Regular readers of this column will know that I am a great fan of finance minister Enoch Godongwana. I like that guy. He has been a stand-up guy, warts and all, since his days at the National Union of Metalworkers of South Africa in the 1990s. I credit him as one of the main unheralded heroes — alongside people such as Pravin Gordhan and Mcebisi Jonas — inside the ANC who stopped the pathologically corrupt Jacob Zuma administration from completely collapsing South Africa in the 2010s. He was key in stopping many of Zuma’s suicidal policy propositions, such as nationalising the Reserve Bank.
But, my word, what a weak, cowardly, visionless and entirely leadership-free budget Godongwana delivered on Wednesday. We are a country in crisis, yet nowhere in the budget did Godongwana and his cabinet display any indication that they are at one with South Africans — who despair at the ailing economy and the patronage politics that bedevil the country — and that he has a plan to stop the rot.
There was nothing in the budget that indicated that our finance minister or our leaders are grappling with the crises that face us: an unemployment rate that would make any self-respecting leader hang their head in shame; an economic growth rate that is so anaemic that it means we will soon become a failed state; a public debt burden that the state is unable to wrestle down; and an infrastructure, energy and logistics framework that is collapsing rapidly. In the meantime, murder, rape, fraud, corruption and other crimes remain among the worst in the world.
With these crises in mind, the question to answer, both for the finance minister and the president in his state of the nation address, was this: what is your plan?
President Cyril Ramaphosa clearly did not have one in his rambling nostalgia trip delivered to a somnambulant parliament on the evening of February 8. He delivered nothing but a tribute speech to Nelson Mandela’s nation-building abilities and Thabo Mbeki’s economic nous.
So it was up to Godongwana to deliver the clear, unadorned budget that would show what our plan is, where we want to be in five or 10 years, and how we are going to get there. He failed spectacularly.
He raided the family jewels, and nothing more. That’s his plan. That’s his growth story, his inclusion story, his rejuvenation story. He grabbed R150bn of the family cash that’s sitting in the Gold & Foreign Exchange Contingency Reserve Account (GFECRA) and thus fooled the currency and bond markets into believing that this was a good budget.
To be fair, it is — if you are thinking short term. For example, personal income tax wasn’t increased (yay!), public servants get an extra R251bn to cover the increase in the public sector wage bill that Godongwana should not have agreed to in the first place, and the debt-to-GDP ratio will now peak at 75.3% of GDP in 2025/2026, whereas economists had projected the debt burden to increase to upwards of 80% without stabilising. Furthermore, the controversial National Health Insurance was allocated a mere R1.4bn in the budget, meaning it’s not about to be implemented.
What is the plan to close the SOE maw that guzzles cash in increasing numbers every year? What’s the plan for Transnet, which was hardly mentioned in the budget?
All these laudable goals were achieved not because Godongwana and the government have a plan, or the courage to implement an economic renewal plan. They exist because he could raid the GFECRA. When that money is done and dusted, we still need a plan, and an executive that can execute it. Instead, what we have is the knowledge that the alcoholic, our spendthrift government, now knows where the liquor cabinet is and has the combination to the lock.
Ironically, it was Cosatu that clearly defined Godongwana’s failure of courage on Wednesday. It said: “The Treasury ... failed to seize the moment to respond decisively to the myriad challenges workers, society, the economy and the state are facing … We are in a crisis because the economy is not growing, and unemployment remains dangerously high.”
The trade union federation begged for information on how the government intended to revive Metrorail, the South African Post Office, the Postbank, Denel and the SABC.
“Retrenching 6,000 workers at the Post Office is not a plan,” it said. Hear, hear.
Last week the National Treasury told parliament that just in the past three years the government had bailed out six failing state-owned entities (SOEs) with a staggering R281bn. What is the plan to close the SOE maw that guzzles cash in increasing numbers every year? What’s the plan for Transnet, which was hardly mentioned in the budget, to do its job: get people and goods travelling efficiently? While the home affairs department shuts the borders to skilled workers, what is the strategy to attract investment, create jobs and grow the economy?
Give me my GFECRA.
The crises that South Africa faces need focused leadership, political courage, and a commitment to implementing plans. Godongwana’s budget presents no plan, except to heave a huge sigh of relief that we have the GFECRA to dip into. Almost every single bit of “positive news” from this budget emanates from the GFECRA windfall, not from astute fiscal or economic management.
Luck is good, and windfalls are even better. But, as any retirement planner will tell you, they don’t beat a consistent long-term plan that is implemented effectively. This budget has not shown us that we have a plan.
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