CAIPHUS KGOSANA | Which of his two hats will Godongwana wear for his budget? His choice is SA’s future

Thursday is the day Enoch Godongwana becomes finance minister.

Yes, he was appointed in August when President Cyril Ramaphosa reshuffled his cabinet, but you are not officially a finance minister until you have delivered the budget speech to the nation.

Granted, he is not tabling a full budget with all its major policy announcements, but the medium-term budget policy statement is equally important. It gives us an update on the health of our finances but also adjusts allocations to government departments, provinces, municipalities and state entities based on prevailing needs.

Godongwana is not entirely starting from scratch. As head of the ANC NEC subcommittee on economic transformation, he is literally the custodian of economic policy. However, it’s one thing to formulate policy, another to implement it.

Like all finance ministers before him, Godongwana inherits a highly indebted and technically broke state. His immediate predecessor Tito Mboweni was not one to beat about the bush when it came to the national purse. He took public servants head on, insisting that their wage increase demands were unaffordable, and would leave public finances in a state of flux. In his budget presentation in February, Mboweni proposed moderate adjustments to wage increases, way below inflation. National Treasury also sounded a warning as combined debt was forecast to pass the R5-trillion mark by 2023/24. It cautioned in a review of the budget that the country was entering a dangerous “debt spiral”. Government will pay just under R1-trillion over the next three years to service current debt, more than it spends on health care.

“Funds that could be spent on economic and social priorities are being redirected to pay local and overseas bondholders. Over the next three years, annual debt service payments exceed government spending on most functions, including health, economic services and peace and security,” Treasury noted.

Mboweni eventually lost the battle on public sector wage increases. Political manoeuvring within the alliance guaranteed civil servants not just decent increases (considering that many private sector workers had to forgo increases due to Covid-19’s impact), but a one-off sweetener on top as well. No one knows why they deserve it given that the public service is not just bloated but highly inefficient.

When Godongwana takes to podium in the national assembly on Thursday, it will be the third week running that Eskom has subjected us to incessant power cuts, having declared stage 4 for the rest of this week. Load-shedding is not just an inconvenience to households but causes untold damage to the economy. Remember when mines — our biggest foreign currency earners — were asked to reduce production to help save the weak grid?

Let’s thank our lucky stars that Ramaphosa reined in his fossil of an energy minister, Gwede Mantashe, overruling him on the self-generation threshold that he wanted to set at a paltry 10MW. The threshold was revised to 100MW as a result of the president’s intervention, allowing independent power generation projects of scale to be conceptualised. But the first of these projects will only materialise in the next three years or so. In the meantime we are at the mercy of a crippled Eskom.

The power utility is the economy’s biggest risk and its R400bn debt remains an albatross around our necks. We have been promised that the behemoth is being separated into three independent entities focusing on generation, distribution and transmission, but that work is progressing at snail’s pace. The finance minister will have to give us a progress report and an update on Eskom debt restructuring.

Another elephant in the room that Godongwana can’t ignore is the growing call for some form of a basic income grant for our most vulnerable countrymen and women. At its last extended lekgotla the ANC put the BIG on ice on the basis of affordability. But advocates of the BIG have made very compelling arguments on its necessity and have modelled how to cost it without bankrupting SA.

Some have questioned whether Godongwana can wear both hats; if he is capable of separating his roles as ANC policy guru and ultimate guardian of the public purse. As he officially graduates into a finance minister, our collective gaze will be on the new moneyman, wondering if he is capable of managing these contradictions.