Mboweni’s budget can’t fix broken SA

The core problem is that ANC policies do not make economic sense. When implemented by crooks, they are doubly dangerous.

Steam rises at sunrise from the Lethabo Power Station, a coal-fired power station owned by state power utility Eskom near Sasolburg, South Africa, March 2, 2016. Picture: Reuters

Nothing that Finance Minister Tito Mboweni announces in his election-year budget this afternoon can restore Eskom to anything resembling its former status. Nor can he fix our ailing health or education systems, nor do anything that will “create” enough jobs.

The reason is simple. Despite posing as a maverick, Mboweni is an ANC cadre, deployed to implement policies of an organisation which has reduced every state-owned entity (SOE) to dependency on handouts. Apart from Eskom’s R420-billion debt, think of SAA, the SABC, Denel, you name it.

Even the Public Investment Corporation, custodian of trillions in taxpayers’ money, is rotting. This week the ANC-deployed chair of the Independent Communications Authority of SA was sentenced to 20 years for fraud and money laundering. A rare conviction in a maelstrom of malfeasance. The ANC knows how to take money, not how to make it.

President Cyril Ramaphosa, along with Mboweni and Public Enterprises Minister Pravin Gordhan, project a business-friendly air. But that image is false. Radical Economic Transformation, spouted by former president Jacob Zuma’s supporters – and the EFF and BLF – dominates ANC ideology. They won’t allow an investment-friendly budget, especially when courting populist votes.

That’s why Ramaphosa promises expropriation without compensation. And Mboweni says the state should own 40% of all mining companies, and there should be a State Bank. All this ignores the reality that “the state”, a euphemism for the ANC elite, has proved incompetent at running anything.

Competence is not a priority for the national democratic revolution, in whose service state control and radical economic transformation are invoked. An example of this obsession with control regardless of economic consequences is the uncosted National Health Insurance (NHI) scheme. The folks who brought you 143 Esidimeni deaths want to expand their grasp.

Any significant boost for the NHI in today’s budget will be regarded by rating agencies as further proof that our governing party is not serious about economic or health consequences. Similarly, if Eskom’s burden is partially lifted by shifting a mooted R100 billion of its debt directly to government, without meaningful cost-cutting in the bloated utility, warning lights will flash.

In addition to all the technical cock-ups and coal supply problems, Eskom employs too many people, too expensively. Thousands will have to lose their jobs if the corporation is to become economically viable. Similar logic applies at SAA. At the SABC an interfering minister has, probably unlawfully, stepped in to block necessary retrenchments.

Having made annual unfulfilled promises to create jobs, the ANC leadership is not, on the eve of an election, about to admit defeat by endorsing mass lay-offs, even if that’s required to stabilise SOEs.

The core problem is that ANC policies do not make economic sense. When implemented by crooks, they are doubly dangerous.

ANC policies have brought SA to the brink. As the national debt-to-GDP ratio moves inexorably beyond 60%, with budget debt-servicing costs in tandem, a bailout from the International Monetary Fund (IMF) becomes more likely.

Voting against the ANC could spare us that fate.