Malusi Gigaba. Picture: BLOOMBERG/WALDO SWIEGERS
Malusi Gigaba. Picture: BLOOMBERG/WALDO SWIEGERS

Finance Minister Malusi Gigaba’s 14-point action plan to boost the economy has the right approach, includes some important new initiatives and is refreshingly urgent. But it also falls short. And in that contradiction lies a complicated picture.

It’s the right approach because Gigaba has clearly turned his back on grandiose statements about broad policy and confined himself to specific measures that are tied to specific time frames. In an era when South Africans have heard endless speeches laden with good intentions and pure motives with few specific targets, this approach is a great relief. More verbiage now would have been doubly disappointing.

In some ways, that approach has been forced upon him by the circumstances of his appointment. The firing of his predecessor, Pravin Gordhan, has burdened Gigaba with a terrible albatross. He needs to build credibility and authority in the face of the disheartening suspicion that he occupies the position because he is a political space holder who is preferable to the president than his predecessor, rather than that he might actually be the right person for the job.

The way to defeat that stigma is to start small and focus on getting things done. So far so good.

Gigaba has also played another card designed to achieve the same goal: he has thrown a bone to business. It’s phrased in massively cloaked terms, but "developing a framework for greater private-sector participation in projects run by the government and state-owned enterprises" might, if you were a cynic, be shortened to the word "privatisation".

Of course, it remains to be seen whether Gigaba actually means giving up government control, which is probably unlikely, but at least he has shown the courage to bring up the topic.

THIS ILLUSTRATES THE ROOT CAUSE OF THE PROBLEM: THE GOVERNMENT HAS RUN OUT OF OPTIONS.

Taken together with support for the idea of an inquiry into state capture and a decision to support more discussion with business about the calamitous Mining Charter before it is slammed into law, we have the outline of an approach that does not see everybody in the business, other than the black empowerment lobby, as the enemy. Sad to say, but that constitutes progress.

Yet the plan remains disappointing. The problem is much larger than its repetition of much of what Gigaba has already said. Some of the points suggest that problems in the state sector are much more urgent than even pessimists have thought. The fact that Eskom might need a cash injection beyond the huge resources it is already absorbing is positively alarming. Gigaba said the injection would not affect the overall integrity of the budget, but even so, it’s a worry.

He is also now talking openly about that terrible thing: the possible need for an IMF bail-out. Presumably at this point, it’s to shock his Cabinet colleagues into action, but even so, this is hardly the stuff that builds confidence. As Margaret Thatcher once said, the problem with socialism is that eventually socialists run out of other people’s money.

In a broader sense, this issue illustrates the root cause of the problem: the government has run out of options. Years of economic underperformance, years of treating business like a pariah, years of ignoring the obvious warnings — these are all coming home to roost. Some of that is not actually Gigaba’s doing or necessarily his fault; it’s the president’s doing. The firing of Gordhan was a slap in the face of business.

But the problem goes even deeper: the government fails to really understand how economic growth is generated.

It is not created by special programmes, decrees from on high or passing laws. It is created by loosening the springs of action, building confidence and creating an environment of credibility and excellence. And that is why Gigaba’s plan is ultimately disappointing.

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