Cyril’s panel-beating of the economy may be paying off
The combination of Mboweni and Ramaphosa is promising to be the key to unlocking the logjam in economic growth.
President Cyril Ramaphosa appointed Tito Mboweni as the new finance minister of South Africa, 9 October 2018. Picture: Phando Jikelo / ANA
If President Cyril Ramaphosa’s statement that investors will make pronouncements on their investment plans into the South African economy during this weekend’s Investment Conference is anything to go by, his panel-beaten and remodelled economic vehicle is about to move forward.
The key is in the ignition and the driver is confidently warming the engine.
With Ramaphosa’s Economic Recovery Plan and its stimulus packages now in place, the recent jobs summit and undertakings by all social partners on how jobs would be created, Finance Minister Tito Mboweni was yesterday left to attach the meat to the skeleton.
To some, the minister in his medium-term budget policy statement had delivered the goods on the expectations of the economy, including growing agriculture, a plan to reduce the cost of data while improving its quality, and the addition of zero-rated items such as sanitary pads, bread and cake flour.
But to many he fell short on the needs of the poor.
Of course, the new minister needed to perform a balancing act. With revenue collection having fallen dramatically in the past term, he had not much room in which to manoeuvre and had to rob Peter to pay Paul.
But his approach is bound to put him on a collision course with the left of the ANC-led Tripartite Alliance – such as the SACP and trade union federation Cosatu – and those outside the alliance, such as the SA Federation of Trade Unions (Saftu) and its affiliates.
Saftu and its unions are sure to sustain the fight on behalf of the poor. Unlike Cosatu, they have no political affiliation to worry about.
To the left, Mboweni would continue with existing neoliberal projects by sacrificing the poor’s slice of cake for the rich to satisfy the interests of the International Monetary Fund, the World Bank and the rating agencies. They want him to tax the rich more than the poor and do away with VAT.
He must have disappointed them when he said people must “pay for their tolls”, meaning no cancellation of the Gauteng e-tolls. He also said nothing about reversing the VAT increase.
He is headed for a bruising duel with the unions as both Cosatu and Saftu want the e-toll system scrapped and VAT lowered.
Saftu’s general secretary, Zwelinzima Vavi, was correct: the new minister played to the gallery of rating agencies and capitalists. He said the Reserve Bank will not be nationalised. The much-debated nationalisation of the bank was a concern to the rating agencies and could help SA escape an envisaged downgrading by Moody’s.
The combination of him and Ramaphosa is promising to be the key to unlocking the logjam in SA’s economic growth.
Since the Thabo Mbeki years of sustained economic growth, Ramaphosa seems to be the visionary after close to a decade of chaos under Jacob Zuma.
As Ramaphosa promised and as confirmed through Mboweni’s budget, the key to revitalising the economy lies in reviving agriculture.
This, coupled with commercial banks wanting a joint Land Reform Fund to support beneficiaries of land expropriation without compensation, is a show of confidence in Ramaphosa’s leadership by local business and foreign investors.