It says a lot about Enoch Godongwana’s reputation as a fiscal pragmatist that the markets have welcomed a new finance minister who forged his political credentials as a very red, very left SACP member.
In 1994, this magazine described Godongwana as "among the more impressive of the new generation of worker leaders". Around that time, Business Day wrote that, despite his communist background, "unionists describe his political approach as mature".
Even then, when representing workers as the general secretary of the radical National Union of Metalworkers (Numsa), Godongwana spoke of the need to raise productivity by 5%-7% in wage talks — which is not exactly the talk of a rabid populist.
While the Godongwana of 27 years ago would rage against the government’s Growth, Employment & Redistribution (Gear) policy as a "conservative consensus" and deride SA’s "neoliberal" policies, it was clear he favoured compromise. He called off Numsa’s landmark strike against the motor industry at the time, for example, on the basis that it is "important to go back without bleeding the industry to death".
As Godongwana steps into the well-worn shoes of a weary Tito Mboweni, the question remains: does he have the stomach to take unpopular fiscal decisions that protect the government’s purse, especially given his past ideological ties?
In an interview this week, he tells the FM that plenty of time has passed since his union days. Asked whether his ideological leaning towards communism lingers, he says: "There are practical solutions and practical problems against which, sometimes, abstract ideologies don’t hold."
An example of this is the debate over whether to "nationalise" the SA Reserve Bank. It is, of course, an entirely silly issue: the "shareholders" of the Bank have no sway over monetary policy, as many of the misguided leftists believe. Buying out those shareholders will change nothing.
This didn’t stop the ANC from adopting the policy to "nationalise the Reserve Bank" at its 2017 Nasrec conference — a concession to former president Jacob Zuma’s radical economic transformation faction.
Discussing this point, Godongwana’s diplomacy, and pragmatism, are evident.
"It would be nice to complete the picture and make sure all public institutions are in public hands," he says. "But this has to be balanced with the availability of resources and other priorities … it is a matter of resources."
In other words, SA can’t afford to do that. Case closed.
This sort of line in the sand can only be good news, in a country where every government department is beating down the door of the National Treasury to demand more cash. In particular, there’s clamour for a basic income grant (BIG) — a debate that has divided the ANC.
This weekend, Godongwana seemed to suggest he wouldn’t prioritise a BIG, even though he believes it’s a "reasonable and legitimate call", given SA’s high poverty levels, and the fact that 46% of those aged between 15 and 34 can’t find jobs.
Rather, he told the Sunday Times, money should be used to give work to the black unemployed youth, not hand-outs.
He expands on this, telling the FM: "I was not saying the state should not spend money on the unemployed; I am saying that spending must be categorised. For instance, there should be a support mechanism for groups according to age, from 15 to 34, and then for age groups between 35 and 59, there should be a different support mechanism."
While he doesn’t say what these "mechanisms" are, he implies that SA should redirect spending into building skills. For example, he asks, why does SA import welders from Bangladesh "instead of skilling our own youth?"
Godongwana has also said any income grant should be temporary, and accompanied by a plan to grow the economy — premised on a public infrastructure drive and supported by pro-investment reforms — "because without growth and transformation, the very base of sustaining social security and a better life for all will be eroded".
The markets were greatly comforted by this. For business, Godongwana was a known quantity anyway: for years, he has been talking to them as chair of the economic subcommittee of the ANC national executive committee (NEC).
However, the support of the business sector will be short-lived if Godongwana’s less-abrasive style leads to looser fiscal policy, higher taxes and greater borrowing costs at a time when the government is battling to get growth going.
Because, let’s face it, there’s nothing in Ramaphosa’s new cabinet that suggests growth is the overriding, urgent priority that it should be.
Busi Mavuso, CEO of Business Leadership SA, says Godongwana will have to "move quickly to signal his commitment" to improving fiscal discipline and implementing economic reforms. She says he’ll have to be resolute in the face of a myriad demands from his cabinet colleagues.
"A disturbing trend that business has been concerned about for some years has been a perception that the Treasury’s authority on spending has become less absolute," says Mavuso. "Fiscal decisions that have no rational connection to policy objectives have become too common."
Bailing out SAA is the obvious example, but there are others. This suggests that, if anything, Godongwana will need to take a harder line than Mboweni ever had to.
At this point it is Godongwana’s ability to build bridges with business that is perhaps his greatest asset.
With a master’s degree in financial economics from the University of London, and stints as a director at paper company Mondi and the Development Bank of Southern Africa, he could help dilute the hostility to business among many in the ANC.
He has taken on tough roles before, and defied the sceptics — notably, when he took over as general secretary of Numsa in 1993.
At the time, Numsa was known as a "difficult union", with very different politics from others in the congress movement. Numsa, like the National Union of Mineworkers (NUM), was known for its militancy — but unlike its sister unions, it had a strong liberal element and a workerist, Trotskyite leaning.
Yet Godongwana, the great conciliator, slipped into that unenviable role effortlessly, built bridges with other unions and burnished his political capital. It was he, more than anyone, who brought Numsa into the Cosatu fold and laid the platform for it to become Africa’s largest union.
Whether he can provide a similar stability at the Treasury, while protecting it from the rapacious grasp of some crooked ANC comrades, remains the central question.
His talent for bridge-building was also evident after he left Numsa to take up the position of Eastern Cape finance MEC. Again, there was scepticism. His role entailed representing many of the province’s vehicle manufacturers, with whom he’d clashed in his Numsa days. Again, he bridged the gap.
In 1997 he told Business Day that the reports had "created the wrong impression that this ‘Commie’ is coming. In fact my relationship with business is very cordial. I will consolidate that."
But if that’s his greatest asset, he comes to the role with some unwelcome baggage too.
Back in 2012, it emerged that a company called Canyon Springs Investments had borrowed about R100m in pension money, belonging to 20,000 SA Clothing & Textile Workers Union (Sactwu) members, in a loan facilitated by an investment company, Trilinear. However, it turns out that Trilinear, assisted by former unionist Richard Kawie (one of Godongwana’s friends), had blown the cash — some through allegedly illegal activities and some through shoddy investment decisions.
The problem for Godongwana was not only that he was a director of Canyon Springs for part of the time, but also that he and his wife Thandiwe owned 50% of it.
The Mail & Guardian reported that a liquidation inquiry found Godongwana and his wife were "party to the carrying on of the business of the company, either fraudulently or at least recklessly".
Though there was no evidence that he benefited from the stolen funds, the inquiry said Godongwana admitted he "had not exercised properly his fiduciary duties". And it didn’t help that he’d received R1.5m in payments from Canyon Springs between 2007 and 2009.
When it all emerged, Godongwana was serving in Jacob Zuma’s executive as the deputy minister of economic development. But he soon stepped down.
Asked about this by the FM, Godongwana is clear on what happened.
"When this matter came up, for ethical reasons, I stood down. No-one pushed me. Which demonstrates the character of the individual," he says.
Treasury is a functioning institution, there are gaps here and there, but I don’t see it as a train smash; it’s manageable
— Enoch Godongwana
But he’s adamant that he’s not going to deal with the matter further.
"In terms of the law, what precludes me [from being finance minister]?" he asks. "I have never been charged. It was a civil matter, which I dealt with."
Though Godongwana repaid the money, the Canyon Springs debacle does raise pointed questions about his judgment — which will only be amplified under the unforgiving spotlight that shines on the finance minister.
Nonetheless, many CEOs are mightily relieved that Godongwana is taking on the mantle. His language of pragmatism and conciliation is reassuring to the markets, precisely because fiscal sense is in increasingly short supply in the ruling party.
But is this enough in a country where the finance minister has the hardest job of all: holding the line uncompromisingly, in an economy in unprecedented peril?
This magazine has often given Mboweni a hard time for setting the bar too low for what a great finance minister could be. But SA may soon miss the qualities that made him so maddening, as these were also the traits that made him fiercely independent in a party of mediocrities.
To some extent, Mboweni and Godongwana are polar opposites.
Where Mboweni was outspoken and dogmatic, Godongwana is consensual and diplomatic; where Mboweni was a fiscal conservative, Godongwana is a fiscal pragmatist; and where Mboweni could be high-handed and arrogant, Godongwana is remarkably affable.
But of all the qualities you want in a finance minister, "affable" is not one of them. SA, with a debt-to-GDP ratio set to hit 89% in 2025/2026, and unemployment above 32%, is beyond a point where it can afford a Treasury that aims to keep everyone happy.
For all Mboweni’s peccadillos you knew exactly where he stood on issues: the fiscal framework was "sacrosanct", SA’s public finances were "dangerously overstretched", and he was emphatic that SAA should be sold, not bailed out with another cent of taxpayers’ money.
His critics will say he wasn’t strong enough politically: while he bemoaned subsidising SAA, in the end, he gave the basket-case airline more money. And he allowed public-sector wages to be increased.
Still, the critical point was that Mboweni believed in liberating the economy from the manacles of a weak, inefficient state to boost private-sector participation and raise SA’s competitiveness.
Godongwana, speaking the diplomatic language of a newly picked cabinet minister, hasn’t yet explained if he shares that deep belief in free markets.
But it really matters.
Until now, he has given little away, including his view on what needs to change at the Treasury.
He tells the FM that he’s not worried about the institution, and credits former finance minister Trevor Manuel with crafting an institution that allows any captain to step in and steer.
"It is a functioning institution, there are gaps here and there, but I don’t see it as a train smash; it’s manageable," he says.
Some argue that Mboweni was too austere, and that the fiscal consolidation path he was pursuing was too extreme. By contrast, the emerging consensus is that Godongwana, as the more astute ANC politician, will be better at building political alliances to support the fiscal stance, resulting perhaps in slower consolidation but, ultimately, a more sustainable policy trajectory.
That seems improbable, to put it politely.
For one thing, it ignores the fact that Mboweni wasn’t a fiscal conservative by choice. By the time he took over in 2018, he had no choice but to draw a line in the sand over the public sector wage bill for one reason only: SA had run out of money.
The last thing SA needs is another minister skilled at kicking cans down the road. Not only will Godongwana have to find the stomach to take the hard decisions, he’ll also have to finally execute the reforms that even the far more obstinate Mboweni couldn’t.
Godongwana tells the FM that while he didn’t expect to be asked to fill Mboweni’s shoes, he’s committed to the task. When the ANC demands you step up, he says, there is no alternative.
He quips that the biggest difference between him and Mboweni, actually, is their taste in shoes. (Some of the meaner critics suggest that Mboweni’s brown shoes are the perfect representation of the economy: battered, and not much to look at right now.)
Godongwana’s style, however, includes a penchant for a homburg hat with a red feather on the side.
He says that without growth and transformation, the very base of sustaining social security and a better life for all will be eroded
— What it means:
In outlook, however, Godongwana says he and Mboweni are "very similar", even if their methods differ.
His approach to the unions would be "different", as he has a relationship with them — he says he knows how to "lift the level of debate for the common resolution of differences".
But can SA’s economy withstand more "negotiated compromises"? Can it afford to indulge the unions, when keeping a lid on ballooning civil servants’ wages is central to SA’s credibility?
As the head of the ANC’s economic transformation committee, Godongwana may have saved the ANC from its worst excesses on issues such as nationalisation, land expropriation and prescription — while mastering the art of producing vague, watered-down compromises in the guise of economic policy. But a softly-softly fiscal approach just won’t cut it any more.
Godongwana’s many supporters argue that while he won’t be as loud as Mboweni, he can actively work to find better solutions than his predecessor. And this alone will do far more to rein in spending than Mboweni did. Perceptions are important, but execution is far more important right now.
These days, Godongwana says, he takes solace in books. Unlike his predecessor, he has no particular affinity for cooking, or an inclination for golf, like other ministers, and he stopped drinking whisky a while back.
Hopefully, one of those books contains the answer to SA’s jobs crisis.
Because, make no mistake: Mboweni may have worn beaten-up shoes, but on his best days he was an excellent finance minister.
Those shoes will take some filling. Let’s hope Godongwana is up to the job.
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