Can Tito tame that hippo?

Given the unpredictability of Covid-19, today’s medium-term budget policy statement will involve more guesswork than usual.

Finance Minister Tito Mboweni has no idea whether there will be second, third or fourth waves of infections. Nor can he know how the national coronavirus command council will respond.

Calculations made for the pre-Covid February budget and June’s supplementary budget are out of date. Forecasts today about the budget deficit, revenue shortfall and economic contraction will be revised. However, we know the government is running out of (taxpayers’) money.

In February and June, Mboweni touted a debt consolidation plan to close the hippo-jawlike chasm between revenue and expenditure. He will need Herculean strength to achieve that in the face of opposition from unions and the Presidential Economic Advisory Council (Peac), among others.

More than 2.2 million South Africans lost their jobs during lockdown, worsening an unemployment crisis that was dire before a national state of disaster was declared. Mboweni must find extra money wherever he can – the International Monetary Fund, the New Development (Brics) Bank, or bond and treasury bill markets.

The Peac recommends slower consolidation, saying economic growth is key to surviving the crisis. But can Mboweni mobilise the necessary private sector investment and job creation?

Last week President Cyril Ramaphosa, “more than once acknowledged that the private sector was the biggest driver of employment and investment”, according to Hilary Joffe in Sunday’s Business Times. Yet neither Ramaphosa nor Mboweni has done enough to nudge big business out of its “investment strike”.

Several factors continue to induce caution among investors. These include an incapable state which can’t ensure stable supply of electricity and other services. Political uncertainty and corruption prevail. The lack of arrests and prosecutions of central characters persists, despite blips. Most importantly, employers are reluctant to hire in a labour environment where hostility to business is supported by governing alliance partners.

Democratic Alliance MP John Steenhuisen last week spoke of “people who genuinely believe that businesses and employers are somehow the enemy, even as our broad unemployment rate crashes through 40%. People who have convinced themselves that it is more noble for someone to go jobless and hungry than to work for a wage that doesn’t meet a minimum threshold dreamt up by those who speak only for the already-employed”.

South Africa’s labour law set-up is not conducive to economic growth. A more flexible labour market is essential if this country is to succeed. The emphasis on black economic empowerment in various guises is one element in all this. Labour law is not the finance ministers’ responsibility.

But until it is changed, no amount of tinkering by Mboweni will unleash the pentup investment lying dormant. Today he must make headway with previously announced plans to trim R160 billion off the public sector wage bill.

If he proffers bail-outs not only for South African Airways but also Denel and the Land and Agricultural Development Bank, etc, today’s mini budget won’t be worth a hill of beans, with or without pilchards. And the jaws of Africa’s deadliest large land mammal will open wider.

Martin Williams, DA councillor and former editor of The Citizen.

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