I’ve always enjoyed the fact that author and journalist Pippa Green chose the name Choice, Not Fate for the title of her wonderful biography of South Africa’s most successful finance minister, Trevor Manuel.
Nelson Mandela appointed Manuel finance minister in 1996. The economy was tanking. By 2006 the economy was growing by 5% due to judicious policy choices and actions taken by Mandela, Thabo Mbeki, Manuel, Reserve Bank governor Tito Mboweni, South African Revenue Service commissioner Pravin Gordhan and others.
Green’s title was perfect because it described the key principle and outlook behind the economic successes racked up by the Mandela and Mbeki administrations. They made tough choices and implemented them.
They did not wallow in self-pity.
This is an important lesson for this week, as we enjoy the spring in South Africa’s economic step after S&P Global’s upgrade of the country’s long-term foreign currency credit rating. It is the first such upgrade in two decades.
At the same time, the rand briefly broke below the key R17/$ level for the first time since February 2023 as investors cheered signs of fiscal discipline in finance minister Enoch Godongwana’s medium-term budget policy statement (MTBPS).
The upgrade came just weeks after South Africa’s removal from the Financial Action Task Force greylist, after it implemented reforms to address deficiencies in its anti-money laundering and counter-terrorism financing regime.
All these small but significant triumphs have been registered because tough choices have been made and implemented over the past 17 months. It is a departure from governance in the period between 2007 and 2024. The ANC, solely in power in those years, drew up policy with an air of sullen victimhood, blaming external forces for its failures and the nation’s lack of progress.
The advent of the GNU changed all that. Just over a year after its birth, the fruit of coalition politics is beginning to be seen. I would argue that this started on February 20 when cabinet ministers, among them ANC members, rejected the finance minister’s attempt to hike the VAT rate. It was a necessary assertion of authority by these cabinet members and the nine other parties in the coalition partnership.
The thinking underlying the VAT hike was lazy. It was predicated on the belief that we are fated to punish the poor to plug the fiscal hole created by corruption and feeble economic policies. Underpinning it was a huge disrespect for taxpayers of all classes: like sheep, they will always pay. Well, that did not get anywhere — and the government has been forced to make tough policy choices, including belt-tightening. All this delivered a fiscally credible MTBPS last week.
This MTBPS should be seen as the first concrete policy document of the GNU. Reaction to it should underline to our political leaders just how important and game-changing the coalition arrangement has been to our economic wellbeing.
Another example of the fruit of this new co-operative consciousness was the announcement of the biggest monetary policy reform in South Africa in 25 years: the inflation target that the Bank will aim for has been set at 3%.
It is worth remembering that as recently as August 6 the ANC had blasted the idea of revising the inflation target down. It said then that Bank governor Lesetja Kganyago’s announcement of the Bank’s pursuit of a lower inflation target was “completely unacceptable”.
Godongwana’s announcement of the 3% target last week shows that evidence-based policymaking won, and that the ANC is no longer solely at the centre of policymaking or implementation.
One can thus see where most “shoot yourself in the foot”, ideologically driven policies — such as the health department’s proposal to phase out medical scheme tax credits to help fund National Health Insurance — will end up. The health department has told parliament that scrapping those credits could begin as early as next April, starting with high-income earners.
Godongwana raised the red flag last week.
“My worry … is that if you look at who is paying our PIT [personal income tax], it’s the same group you want to take medical credits away from. It’s actually an attack on the middle class,” he said.
What has happened over the past few weeks is big. We are being rewarded because, for the first time since 2007, the economy is being run with a belief that we can overcome our difficult circumstances through our own policy choices, decisions and actions. Choice, not fate.
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