Rob Rose Editor: Financial Mail
President Cyril Ramaphosa. Picture: SUPPLIED
President Cyril Ramaphosa. Picture: SUPPLIED

Finance minister Tito Mboweni must be itching for someone like US political strategist James Carville to be implanted full-time in President Cyril Ramaphosa’s office.

It’s celebrated folklore how in 1992 Carville scrawled three slogans on the whiteboard attached to a pillar in the campaign headquarters of a charismatic senator from Little Rock, Arkansas, who was bidding to unseat President HW Bush.

The most memorable slogan was: “The economy, stupid”. (The other two, I’m sure you’ll want to know, were: “Change vs more of the same” and “Don’t forget health care”.)

Bill Clinton’s adviser, George Stephanopoulos, wrote in his 1999 book All Too Human about that ultimately successful election bid: “Every speech, every event, every attack and every response had to reflect one of these three commandments.”

The slogan “The economy, stupid” should be etched on the walls of Ramaphosa’s office at the Union Buildings. Because at this delicate moment in SA’s trajectory, as we teeter on the edge of a fiscal cliff, every political decision should be weighed against its economic consequence. Every policy ought to be refracted through an economic prism.

Instead, watching Mboweni present his medium-term budget speech last week, it was hard to shake the impression that the economy had been relegated to just another faction vying for Ramaphosa’s attention. It was as if the picture sketched by the National Treasury is just one of many “considerations” — like “ANC unity” or “politics” — rather than a fundamental underpin to it all.

If so, it would be a mistake: more than anything else, Ramaphosa’s presidency will be defined by whether he’s able to hold the economy together, stave off a jobs apocalypse and keep Eskom’s lights on.

And yet, says economist Iraj Abedian, Ramaphosa has “no growth plan”.

“His recovery plan was woefully short of the mark. This is what makes the medium-term budget’s expenditure programmes highly concerning — it’s like a driver who accelerates towards the cliff,” he tells the FM.

Perhaps partly because of this, Mboweni’s tone during his budget speech was deeply unsettling, as one executive of a multinational company put it last week.

When Mboweni said: “Take this as a warning — if we do not implement these changes, we will be in deep trouble” it was as if he were an outsider to the ANC, rather than a senior ranking member of cabinet. It suggests his opinions may often be ignored by his cabinet colleagues. It was a warning seemingly directed more at them than at anyone else.

How many of those ANC leaders, you wonder, grasp what it truly means that every single day SA has to go out and borrow R2.1bn just to pay its bills? How many believe that all this austerity talk is just Mboweni being Mboweni and that there’ll always be money somewhere?

Robbing schools to keep SAA alive

Perhaps to drum home the reality, the finance minister displayed no little political savvy this week even as he agreed to transfer R10.5bn to the country’s aviation basket case, SAA. (It’s no secret that Mboweni has long resisted bailing out the airline again.)

In something of a masterstroke, the budget set out exactly where that new R10.5bn will come from, and how it’ll hurt real people: R336m will come from the school infrastructure backlogs grant, R273m from the provincial emergency housing grant, R224m from the HIV, TB, malaria and community outreach grant and R14m from the community library services grant.

As Intellidex’s Stuart Theobald points out, this isn’t just smart political theatre, it’s a way to reach into the minds of the ANC’s national executive committee and make them feel the pain.

“It is making the decision to fund SAA real and making people feel it. Schools will go unfixed and HIV, TB and malaria outreach will be curtailed,” he writes in Business Day.

It’s a way to make the ANC feel the opportunity cost of an irrational decision to save an airline that has no good reason to stay alive, Theobald writes.

Just to make it more tangible, Julia Chaskalson, spokesperson for Section27, told the Sunday Times this week that when Mboweni announced a R2bn cut to the education infrastructure grant in June, 1,390 school projects were scrapped.

“These included eradicating pit toilets at 4,000 schools, building more classrooms to deal with overcrowding and the provision of libraries and laboratories at schools that still do not have such facilities,” the newspaper reported.

Theobald says it seems few people in government really understand the fiscal crisis we’re in. It is as if the Treasury isn’t taken seriously and some government leaders think that if we can find R10.5bn for SAA, “then money can also be found for other things they want”.

Clearly, some trade unions seem to believe that.

Numsa spokesperson Phakamile Hlubi-Majola, for example, accused Mboweni of “mischievously and deliberately” misleading people by creating the impression that “other departments had to be sacrificed to save SAA”.

This, says Hlubi-Majola, is “very disingenuous, very reckless [and] very irresponsible”. (As luck would have it, others might describe the SAA bailout in exactly these terms.)

Evidently, Numsa believes the magic money tree will just sprout again when the mood takes it and that no trade-offs are required.

Slandering the undead

With this sort of economic illiteracy, and scant recognition for the Treasury’s vanishingly thin room to manoeuvre, you can see why Mboweni’s frustration levels must be going through the roof.

No wonder economists seem to be placing bets on when the finance minister will finally tire of all the political concessions he’s forced to make and retreat full-time to Magoebaskloof.

But not only was Mboweni forced to stump up for a failed airline, he even ended up defending SA’s flailing state-owned enterprises (SOEs) when the DA referred to them as “zombies”.

“They are not zombies. In fact, [The DA’s] behaviour is zombie-like,” Mboweni retorted.

As writer Tom Eaton pointed out in a well-argued column, Mboweni is correct: there are, in fact, numerous differences between the country’s SOEs and the mindless undead.

“Zombies eat only brains, whereas SOEs seem to be allergic to brains, preferring to eat pretty much everything else; Zombies can run towards you at extreme pace, while SOEs mostly inch along at a glacial crawl ... and Zombies can be stopped by removing their heads, but when you remove the head of an SOE, it simply gets a new one and the rampage continues,” he writes.

Perhaps it wouldn’t be so bad if there were any sense that our investment in SOEs like SAA has provided some kind of return for the country.

But, as independent economist Thabi Leoka writes in News24, “the government is essentially robbing Peter to pay Paul, with little assurance that the money spent on Paul is worth it”.

It’s an equation that Ramaphosa needs to get right by prioritising the economics over the politics. Because, as every successful world leader will tell you, it’s all about the economy, stupid.​

This is a roundup of the best Covid-19 news from the web, brought to you in today’s FM lockdown newsletter.

Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.