Mpumelelo Mkhabela

Mpumelelo Mkhabela: There's hope for Mboweni's struggling aloe if all ministers show up

2019-10-31 07:47
Finance Minister Tito Mboweni extols the virtues of the Aloe ferox plant as he delivers his 2019 Budget speech in Parliament. (Gallo Images)

Finance Minister Tito Mboweni extols the virtues of the Aloe ferox plant as he delivers his 2019 Budget speech in Parliament. (Gallo Images)

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Tito Mboweni's updated economic policy document says all the right things that he would like to see done. But there are still no ideas on how to get implementation going, writes Mpumelelo Mkhabela.

When Finance Minister Tito Mboweni brought an aloe plant to his budget speech in Parliament in February, he communicated a message of belt-tightening and resilience. An aloe survives difficult times.

The fact that he brought the same plant for his Medium-Term Budget Policy Statement this week showed nothing has changed in the country's economic outlook. As he said, the plant has struggled.

ANALYSIS | Mboweni, Treasury reveal how political stasis is paralysing government reform

Those who have tasted the undiluted juice extract from an aloe would know that it's bitter. Mboweni presented a Medium-Term Budget Policy Statement that had similar effects on the taste buds.

If the aloe's alleged medicinal value does not cure the nation's illness of fiscal profligacy and over-spending without generating wealth, the next medicine could be so bitter an aloe would have no match.

The bitter taste must jolt us into starting to do things differently. Often doing things differently is couched in broad terms like "structural reforms". Mboweni's updated economic policy document says all the right things that he would like to see done. But there are still no ideas on how to get implementation going.

Though bitter, it was good Mboweni acknowledged that the government is not a job creator. Thousands of civil servants who earn above a million rand are likely to be retrenched. They should be in private business generating wealth, creating jobs, growing the economy and paying taxes to the fiscus, not consuming taxes. The government must learn to do more with less. This means increased productivity.

Stop lying to the people

It would be great to have all political parties admit that government cannot create jobs. No political party must campaign on the basis that they will create jobs. They should rather say they will create a conducive environment for the private sector to create jobs. Electoral competition must be about which policies and who is best suited to implement those policies conducive for job creation.

The promise to provide things for free must also not feature in future manifestos of political parties. Eskom's debt situation has suddenly woken the government to realise the unpalatable truth that must be communicated to voters: that there is nothing for free.

Politicians must stop promising to double or triple social grants because there is no fiscal space for this. In other words, they must stop lying to people during elections. Unrealistic and unfulfilled promises fuel discord and cynicism in politics.

This does not mean, however, that the government is powerless. Mboweni mentioned something lightheartedly that goes to the heart of what is strangling the economy when he said the president had been waiting for a few years for a water-user license from the municipality in Cape Town. Mboweni became aware of President Cyril Ramaphosa's concerns when they were discussing the importance of making it easy for companies to do business.

Now, the government must invite all companies to present expansion plans in which they answer two questions: what is preventing them from investing further and how many people would they employ if the blockages were removed?

The aggregate answers to the second question would give the government an idea about the job creation potential of the economy if identified blockages were addressed. The identified blockages should then be directly linked to the performance assessment of individual ministers/bureaucrats who can be held accountable for delivering the enabling environment for investment and jobs within a specific time frame. (By the way, why is the president not publishing the key performance indicators for all his ministers?)

Some blockages are specific to companies and cannot be addressed through broad policy decisions. Investment summits are fine, but they don't provide a sufficient forum for companies to openly indicate their concerns. They are a nice public relations platform for the president to have photo opportunities with corporate executives to be seen to be investor-friendly.

Some South African companies are cash-flush. In addition, banks and development finance institutions have room to extend credit. Although some companies, particularly smaller ones, might have funding constraints, not all have this kind of problem.

Government must lobby companies, not other way around

How the government regulates companies seems to be the biggest obstacle. Some liberal market fundamentalists even argue for less or no regulation. That would be a recipe for disaster. In fact, that's not the issue. The issue is the nature of the regulations, the efficiency (or lack of it) with which they are executed and whether their impact on investment and jobs is understood by those who take decisions.

The government ministers and other officials must understand that in this age where there is global competition for investment, they must be the ones lobbying investors to invest. It should be unnecessary for companies to spend a lot of money hiring consultants to lobby the government to create a better investment environment. It must be the other way around.

This would require the president to order all his ministers to each produce a growth plan on the basis of which they will either keep their jobs or kiss goodbye their Cabinet perks. Gerrie Fourie, the chief executive of Capitec, recently proposed the idea that each minister must have a growth plan. He was right.

All ministers must indicate how each one of them will assist the private sector to invest and create jobs using, among other things, regulatory powers, licensing powers and efficient decision making.

- Mkhabela is a regular columnist for News24.

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