Response October
27th, 2016

It seems to be customary for post-1994 English-speaking finance ministers to include in their major speeches a few phrases in an African language. Yesterday, Pravin Gordhan quoted a Sepedi saying that “if a pack of lions fails to work together they will not be able to bring down even a limping buffalo.” There was much teasing laughter directed at Deputy President Ramaphosa who once, when he was still a businessman, paid many millions of rands for a prize buffalo.

Mr Gordhan’s apparent intention was to illustrate the need for the nation to find a shared sense of purpose in the face of major economic challenges. Unless we “work together” – a phrase he repeated a number of times – our prospects are dire, as we face a veritable herd of vigorous buffaloes, let alone a limping one. We have to deal with an expected credit rating downgrade, which will make government borrowing much more expensive; low commodity prices, which affect our export earnings; ongoing low global growth; and the worst drought in 30 years. On top of this, socio-economic demands, typified by the ‘fees must fall’ demand, are becoming daily more strident.

For Mr Gordhan, these are all challenges to be assessed and dealt with. They are manageable if, as he said repeatedly, “we make the right decisions”. Among those decisions are the need to raise taxes in order to secure more revenue; the need to cut the state’s wage bill, which now accounts for around 40% of all government expenditure; the need to keep the budget deficit at or below 3%; and the need to tackle deep-seated inequalities that threaten our social stability.

It is the focus on this last point that characterises Mr Gordhan’s approach to budgeting. He is profoundly aware of the social impact of his revenue and expenditure plans, and quoted Pope Francis in this regard: “Human rights are not only violated by terrorism, repression or assassination, but also by unfair economic structures that create huge inequalities.” Inclusive growth was another of Mr Gordhan’s themes; it is not enough to achieve simple bottom-line economic growth, it has to be the kind of growth that creates jobs, improves living standards and benefits marginalised communities. This is not something that the ‘market’ is always aware of, or takes seriously, but as long as Mr Gordhan is finance minister he will highlight this aspect.

It was not only to the market that Mr Gordhan directed a veiled warning. He spoke of “vested interests that interfere with decision-making” and he reminded “those who are called upon to serve in public institutions” of their “responsibility to work with integrity, honesty and accountability and to ensure that their efforts are directed towards the shared interests of all South Africans”. He also noted the need for a “predictable and stable policy and political environment”. It is impossible to separate these comments from their context: the battle being fought against Mr Gordhan and his department, which has resulted in his having to defend himself against spurious criminal charges at a time when all his energy should be focused on improving the health of the economy.

A large crowd of demonstrating students converged on Parliament just before the speech, demanding free tertiary education. Mr Gordhan (who went out to speak to them briefly) noted that the second highest rate of growth in any item of state expenditure in recent years has been in post-school education. The highest, very worryingly, has been in interest payments on the national debt, which now stands at over R2 trillion! Although he announced a further allocation of R9 billion for the National Student Financial Aid Scheme and R8 billion to subsidize fee increases for households with income up to R600 000, he also listed the other social demands that government is addressing: expansion of the HIV/AIDS programme; an extension of the child-support grant; grants for the employment of social workers; 39 000 bursaries for new teachers; and, of course, the need for hundreds of billions to be spent in infrastructure development for transport, housing, sanitation, energy and water. In other words, there are many calls on the fiscus, and it is not just those who are able to make the loudest noise that deserve the most attention.

But in the end, this speech was not so much about the juggling of figures and the allocation of funds, as it was about presenting the nation with a vision of how government ought to be run. A number of commentators remarked afterwards that it was a ‘presidential’ speech, and indeed it was. It located the dry and dour business of budgeting and taxation in their proper constitutional context:

“We are enjoined to build inclusive institutions and an open, enterprise-based economy, including measures to redress discrimination and promote equality. We are obliged also to combat tendencies that are anti-competitive, restrictive, discriminate unfairly, take undue advantage of influence or are hidden and fraudulent.”

In recent months the buffalo that manifests as cronyism, nepotism, state-capture, undue influence, vested interests, and nominally independent public servants taking partisan positions, has been wounded. The courts, the Reserve Bank, the Public Protector, the Treasury, and not least, as Mr Gordhan himself acknowledged, civil society and the faith community (“Your moral guidance is a cornerstone of the struggle for freedom and the fight against corruption”) have stood firm. Another blow will be struck when the criminal case against Mr Gordhan falls apart, as it must do.

The buffalo is limping, but it is still dangerous. The question is whether the lions that are now beginning to gather will find a way to work together quickly enough to bring it down before it does even more damage.


Mike Pothier
Research Co-ordinator


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