Budget Watch

A herd of elephants are threatening Gordhan’s vision

Delivering the MTBPS

Using an old African proverb about a limping buffalo escaping a pack of lions, Finance Minister Pravin Gordhan on Wednesday called for a united national effort, but a herd of elephants is threatening his vision.

Gordhan accomplished an admirable balancing act with his Medium-term Budget Policy Statement (MTBPS) under extremely difficult circumstances. Central to the eventual success of his carefully laid plans is – in his own words – a united national effort.

But as he was speaking in parliament, outside one could hear one of the elephants threatening his vision – civil unrest – going on the rampage. A #feesmustfall protest became a violent clash between protesters and the police. It spilled over into the streets of Cape Town, leaving a trail of destruction behind – something that has lately been happening across the country around institutions of higher education.

These occurrences have become indicative of a much wider and deeper discontent in the South African civil society.

Devil in the detail

A closer look at the figures, which came with the MTBPS, reveals the constraints on the efforts of Mr Gordhan and his team to address some of the root causes of this discontent under prevailing economic and fiscal conditions.

To use another old proverb, the devil is in the detail. While an additional more than R17 billion will be spent to, in part, meet the demands of what has become known as higher education’s Fallists, spare a thought for thousands of mothers depending on child support grants to put food on the table.

The child support grant is being raised by R10, to R360 per month to “keep pace with inflation”. That, in the lived reality of those mothers depending on the grants, translates to barely one loaf of bread per month.

To change the mood of discontent among millions of South Africans and avoid the threatening widespread civil unrest, something more fundamental has to happen and has been identified by Mr Gordhan: collectively South African society needs to get inclusive growth of its economy going.

For this to happen, some fundamental structural changes must take place, and that is the task of not only the government. An example is the stranglehold of big companies on the retail sector, dealt with in another article in this edition.

Other elephants rumbling

On the broader economic front, there is a whole herd of other elephants rumbling. Foremost among these is the prospect of a sovereign credit downgrade to junk status by credit rating agencies before the end of the year.

Behind this leader lurk a range of other ‘bigfoots’. Most prominent among them is the position of Mr Gordhan himself, who will be (or maybe not anymore) in court next week on highly controversial fraud charges.

Then there are the escalating factional battles in the governing African National Congress, the ailing state-controlled enterprises and turf battles surrounding them, the controversial nuclear build programme and the battles surrounding the Public Protector’s report on state capture, to name but a few.

Clearly, South Africa is not out of the woods yet and Mr Gordhan and his team are going to need help – plenty of help from many quarters.

by Piet Coetzer

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