‘Don't spin, tell the truth’ encourages Mboweni

Tito Mboweni
Tito Mboweni

A frank assessment of the dire state of affairs, coupled with practical solutions, could be enough to convince investors in Davos that SA is not a junk yard (yet).

In his typically frank style, Finance Minister Tito Mboweni laid down the cards that will be taken by Team SA as it heads to the World Economic Forum in Davos, Switzerland, at the end of January.

As the country’s debt woes grow, tax revenue declines, unemployment increases and foreign investment slows, Team SA does not, on the face of it, have a particularly sparkling future to sell. Or so you would think.

Not so, says Mboweni.

“The country has the determination to implement serious structural reforms and we have a clear economic strategy,” he says.

The elephants in the room, state-owned enterprises (SOEs), are firmly in hand.

Fiscal stability is under threat from SOE demands
Tito Mboweni

“Those that work must be supported,” says Mboweni. “Those that don’t must get out of the way.”

This view is unlikely to find any friends in the labour movement, but it is a clear sign of government’s determination to ease the pressure on the fiscus.

“Fiscal stability is under threat from SOE demands,” says the minister.

Referring to a pending R2 billion bailout due to SAA, Mboweni emphasises that there are huge operational problems that must be addressed at the national carrier.

“We should have a national airline that can do the job. The department of public enterprises, Treasury, SAA and the business rescue practitioner must arrive at a position where decisions can be taken.

“We are trying to find the cash and will keep our fingers crossed.”

Mboweni’s pre-Davos briefing follows his views expressed on Twitter in the first two weeks of this year.

Structural economic reforms inertia is frustrating. Let’s get on with it. Movement!!!! Many steps at a time!!
Tito Mboweni in a tweet

“If you cannot effect deep structural economic reforms, then game over. Stay as you are and you are downgraded to [junk] status! The consequences are dire. Your choice. Yep!! Askies!!” he tweeted.

Not one to mince his words, Mboweni followed with another blistering tweet, reflecting a growing sense of frustration.

“Structural economic reforms inertia is frustrating. Let’s get on with it. Movement!!!! Many steps at a time!!”

Ebrahim Patel, the minister of trade and industry, picks up the same positive narrative.

“This will be a great year. During periods of wild swings, it is important to have good perspective.

“So, what are we going to tell investors in Davos? Well, we will reflect on the period from January 2019 until now. We had an election that was welcomed by the markets. [President Cyril Ramaphosa] has a high degree of confidence.

“This is critical. We have political stability,” he says, before walking though a list of positives which, although slow in transformative pace, are clear signs of positive movement.

Among the positive movements is:

  • The Energy Resource Plan, which offers a clear vision of the country’s energy mix;
  • Reshaping the competition space, which includes opening the retail space, moving on data services and pricing, and investigating private healthcare.
  • Practical interventions, for example, in the processing of water licences, the availability of spectrum, as well as the continual pursuit of the fourth industrial revolution and utilising the opportunities emerging out of the new economy. To achieve this requires us to fundamentally reshape the way in which we educate the future generation.
  • The agreement to establish an African free trade market under the African Continental Free Trade Area. It currently includes 28 countries whose parliaments have signed and ratified the treaty.

“There is a lot of great enthusiasm, a lot of positive energy,” says Patel.

Tariff liberalisation talks are due to start in July, which will be a major step forward, he says.

A permanent CEO at Eskom, who has the mandate to implement government’s stated policy to separate the entity into the operating units.

Yes, we experience load shedding, but we cannot be a doomsday sayer. There is power
Tito Mboweni

“Despite the bumpiness, we are moving forward. Investors want to see forward movement. They want to see that they will get a return if they invest,” says Patel.

When asked what Team SA would tell investors about the parlous state of South Africa’s power utility and the load-shedding in the country, Mboweni took the high road.

“Yes, we experience load shedding, but we cannot be a doomsday sayer. There is power and steps have been taken to strengthen Eskom.”

Asked if the utility will be privatised, Mboweni again explained the process that will be taken.

“It will be broken into three units: Generation, which will open the space for independent generators; transmission, which will remain as a single entity under state control; and distribution. There are already multiple distributors and they may increase.

“We don’t want to lie to people,” says Mboweni.

We all have a responsibility to be vigilant. Large projects will attract thieves, rats and mice
Tito Mboweni

“When you go to Davos, it is a networked community, a forum that provides a platform for opportunity. You don’t have long speeches. You speak on your feet, you get your ideas across and you do deals on the side.”

If only it were that simple to effect changes in the country. There are some difficult issues to tackle.

“Wastage and corruption must be stopped. We all have a responsibility to be vigilant. Large projects will attract thieves, rats and mice.

“We must tackle general mismanagement which destroys infrastructure, which then requires billions to rebuild. The Vaal River system, for example, is being destroyed by municipalities which will later be required to rehabilitate it. We can’t allow this.

“The civil service wage bill is a huge threat, but the issue has to be approached responsibly. We will do so,” says Mboweni, as Team SA gears up to take the future of the country to Davos.


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