South Africa’s new finance minister, Tito Mboweni: A reflection of what makes him tick

14 Oct 2018

Too much time has been lost and in the process, ‘the rats and mice have been feeding’ on the movement’s glorious history and achievements

By: Ujuh Reporter

A lot is being offered in the way of understanding South Africa’s new finance minister, Tito Mboweni, as he takes over management of an economy that’s teetering on the edge of abyss.

The former South African Reserve Bank (SARB) governor has a lot to deal with. The latest GDP numbers announced a technical recession, the second one within 18 months, unemployment is approaching 30% and youth unemployment is quoted at more than 50%. Poverty levels are edging upwards to scary levels. Government’s fiscal position is messy.

The situation has forced President Cyril Ramaphosa to set off the alarm bells. He has announced an economic stimulus and recovery plan and oversaw a summit where key social partners discussed ways of pushing back unemployment. And so Mboweni’s world view has become a big deal.

What makes him tick? A speech he presented in 2012 as a tribute to former President Thabo Mbeki is revealing. Not only because Mboweni’s impressions of Mbeki reflects much if his outlook but also because of the historical parallels he muses over: His characterisation of the economic challenges facing the post 1994 government and the predatory cadre that captured the ANC after Mbeki was deposed in 2009 rings true today. And there’s the deployment of Tiyo Soga’s hym “Lizalis’ idinga lakho” which is required today.

This speech is instructive for a number of reasons:

  • The tone and texture of the text suggest that it was dug from deep.
  • Its unencumbered by the SARB governorship trapping
  • It gives a taste of Mboweni’s exile days
  • His characterisation of the economic challenges of the young democracy delivers a view of his economic philosophical outlook
  •  His observation around the Mbeki ousting locates him within the key ANC grouping

Here follows extracts from that instructive speech:

Forgive our sins; Do not send your wrath, To kill the children

He starts the speech by reciting Soga’s famous hym:

“Lizalis’ idinga lakho (Fulfill/realise your promise),

Thixo Nkosi yenyaniso! (Faithful/Truthful God),

Zonk’ intlanga, zonk’ izizwe (All races, all nations),

Ma zizuze usindiso (must be saved),

Amadolo kweli lizwe (All knees in this world),

Ma kagobe phambi kwaKho (Must bow before you);

Zide zithi zonk’ iilwimi (So that all tongues),

Ziluxel’ udumo lwaKho (Proclaim your glory).

Law’la, law’la, nKosi, Yesu! (Govern/Prevail our God)

Koza ngaWe ukonwaba (Happiness can only come through you);

Ngeziphithi-phithi zethu (Because of our struggles/uprisings/challenges),

Yonakele imihlaba (The world is damaged).

Bona izwe lakowethu (Look at our world),

uxolel’ izoono zalo (Forgive our sins);

Ungathob’ ingqumbo yaKho (Do not send your wrath),

Luze luf’ usapho lwalo (To kill the children).

Yaala, nKosi, singadeli (Prohibit us God from disobeying)

Iimfundiso zezwi laKho (The teachings of your Word);

Uze usivuselele (Revive us),

Sive inyaniso yaKho (We can hear your Truth).

Pre 1994 interactions and views

Somewhere in 1988, I was on a plane with him (Mbeki) from Lusaka to Harare. He complained bitterly about what he called “inertia” in the ANC leadership. “They don’t move”, he complained. Basically he was saying that most of the leadership was caught up within the “People’s War” mentality and could not see that negotiations were nearby. Discussion about negotiations was seen as weakness and yet the reality was clear: we were on the verge of a negotiated solution. Then he went to the back of the plane to smoke! You could smoke in planes those days, not a pipe though.

Economic challenges of a new democracy

Thus, in 1994, the ANC had won the first democratic elections convincingly and people’s expectations were understandably very high. Another complicating factor was the way the ANC election manifesto had been drafted. It promised too many things: houses, a million jobs, etc. Upon reflection, this was an error influenced to some extent by Greenberg’s electoral politics. The original ANC platform of The Time Has Come, was more than sufficient. But this was changed to A Better Life For All. Nothing wrong with that except that when one starts to promise a million jobs and RDP houses etc, things got a bit too promising to be true. Hindsight as is often said is the best teacher.

However, the economy in 1994 was in crisis. The socio-economic position of the majority of the people was deplorable. Unemployment was high and the country was for all intents and purposes, bankrupt. Without an urgent fix, the lifeblood of our manifesto would very quickly run dry.

Faced with international isolation for many years, the South African economy had registered poor performance over a number of years. South Africa could not access the international capital markets and was inward looking. The International Monetary Fund could not extend loans to South Africa and the exchange rate was artificially managed with two currencies: the financial rand for non-residents and the commercial rand for South Africans. The central bank had the difficult task of sourcing foreign exchange through a whole range of doubtful interventions: credit lines with sanctions bursting banks and basically lived from hand to mouth. This cocktail of crisis measures led to the country managing a forward book of some $25 billion. At a growth rate of less than one percent(1%) the economy was in trouble. Inflation was stubbornly above 15% and interest rates were at some stage as high as 25%. On the fiscal side, the country was on the brink of a debt trap. The deficit before borrowing had ballooned to as high as north of 10% and the financing costs were skyrocketing.

On Mbeki and the economy: Discernable leadership

This was the country we wanted to change immediately. Without economic growth and access to the international capital markets, the immediate task before us was gigantic. It was through President Mbeki’s astute stewardship that we began to turn the titanic around.  First thing was to consolidate the fiscus. We focused on expenditure control in order to get the deficit levels down and reduce the debt servicing costs. We called this ‘belt-tightening’. A kind of home-grown “structural adjustment” program.

We were loath to going to the IMF to borrow. In fact many of us detested the very idea of it. You might recall that the IMF at that time was very rigid in their policy recommendations. Of course they were waiting for us to come to them but we said no. This is a historical fact which is normally forgotten by those who shout “’96 class project” at President Mbeki, Trevor Manuel and myself. Which makes one wonder what these detractors would’ve done had they been in the hot seat. Nevertheless, our second key decision was to approach the international capital markets for a sovereign bond issue. We raised $750 million at a very steep interest rate: six hundred basis points, that’s 6 percent, above thirty-year US treasuries. But the risk worked. Over the next few years, this rate narrowed significantly as we proved to the markets that we knew how to run an economy.

Thirdly, the central bank began to gradually reduce interest rates as inflation was coming down. The forward book was being reduced and the economy began to grow albeit at a slow pace still. The growing economy enabled us to start collecting more taxes and we launched a tax amnesty for all those (like in Nafcoc and Fabcos) who had not been paying tax. It worked and today South Africa’s tax morality and collection efficiency are amongst the highest in the world.

That our government was successful in undoing an unsustainable economic foundation and replacing it with a sound structure is a lesser-told story. It also resulted in the transformation of key economic institutions such as SARS, the central bank and National Treasury into respected and trusted, world-class institutions. All this was no coincidence. It was not because we were all bright sparks in our respective ministries, independently cooking up strategies that miraculously aligned with each other. The plan succeeded because it had discernible leadership in President Mbeki. He demanded focus, excellence and accountability and this approach yielded results.

…It’s important for us to retell these stories, especially on a platform such as this one, because the nature of the standard narrative sometimes suggests that some people were in a convenient slumber during those times.

Beyond Polokwane

Too much time has been lost and in the process, ‘the rats and mice have been feeding’ on the movement’s glorious history and achievements. At times one feels that “the best lack all conviction, while the worst are full of passionate intensity”.

The worst of our movement and society have certainly demonstrated passionate intensity in their looting of state resources; resistance to genuine transformation; continued subjugation of workers, particularly those who are not organised; paying the odd bribe to police officers; raping toddlers; illegally moving capital to other shores. I raise these examples to demonstrate that we all complicit in the undoing of our society. Some of course, are blatant, shameless thieves. They are the worst amongst us. They cook up state tenders, inflate prices, create non-existent projects, “deliver” shoddy work and facilitate illegal capital flight! They have to go to jail!!

We cannot allow a situation to continue where “the best lack conviction while the worst are full of passionate intensity” and arrogance.

And it is in times like these that we should call upon the best not to lack all conviction” but to take the baton of Tiyo Soga and the pioneers of the freedom struggle and trudge on and be the ones who are ‘full of passionate intensity”. The activist intellectuals have to come back to their movement and work amongst the people in the same way, albeit different conditions, as did our forebears.

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