Treasury choice to stabilise SA Inc

01 May 2016 - 02:02 By ASHA SPECKMAN

Lungisa Fuzile, whose contract as director-general of the National Treasury was renewed this week by cabinet after speculation Treasury may lose his skills, says priorities in his remaining two years are improving investor perceptions, easing labour conflict and attracting skills to South Africa.Fuzile's contract at the Treasury has been closely monitored by business leaders, rating agencies and international investors. His skills are regarded as essential for maintaining stability at the Treasury, especially as South Africa faces a possible downgrade of its credit rating and allegations of state capture by the influential Gupta family.The renewal of his contract, after the Treasury had become the target of intense political infighting, is certain to reassure investors that there is a steady hand on South Africa's finances.Finance Minister Pravin Gordhan said in a statement that Fuzile had contributed to strengthening the reputation of the Treasury as a stable institution with a depth of experience in its ranks.story_article_left1"He has had to lead the Treasury at a difficult time, following a period of a recession and low growth after the 2008 global financial crisis," Gordhan said.Under Fuzile's leadership, improvements have been made to financial management, including the establishment of the office of chief procurement officer to modernise procurement and ensure better value for money for the government.On Friday, Fuzile, who was on a five-year contract, said his tenure was extended by two years , not because of political interference as had been speculated, but at his request. "I thought two years would be fine. I joined shortly after our freedom, around the same time as many people who have since left."A pool of talented people could succeed him , he said. "There are many people inside the institution, and I would imagine outside, but many inside who have grown up in the institution; if they are not ready [yet], one, two years from now they will be perfectly ready."Fuzile, who turns 50 in June, said: "I still have a lot of energy." Asked if he would enter the private sector once his contract was up, he said: "It's still a very long way to go. The key thing is to do my best with the team now, with 100% focus on it. Closer to the time, I will start thinking about that."On the challenges facing South Africa, particularly as the International Monetary Fund is in the country to compile a report known as the Article IV consultation, Fuzile said the priority had to be to design measures to stimulate growth.story_article_right2The IMF had identified structural reforms - "making sure we permanently resolve the energy situation, which they concede is improving", he said. The country also needed to en sure regulations that caused doubt in the minds of investors were dealt with and "we need to find the right balance to make sure projects support the national interest but are still able to compete for investment in a globalised world".South Africa needed to attract skilled people from around the world so that it could enjoy the multiplier effect of every person who was skilled and employed getting two or more unskilled people employed. Speeding up processes at Nedlac aimed at easing conflict in the labour market was essential."It is those kinds of things we've got to do," Fuzile said.Keeping the cost structure of the economy as low as possible was also a priority, he said. This included finding the balance between making sure that Eskom operated efficiently and was financially sound, but that costs it passed on would be as low as possible.Port charges had declined, but there could be scope for further decreases to make sure exporters did not face much higher charges than competitors elsewhere in the world.Stability in managing South Africa's finances is one element that rating agencies will consider when reviewing its rating.Gardner Rusike, a sovereign analyst at S&P Global Ratings, said: "Continuation with the director-general gives confidence on the path that Treasury is taking." However, there was no direct link between the renewal of Fuzile's contract and any rating action."The continuation of the director-general is not the only factor that will determine how ratings move going ahead," Rusike said. "There are a number of factors that we've outlined which are around growth and fiscal consolidation. We do take cognisance of everything. Small steps are good, but there are a number of things that we look at so it mustn't be confined to specific events."story_article_left3Improvements specifically around growth would do a lot more to the ratings trajectory.Azar Jammine, chief economist of Econometrix, said Fuzile was well respected. The extension of his contract "strengthens the mood of confidence in the ability of the Treasury to hold the fort and resist state capture and corruption that engulf much of the rest of government."Xhanti Payi, an economist at Nascence Research, said Fuzile was strong, upfront, competent and extremely knowledgeable."He has a strong sense of integrity, and was an important player in holding things together during the difficult December debacle [when finance minister Nhlanhla Nene was fired]. He is very well respected. So I imagine his skill and presence in the Treasury at this time is important and that the minister would have wanted to keep that."This week Telkom chairman Jabu Mabuza will represent business leaders, in a meeting with Gordhan and President Jacob Zuma to give an update on new areas in which to invest and create jobs. This is part of cooperation between business and government to avoid a downgrade.speckmana@sundaytimes.co.za..

There’s never been a more important time to support independent media.

From World War 1 to present-day cosmopolitan South Africa and beyond, the Sunday Times has been a pillar in covering the stories that matter to you.

For just R80 you can become a premium member (digital access) and support a publication that has played an important political and social role in South Africa for over a century of Sundays. You can cancel anytime.

Already subscribed? Sign in below.



Questions or problems? Email helpdesk@timeslive.co.za or call 0860 52 52 00.