EDITORIAL: Mboweni’s job is difficult but Ramaphosa’s is impossible
SA looks forward to stability at Treasury after five finance ministers in five years
It is a sign of the instability in the government and in ANC politics that we now have a fifth finance minister in as many years. Only a decade ago the Treasury was run by the world’s second-longest serving finance minister in the person of Trevor Manuel and was held up as a beacon of consistency and excellence.
The contrast shows just how much work incoming minister Tito Mboweni has ahead of him in rebuilding the institutional strength and capacity of the Treasury. Apart from the instability in the political leadership, the Treasury has been quite severely hollowed out by an exodus of skilled people over the past five years. While good and dedicated officials do remain, it is not unfair to say that the organisation is a shadow of its former self.
The appointment of Mboweni is a good one in many respects. As a former governor of the SA Reserve Bank, he has a solid reputation in the global financial world; he understands economics well and is experienced in economic management.
Having been part of it from the beginning, Mboweni has a seniority and gravitas few others in the governing party share. So, in many ways, he is a good fit. At the announcement, his old friend the rand — Mboweni used to sign our banknotes — clearly approved.
He was integrally involved in the formulation of ANC economic policy in the early 1990s, along with colleagues Manuel, Maria Ramos and Bank governor Lesetja Kganyago. This included the landmark decision contained in the constitution for an independent central bank and market-friendly policies aimed at attracting investment. Having been part of it from the beginning, Mboweni has a seniority and gravitas few others in the governing party share.
So, in many ways, he is a good fit. At the announcement, his old friend the rand — Mboweni used to sign our banknotes — clearly approved.
Mboweni also has another clear advantage over any other internal candidate President Cyril Ramaphosa could have chosen. While he has remained a member of the ANC’s national executive since completing his two terms as governor in 2009, he has not been very active in politics, other than his occasional bursts of fire on Twitter.
He has engaged in business, not with any tremendous success, and also in farming. But being quite far removed from the politics of the Zuma era, he is unlikely to have been tainted with the brush of the Guptas or the corruption of any of the other agents of state capture. With luck, this will allow the Treasury to recede from the political frontlines and get back to the technical and serious work of advising the government.
However, we need to be frank about the enormous challenge Mboweni will face in getting the public finances back on track. He comes in at a time when, the period 1994 to 1999 excluded, public finances are under unprecedented pressure.
The medium-term budget policy statement, which has no doubt already been completed by his predecessor, Nhlanhla Nene, must be presented in just more than two weeks. In it are no doubt some sobering numbers. Growth will have to be revised down, and with it government revenue. At the same time, spending demands have grown: wages for public servants are going to cost more than expected; state-owned companies are in distress; and the stimulus package introduces some new line items. The public is showing increasing signs of revolt over increased taxes and fuel prices.
It will not be a glamorous or easy time to be finance minister.
The whole Nene episode is also worth some reflection. It is regrettable that Nene, who was competent and capable and had shown courage when it mattered most, had to go. It was in part because he handled the matter so badly, but more importantly it was because the fallout of the corruption of the Zuma era is going to be difficult to avoid for any ANC politician who served at the time. It will be far and wide.
This puts the spotlight on what in the next nine months will be a big problem for Ramaphosa. How will he put a government of integrity together while guarding ANC unity, something he has set as his priority? One or the other will have to suffer.