IN THIS job I meet many vastly different people. Local business people and politicians, overseas corporate fixers, investment bankers, fund managers, risk management consultants, researchers and policy wonks are among the people who have in the past two years dropped me an e-mail, asking to have a cup of coffee. They ask many questions, mostly about the economy, government policy and politics.
They want to know, for instance, if Cyril Ramaphosa stands a chance of being president. A lot seems to hinge on this for them. I tell them I have no idea since I haven’t seen him make a move in that direction. All I see is that in every other speech, he seems obliged gratuitously to praise his boss’s leadership, a problematic proposition since very few believe that boss can spell the word.
There are also many questions about the Reserve Bank — whether it is, or can remain, independent. I tell them the institution is solid, with great depth of expertise and talent.
The Treasury, invariably, is the longest part of the discussion. Does Finance Minister Nhlanhla Nene have the president’s ear? Does he have any clout in the national executive committee of the African National Congress (ANC)?
Is it insulated from inappropriate political interference?
Dutifully, I point out that they only need to read the minister’s speeches and pick up the consistency in them, about fiscal consolidation, controlling the public sector wage bill, curtailing corruption, waste and so on. Increasingly, they are not easily persuaded, so they press on. “But these were the same things Pravin Gordhan said, and they’re still not resolved. It would be nice to see some movement, otherwise it’s all just cheap talk,” is the typical response I get.
It helps enormously that the Reserve Bank, Treasury and South African Revenue Service are solid institutions; otherwise the task of talking the country up to these people would be tough. Almost all of them believe that they are the only thing standing between SA and economic oblivion, rapidly followed by international irrelevance. So when one sees at any of these institutions developments that could break that last, holding position into pieces, all of us have to worry.
The Treasury finds its usually solid message wobbling lately, being undone by South African Airways (SAA) and its wayward chair, Dudu Myeni, a friend of the president and, therefore, untouchable.
The thing about the Treasury has always been that it could be trusted. Usually, when it says something needs to be done, its stakeholders show a willingness to do it, or at least meet it halfway. But when a state-owned enterprise under its direct care shows no regard for the finance minister, it sends a powerful message that the institution no longer enjoys the clout it was previously believed to have. If it cannot rein in Myeni, what are the chances it can rein in the bad habits of powerful politicians? This leads to questions about whether its budget and debt-raising presentations are worth the paper they are written on.
The SAA story is simple. The airline is a public money leech due to bad management and archaic shareholder orientation — that is, the ANC. Nene can do little about the backwardness of his political colleagues, but theoretically, he could install solid management. This means a knowledgeable, experienced board and talented senior management.
Neither has happened. SAA’s depleted board has continued to take decisions that will cost the public billions, exposing three concerning issues. The first is that the minister does not have the ear of the president, at least not as much as Dudu Myeni appears to. She continues to do what she likes regardless of consequence, while the minister has to find creative ways to contain her without firing her.
Secondly, Nene’s recent injunction to use public money wisely is being ignored by a state-owned enterprise, right under his nose. In fact, it is rubbing his face in its defiance. This says it is unlikely anyone else will accede to his plea, so the wanton spending will continue unabated.
Lastly, the ANC as an institution of political consequence in the government is comatose. A person who is supposed to be of no political importance to it is causing its government and the country severe damage, and there is nothing it can do about it. It has said nothing and may eventually issue a meaningless statement, but will do nothing. All that is left is for its national working committee to hold its meetings in Saxonwold, where the real decisions appear to be taken, such as cabinet appointments and the appointment of heads of state-owned enterprises, board members and such.
My awkwardness in future conversations with investors or their representatives is of little significance.
The decisions that will be taken soon, such as whether we should be downgraded to junk credit status, will affect all of us. Do not believe those who say it is unlikely. It could happen, and if it does, it will be due to political mismanagement. SAA is the writing on the wall.