Cape Town - Expecting Finance Minister Malusi Gigaba to pull a proverbial economic rabbit out of his hat in Wednesday’s mini budget seems a fantasy-like expectation. Expecting him to clearly articulate a lucid economic vision for the country seems similarly illusive.
The relatively new chief of our fiscus faces immense obstacles – some relating to his own persona but, mostly, due to the broader macro-political and economic environment in which the country currently languishes.
Firstly, Minister Gigaba should be seen in the context of both the performance and dismissal of his predecessor, Pravin Gordhan.
Gordhan’s tenure was characterised by an attempt to shore up foreign investor confidence in the wake of declining credibility in the performance of the state and the office of the president.
While Gordhan managed to stave off those ratings downgrades which eventually were inflicted upon his dismissal, he largely enjoyed a deep level of credibility in the position and despite accusations to the contrary from his domestic political detractors, his personal conduct was viewed by the private sector and foreign agencies as exemplary.
Malusi Gigaba enjoys no such provenance – or at least, he is yet to earn it. His own personal history and alleged role in linkages with the Guptas and associated state capture aspects will taint his message. One can assume that Gigaba’s own appointment was approved by the Guptas, leaving a muddied view of his independence and credibility to forge policy and practice that is separated from Saxonwold.
Given the alleged entrenchment of a ‘patronage’ state that has cost the taxpayers billions, sapped performance delivery from the state-owned sector, damaged the country’s credit ratings and left a gaping hole in our international stature, Gigaba’s close association to the Zuma way of life leaves him playing catch-up on taking corrective action and again, delivering a credible rebuke of the wrongs of the past (and still present).
Gigaba therefore was simply too close to the wrong side of recent South African governance. While Gordhan could put clear blue water between himself and the patronage club – which he did with great aplomb – there is no such benefit for Gigaba.
So, it is in this context that the current minister of finance now is expected to break with the past, break with the present malaise emanating from the Presidency and ‘be his own man’. All, it seems, could be a bridge too far.
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Clearly, Minister Gigaba is as uncertain about the ANC’s elective conference as anyone else. And he will therefore be playing his political cards very close to his chest. While rescuing the economy might be the core issue at stake in all departmental pronouncements, here is a minister of finance who will be speaking to his own political party and those leadership frontrunners he wishes to service in a similar or enhanced capacity in the future.
Play it safe, play all sides
With that in mind, expect Gigaba to play it safe and play all sides. The sound bites will therefore speak out about fighting corruption, correcting state-owned entities (SOEs), inclusive growth, ensuring fiscal stability based on fairness and keeping a lid on government spending and rising debt to GDP ratios.
It’s all going to be there as the minister waits with the rest of the country to see which ANC faction wins out.
Gigaba is therefore unlikely to be overtly ideological; he will probably not talk about radical economic transformation and be less committal about big state spending projects. These are the stuff of leadership tussles.
But sound bites is what it is just going to be. And in a way, Gigaba is not really to blame for an inability to flesh out detail or policy direction. Given that his parent ANC is in a state of internal turmoil, given that the broader alliance is strained to levels never seen before and given that a coherent set of economic policies remains elusive, there’s not much he can do.
In this respect, Gigaba will find himself in a similar space to that of his predecessor. Faced with the spectre of similar revenue shortfalls, Gordhan took the easy way out – increase taxes for the middle and upper-middle classes.
The February budget offered little in terms of pragmatic or innovative policy-making. It was a patch-up job to collect cash, keep the books looking relatively decent and pacify the Moody’s of this world.
Gigaba will find that little has changed. Just like Gordhan, who back in February was under personal siege and also part of a larger political party that was steadily losing direction, Gigaba will feel similarly constrained.
Plugging revenue holes has become the headline take-away from recent South African budgets simply because policy paralysis, ideological confusion and political shenanigans prevent growth-orientated initiatives from gaining any traction.
When the redistributive side of ANC policy still seems to trump anything that can kickstart growth, Gigaba will just have to fall in line and milk the middle classes and, perhaps, even the poor.
One area Gigaba can point to with some success is the ongoing reform of selected SOEs. He can claim a hand in the South African Airways management turnaround, although this is likely to be more political point-scoring than based on reality.
Still, what he cannot do is take any stance on changing ownership patterns of these behemoths as both politics and ideology prevent this.
The mini budget is therefore more likely to be a mash-up of holding patterns designed to roll over the country to February when - perhaps - new ANC leadership will be in place. While Gigaba can break free from his patchy past, there are just too many political constraints to allow this.
And, when assessing his own future, his own political instincts are likely to play an important role. Wednesday is therefore unlikely to be a ‘baptism of fire’ or a ‘legacy-leaving’ exercise as other analysts have suggested.
* Daniel Silke is director of the Political Futures Consultancy and is a noted keynote speaker and commentator. Views expressed are his own. Follow him on Twitter at @DanielSilke or visit his website.
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