EXPLAINED: Why it matters that Mabuza dissed Mboweni

David Mabuza
David Mabuza

What happened?

During question time in the National Assembly on Tuesday Deputy President David Mabuza was asked about Finance Minister Tito Mboweni's public statements on "strategic equity partners" for state-owned enterprises (SOEs). He replied that he doesn't take Mboweni's views on the matter seriously.

What was the question to Mabuza?

The question was asked by DA MP Natasha Mazzone, who wanted to find out what Mabuza's position on the privatisation of SOEs are, given that Mboweni has said he believes some of them have to be sold because they are a drain on the fiscus. Mazzone said she asked this because President Cyril Ramaphosa seems not to have a clear position on the matter.

How did he answer Mazzone's question?

Mabuza, who has been largely anonymous in government and politics since he was elevated to the deputy presidency in February 2018, said: "I don't really take the minister of finance seriously when he makes comments… these are his own comments." He then tried to explain that Mboweni's comments are his own views, and then while touching his head, he said Mboweni will be taken seriously when he articulates government's views.

OMW?

Yes, it's quite remarkable that a deputy president will deliver such a public rebuke of the person occupying arguably the second most important position in government.

Does Mabuza know the implications of what he said?

It's unclear. He explicitly said that he, the deputy president and a heartbeat away from the Presidency, does not take the finance minister seriously. If he should become president the inference is that advice from Mboweni, the steward of the national accounts and public expenditure, could be ignored.

What did Mboweni say about privatisation?

During his budget speech Mboweni was pretty clear about his position: the country has to decide, and decide quickly, which SOEs are strategically important and which it could do without. Both him and National Treasury have showed policy makers in chapter en verse how serious a risk SOEs pose to the economy, with Eskom for example holding more than 15% of total national debt. Mboweni and Treasury have said that private equity partners will be brought on board to help stabilise certain SOEs.

What does Mabuza's dissing of Mboweni mean?

It could mean a lot, or it could mean very little. Mabuza's premiership of Mpumalanga has been pretty dire. According to a report by the auditor general (AG) for the last full financial year Mabuza was in charge irregular expenditure stood at a record R11,2bn, with the AG saying the province seems unable to properly investigate the problem. His poor management of the province could mean that he simply does not grasp the perilous state of the national finances. But it could also signify the enormous policy and ideological cleavages inside the Cabinet and ANC, where the possibility of privatisation is so far out there it might as well be an idea conceived on Mars.

What now?

Mboweni's Treasury and Pravin Gordhan's department of public enterprises seem to be pressing ahead in cleaning up SOEs and enlisting the help of private capital. They have no choice in the matter anymore seeing as the state coffers have been sucked dry by corruption and mismanagement. In the words of Treasury's Budget Review (has Mabuza read it?): "The deteriorating financial position of some institutions, particularly several large SOCs [state-owned companies], is a major risk to South Africa's economy and its public finances."

Should we be worried?

Not more than usual. International ratings agencies, foreign investors, organised business and labour all take Mboweni seriously. It's doubtful they take Mabuza that seriously – the only reason they would is because of his proximity to the top job, Ramaphosa's job. 

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