A fine technocrat who did not wear his position on his sleeve, and known for tapping into his soft power of persuasion, Nhlanhla Nene has now been shunted out of South Africa’s national Treasury.
The man who was Finance Minister has been forced to make way for an obscure politician, David van Rooyen, who was on the backbenches of parliament.
The crux of Nene’s fall is not easy to decipher. But two factors seem to have driven the final nail into his professional coffin.
The first has to do with his hard stance on South African Airways. Nene challenged the board of the state-owned airline, led by Dudu Myeni, to reconsider its intended restructuring of a fleet arrangement with Airbus.
The restructuring would have had fiscal implications, with the government being forced to make good on its guarantees.
Second, it is apparent that Zuma found the national Treasury, and Nene in particular, a stumbling block to a nuclear deal the president is believed to have promised the Russians.
It is estimated that the deal could cost as much as R1-trillion. Nene’s allocation of a mere R200-million towards research for this programme must have been seen as an insult by Zuma’s cronies and insiders.
Zuma believes this nuclear deal will be a magic bullet for South Africa’s urge to undertake industrialisation on a large scale, address energy deficits and create employment.
He may turn out to be right on some of the outcomes, but the push to flout procurement rules and avoid accountability signifies a destruction of institutions.
The likely, and more menacing scenario, is deepening corruption.
This is more so given Russia’s impoverished corporate governance culture. The nuclear deal, if implemented, could create a feeding trough on a gigantic scale for cadres and cronies while acting as a debt albatross for future generations.
At the heart of both the SAA saga and the nuclear deal is the failure by the country’s leadership to adhere to accountability and transparency mechanisms, especially the Public Finance Management Act, as well as to grasp the implications of irrational decision-making on the fiscus and the economy.
The markets or economic actors are not familiar with Van Rooyen, Nene’s replacement at the helm of the Treasury.
He clearly is someone Zuma considers malleable.
The appointment itself was handled clumsily with no forewarning to the markets.
This was a serious mistake given the strategic importance of National Treasury. The department stands at the nexus between the domestic economy and global markets.
What we can draw from these changes is that the Treasury has now lost its place of pride as a premier economic nerve centre for government.
The cavalier manner in which Zuma has treated this crucial institution will have implications for the economy.
Investor confidence will be negatively affected, and trust in the ability of the ruling party to provide economic leadership severely eroded.
Further, there will be a heightened sense of political risk, making it even harder to convince investors about South Africa’s profile as an investment destination.
The public debt, already hovering close to 50% of the GDP, will balloon, with implications for fiscal sustainability in the future.
Delivery of quality public services, public sector wages and the ability to modernise infrastructure will suffer further.
To hope for faster economic growth and job creation under such a scenario is a pipe dream.
What will get South Africa out of the quagmire is a revolt within the ANC to challenge Zuma to explain himself and to provide a credible plan to reform and manage the economy.
Second, the local government elections due to be held in early 2016 should be a platform to rebuke government for its shambolic management of the economy.
Mzukisi Qobo is associate professor at the Pan African Institute, University of
Johannesburg.
This article is from The Conversation
ONLY REVOLT IN ANC WILL SAVE ECONOMY FROM BLIND PILOT
The man who was Finance Minister has been forced to make way for an obscure politician, David van Rooyen, who was on the backbenches of parliament.
The crux of Nene’s fall is not easy to decipher. But two factors seem to have driven the final nail into his professional coffin.
The first has to do with his hard stance on South African Airways. Nene challenged the board of the state-owned airline, led by Dudu Myeni, to reconsider its intended restructuring of a fleet arrangement with Airbus.
The restructuring would have had fiscal implications, with the government being forced to make good on its guarantees.
Second, it is apparent that Zuma found the national Treasury, and Nene in particular, a stumbling block to a nuclear deal the president is believed to have promised the Russians.
It is estimated that the deal could cost as much as R1-trillion. Nene’s allocation of a mere R200-million towards research for this programme must have been seen as an insult by Zuma’s cronies and insiders.
Zuma believes this nuclear deal will be a magic bullet for South Africa’s urge to undertake industrialisation on a large scale, address energy deficits and create employment.
He may turn out to be right on some of the outcomes, but the push to flout procurement rules and avoid accountability signifies a destruction of institutions.
The likely, and more menacing scenario, is deepening corruption.
This is more so given Russia’s impoverished corporate governance culture. The nuclear deal, if implemented, could create a feeding trough on a gigantic scale for cadres and cronies while acting as a debt albatross for future generations.
At the heart of both the SAA saga and the nuclear deal is the failure by the country’s leadership to adhere to accountability and transparency mechanisms, especially the Public Finance Management Act, as well as to grasp the implications of irrational decision-making on the fiscus and the economy.
The markets or economic actors are not familiar with Van Rooyen, Nene’s replacement at the helm of the Treasury.
He clearly is someone Zuma considers malleable.
The appointment itself was handled clumsily with no forewarning to the markets.
This was a serious mistake given the strategic importance of National Treasury. The department stands at the nexus between the domestic economy and global markets.
What we can draw from these changes is that the Treasury has now lost its place of pride as a premier economic nerve centre for government.
The cavalier manner in which Zuma has treated this crucial institution will have implications for the economy.
Investor confidence will be negatively affected, and trust in the ability of the ruling party to provide economic leadership severely eroded.
Further, there will be a heightened sense of political risk, making it even harder to convince investors about South Africa’s profile as an investment destination.
The public debt, already hovering close to 50% of the GDP, will balloon, with implications for fiscal sustainability in the future.
Delivery of quality public services, public sector wages and the ability to modernise infrastructure will suffer further.
To hope for faster economic growth and job creation under such a scenario is a pipe dream.
What will get South Africa out of the quagmire is a revolt within the ANC to challenge Zuma to explain himself and to provide a credible plan to reform and manage the economy.
Second, the local government elections due to be held in early 2016 should be a platform to rebuke government for its shambolic management of the economy.
Mzukisi Qobo is associate professor at the Pan African Institute, University of
Johannesburg.
This article is from The Conversation
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