Govt must get its act together to be able to drive SA's economic recovery, says Godongwana

Finance Minister Enoch Godongwana.
Finance Minister Enoch Godongwana.
Gallo Images
  • Finance Minister Enoch Godongwana said at an event on Sunday there was a general consensus on the need for structural reforms, even though the details were contentious.
  • At the same event Advocate Wim Trengove said the Judicial Service Commission's failure to exercise discipline over judges posed a threat to rule of law.
  • Eskom CEO De Ruyter, who also spoke, said that if policy could align better, South Africa would have an opportunity to drive demand for locally produced renewable energy components.

Finance Minister Enoch Godongwana said on Sunday that government has to improve on its implementation of policies and structural reforms if it hoped to deliver on the promise of economic recovery.

Godongwana was addressing the South African Jewish Board of Deputies (SAJBD) event on the state of the economy.

The address comes weeks before what will be Godongwana's parliamentary joint sitting debut, as he is set to table the medium-term budget policy statement in early November.

Since his appointment as finance minister by President Cyril Ramaphosa in August, Godongwana - who also chairs the ANC's economic transformation committee - has given signals that he would lead the Treasury with a decidedly business-friendly approach.

Unions, especially those aligned with the ANC's labour ally, trade union federation Cosatu, have urged Godongwana to put a halt to policies they view to be at the expense of workers and South Africans, including government's effort to curtail the rise of the public service wage bill.

All about the outcomes

Godongwana said rather than recount the problems South Africa faces, it was important to put "recovery and reconstruction" front of mind on the agenda. He said South Africa needs common engagement on the things the country hopes to achieve.

"If we can take a lesson from Covid-19, South Africans across the board, with civil society, government and business worked together without a single document being drafted. We need to figure out how to get that level of commitment and channel that towards our recovery," said Godongwana.

Godongwana said there was a general consensus that South Africa needed to make structural reforms, even though the details were contentious.

Regarding underspending on Covid-19 interventions, Godongwana said government had to sharpen its implementation of interventions as well as tracking the outcomes thereof.

"Most of that stuff sits in Parliament and is appropriated in the form of adjustments. What does not exist as adjustments is the R200 billion, because it is a guarantee. For argument's sake, it's all very well for someone to say we have given so many injections, but what we want to know is the mortality rate. The key thing is to check the outcomes," Godongwana said.

Regarding the July unrest and government's hopes of bringing the saga to a point of closure and justice, Godongwana gave a brief, sharp commitment that the state would work to get to the bottom of the crisis.

"We cannot take isolated incidences that are not a feature of our country as a reason to not invest. There will be involvement from the security forces in response to this. Watch this space," he said.

Rule of law

Advocate Wim Trengove (SC) said at the same event that South Africa had to appreciate its Constitution and rule of law and that progress had been made in spite of past governments' attempts at undermining that very Constitution.

"The success has been a result of the leadership of the judiciary - the chief justice and the judge president of the Gauteng High Court. There were a series of judgments that courageously upheld the rule of law against attacks from those who looked to undermine the Constitution and the rule of law," said Trengove.

Trengove said the Judicial Service Commission (JSC) failed to exercise discipline over judges, and that the erosion of the quality of judges extended to high courts and as high as the Supreme Court of Appeal.

"It is important that we maintain a core of smart judges who are capable in what they do. Unfortunately, the Judicial Service Commission has not been able to be consistent in that. We have too few brilliant judges and far to many less-than-brilliant judges," Trengove said.

Trengove said it was unclear why the JSC had failed in securing a consistent supply of competent judges.

"Remember the Judicial Services Commission has been taught some valuable and pointed lessons in the past year or two and there are many judges who take those lessons seriously," he said.

Cleaner, better power

Eskom CEO Andre de Ruyter, in the wake of a week-long bout of state 2 load shedding, gave a blunt account of the state of the power utility at the SAJBD event. 

He said the technically insolvent business found itself in a difficult position, but that from the ashes of this predicament, the catalyst for economic growth could rise.

De Ruyter said if fiscal, environment, energy and industrial policy could align better and more justly, South Africa would have an opportunity to drive demand for locally produced renewable energy components. He said Eskom would attend the upcoming 26th Congress of Parties (COP26) meeting in Glasgow, Scotland with sustainability high on its priority list.

"We have a unique set of circumstances. We emit 25% more per capita than China. With the impending crisis of climate change having a disproportionately negative impact on South Africa, South Africa is endowed with some of the best wind and solar acreage in the world," said de Ruyter.

De Ruyter said improving the state of renewables would free up R3 billion which Eskom would otherwise spend on responding to emissions. He said South Africa needs 4000MW to 6000MW of capacity on the grid to support its economic growth needs.

De Ruyter said he agreed Godongwana's comment earlier at the SAJBD event that was non-negotiable that Eskom would have to stabilise the grid.

"We need to, as soon as possible get more capacity from the grid from whatever source to respond to the shortfall. Eskom will retire 22 GW of capacity by 2025," De Ruyter said. 

"We need 60 GW of new capacity to replace that from a variety of sources and we are not ruling out and category. But renewable sources will give the speediest solution to the capacity challenge." 

He said Eskom would need 72% availability factor and the power utility was working to achieve that. However, he said the age of Eskom's plant meant that it was not guaranteed that the availability factor would be achieved cost effectively or sustainably.

Chair of the Banking Association of South Africa and Investec CEO Richard Wainwright said clients are hungry to invest again but said that the only way to make the best of South Africa's gradual exit from the pandemic would be to grow the South African economy by between 4% and 5%.

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