guptas. That means markets have been watching closely to see whether deeds will match words. The Treasury director-general’s post has been at the top of the watch lists, after Fuzile asked to leave a year early following Gigaba’s appointment.
It is the president who appoints the director-general, not the minister, so the choice of Mogajane will help to provide reassurance that the government is still committed to continuity at the Treasury. But it is just one item on the list and the choice of the Treasury’s chief procurement officer will matter too, because that post should provide a crucial check on corruption and capture. And what the government does about other crucial aspects of economic policy, such as the mining charter, will matter just as much.
The appointment will help with reassurance the government is still committed to continuity
Mogajane and his team face big challenges if they are to deliver on promises that Gigaba and the government have made, especially now that the economy has gone into recession — and we know that this year’s growth rate could come in well below earlier forecasts, as could next year’s.
Keeping the lid on expenditure will not be easy, especially given the infiltration of corrupt elements everywhere in government. Meeting revenue targets will not be easy either, and the Treasury will have a challenging time to get the numbers to work for October’s medium-term budget, which will be watched closely by ratings agencies and investors.
The threat of further ratings downgrades is as present as ever and so too are the ideological battles within the government and governing party over economic policy and "radical economic transformation".
Mogajane has his work cut out for him. We wish him the best of luck and good judgment.