Success Not Final, Failure Not Fatal: Tito Mboweni’s Fiscal Goliath
By Musa Mdunge
On 28 October 2020, the Minister of finance, Tito Mboweni delivered the medium-term budget statement that lays out the country’s fiscal framework for the next 3 years and provides a readjustment to government expenditure, revenue, and debt projections. The South African economy has been battered and bruised by not only covid-19, but pre-existing economic conditions and political damage laid upon it by 10 years of state capture and economic mismanagement by the Jacob Zuma administration.
However, one cannot simply lay all the blame at the feet of government, the failure by the private sector, which is currently sitting on R2.5 trillion on its balance sheets has made worse and already challenging period in which not all social partners have been equal in their commitment to the South Africa dream. In many ways as a collective, the same commitment we had in building a strong democracy that would stand a beacon of hope in Africa in the first 10 years of our democratic project has since dwindled and left us with little to be impressed with.
In many ways the budget as presented by Mboweni must be a wake-up call to us of the current trajectory we find ourselves on and how if we do not change tact, will plunge future generations to pay for our betrayal of the South Africa vision of our forefather bequeathed to us.
Mboweni’s address comes after President Cyril Ramaphosa presented the government’s economic recovery plan. I have already provided my critique of what I believe was a plan that did not propose anything new but was can be viewed as a reaffirmation of what the state needs to do to bring South Africa out from the brim of economic destruction.
I appreciate the fact that Mboweni highlighted the fact given the fact that government debt would rise to 95,3% of GDP, it means that the argument of simply spending our way out of this economic depression is out of the window. Unlike the 2008 great recession, South Africa does not the fiscal space to simply stimulate the economy with new money in the circular flow. Our economic conditions are far worse than 2008, where President Thabo Mbeki’s government gave the Zuma administration a budget surplus and a debt to GDP ratio of less than 30%.
Today, our debt servicing costs are the fastest-growing line item, seeing R2.1 billion per day expenditure on debt service costs. Unless we get debt under control, it will rob us of allocating much need Rands to critical services such as improving the healthcare system or building new homes for the poor. Some may ask but what is the big deal? Well simply, failure to provide quality service delivery to the most vulnerable of our people, means that the benefits of democracy are unequally distributed and the human dignity of the masses of people remains a pipe dream. Disgruntled souls are fresh ground for populists’ voices and growing dissent against the very democracy our forebears fought for. It is this that gives rise to political and social instability. There is no high wall in the lush suburbs of Sandton or Camps Bay that will stop the anger of the poor to overflow in those areas, for as long as their poverty is seen as a direct result of the wealth in these areas.
So, what now? The government’s focus on infrastructure development is the key to unlocking economic growth and the creation of jobs is a good start. There is no doubt that improvements to transport and telecommunications infrastructures are key to unlocking new investments, reducing the operational risks faced by businesses operating in South Africa, and supporting down and upstream industries. This we all must support. I was happy that the minister spoke to the fact for a legislative perspective much was needed to be done to reduce the expensive cost of doing business in South Africa and the key to that is removing the red tape, making entry into the South African market much easier than what is the current experience.
However, continued wasted Rands to SAA, continue to underestimate confidence in Ramaphosa’s administration to deal decisively with state-owned entities that are bleeding the state. After all, it is SOEs that are our greatest public debt line items, and rather than being institutions that help aid economic reform and transformation most of them have become shackles around our economy’s neck and the time has come to have a serious conversation about the role of non-performing SOEs and what their future in South Africa looks like.
Fellow South Africans even as the dark clouds loom over our heads, we must look to our collective history and legacy of triumph over adversity and say the sun will shine again, the rain pours out its waters and the rives will flow! However, for this to happen it requires us to play our role too. It requires us in the companies we lead or work for the make the necessary sacrifices to keep the lights on. It requires moral leadership and servanthood by public officials and civil servants, ensuring the provision of services to the masses of our people. It will require us to build a new social compact where we the people of South Africa again commit to the preamble of our democratic constitution, for in the words of Winston Churchill, “Success is not final, failure is not fatal — it is the courage to continue that counts,”.
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Jacob Zuma administration
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