While discussing the economy and politics the other day, a friend said I am being unfair to Finance Minister Pravin Gordhan. Other countries like the US and UK – from where he comes – also experienced difficult economic conditions after the crash in 2008.
Unwittingly, he then asked and answered my criticism of Gordhan: these countries implemented measures to mitigate the crisis, including fiscal discipline and austerity measures, as Britain did, while South Africa did not. Also, he overlooked the fact SA is not a developed country or most emerging markets that have the economic wherewithal and discipline to self-adjust, learn from its mistakes and grow.
And so we came to my main criticism of Gordhan that my friend who, in his defence, is not knowledgeable about economics, doesn’t understand. Under Gordhan’s stewardship from 2009 to 2014 government debt went from about 30% of GDP to over 50%, undoing much of his predecessor Trevor Manuel’s (of whom I’m also not a fan) work.
Twenty-year average GDP growth dropped from 3.2% to 3.0% a year. The budget deficit rose from 3.8% to 4.0%.
Delivering the Medium Term Budget Policy address in 2013 Gordhan, as analysts regularly do, “pinpointed SA’s public-sector wage bill as one of the risks to the country’s fiscal sustainability and has promised [emphasis added] to ensure this doesn’t expand any further”. He noted spending had doubled from 2007/08 to 35% of the budget in 2013. When he took office it was 32%. It’s now 40%, double the developing economy average of 22%.
But like his other promises to reel in government spending and facilitate growth, it was unsuccessful, which is an indictment of his management of the portfolio. Rating agencies look at growth, budget deficit and public wages in particular to assess the strength of a country’s economic policies and its credit worthiness.
However, even putting aside the usual hagiography accorded post-apartheid finance ministers, since Gordhan’s reinstatement in December 2015, the Hawks investigation and his recent indictment for fraud has elevated him to the status of saint or immortal hero. With SA society behind him and representing his interests in court, he received a “roaring standing ovation” when he delivered the Medium Term Budget Policy in the National Assembly on Wednesday. Business Live described it as a “presidential” “State of the Nation” address.
Richard Poplak, one of the few political analysts in SA who cuts through the crap, summarised the situation in Daily Maverick:
“There is much the finance minster has to answer for related to his first stolid, don’t-rock-the-boat tenure as the head of the Treasury. But we don’t hound Gordhan on the finer points of his ideological outlook, because we’re too busy trying to keep him from getting arrested by a fake national prosecutor. In this, he will probably never face the klieg lights for behaving like the developing world’s tamest neoliberal. And that’s a shame, because this is a tête-à-tête we should be having.”
Recently I wrote “South Africa is in danger of floundering on the rocks and shoals, and the pilot and crew – Zuma, ministers, ANC and state agencies – are either locked on the bridge fighting for control of the helm, or in the ship’s saloon drunk on Johnnie Walker Blue Label”.
So South Africa did not arrive at this economic pass automatically, without help from those who control economic policy and finances. Gordhan is now being portrayed as the hero. But where was his steadying control – or lack thereof – of the tiller before?
Former finance minister Nhlanhla Nene has been forgotten. But if anyone is the hero, it is he for trying to do what Gordhan failed to do during his first don’t-rock-the-boat term. And he paid the price for it.
A reluctant hero in fiction is an ordinary person thrust into extraordinary circumstances and required to perform heroic acts. From mythological Odysseus and Achilles, to historical Horatius, to modern fiction’s Han Solo, Jack Reacher and Kung Fu Panda, the reluctant hero selflessly, and usually alone, vanquishes the evil foe and saves the world from disaster.
In Gordhan’s case the popular narrative is he is saving SA from state capture and downgrades from alleged bad guys Zuma, NPA head Shaun Abrahams, Hawks and Guptas. But rarely in fiction is the reluctant hero a player and complicit of the dark side, so to speak, as Gordhan is and described by his handling of economic policy. In this case, to portray him as the reluctant hero of the story does not gel.
Big business’ leaders were silent as the economy continued to unravel during and after Gordhan’s first tenure. Last year they briefly came out of their boardrooms to express “concern” about Nene’s firing, but only after the country reached an economic tipping point. Despite the crisis not being over, they retreated to safety again – as businessmen they prefer to stay out of politics.
But last week, after the fraud charge was brought, 81 CEOs – “captains of industry” – shook off their complacency, stupor and cowardice and “dramatically” gave moral support to the “hero” in his “war against Zupta”, as the media breathlessly reported.
The irony is not lost on me that instead of the hero saving the people, as in fictional stories, the South African public – NGOs using donor money, former judges and politicians, business, media and ordinary citizens – are rallying a “massive support campaign” to save the hero, or more accurately, one of the antiheroes. Truth is indeed stranger than fiction.
Do I want Gordhan to be maliciously prosecuted? No. Do I want stability and sound fiscal management? Yes, but unlike his supporters I don’t think he is the person for the job – he has not shown the stomach for it before, at least until now apparently. And while his latest promises are to be proven in time, his record is unspectacular.
I wrote before SA has so few real heroes and role models that we latch onto those who inevitably disappoint us. Memories are short, and we make the same mistake of forgetting past experience and place trust in the wrong people.
I don’t know if Gordhan will live up to his new found role as the Guardian of South Africa. But the treasury he heads is vital to economic growth and development. It must be defended. This story is not yet played out, but I hope, like in books and films, it has a happy ending.
