In the run-up to his medium term budget speech, the latest Finance Minister of South Africa, Tito Mboweni this weekend requested input on Twitter: what can he do to “annoy the Establishment”? Just who exactly he, as ex Reserve Bank governor and senior figure in the ANC and government, has in mind with this reference remains to be seen.
When Mboweni presents the medium term budget on 24 October, he will be only two weeks into his term. Though possible, it would be unusual if major changes are announced for straight-away implementation. The mini budget, more than anything else, is typically an interim report on state finances six months after the annual February budget, coupled with some projections and revisions to assumptions on which the original budget was based. Since most of the work for this would have already been done, and there typically isn’t much one can do to change history (except rewrite it, but two weeks is a short time even for that), Mboweni’s influence on the mini-budget will in many ways be limited.
Yet, the mini budget is also about prepping the market and government departments for some of what is to come. And, as a new broom, Mboweni will offer us the first official and systematic indication of how he wants to sweep clean, or, as he called it last week in another tweet: “Using the budget strategically to transform the economy.”
In the days and weeks ahead, much time will be spent, as it should, trying to gauge the direction the Mboweni treasury puts the country on. Detailed analyses will be done, projections and assumptions will be questioned, and of course, many will ask whether enough was done to prevent the long-expected downgrade of the South African state’s sovereign debt. With others, Sakeliga will be doing this and more, but it shouldn’t let us lose sight of the primary question in evaluating Mboweni’s likely influence on the economy: what is his vision for the size of government?
On the one hand Mboweni might turn out to be a man of his tweets. This would be the case if he confirms his earlier support on social media for extreme and interventionist policies. Policies he has publicly suggested in recent months include 40% state ownership of mining companies, a state bank, a sovereign wealth fund, and significantly greater state ownership of land.
Where he draws his intellectual inspiration for his speech from might also be instructive. Will it be the kind of junk status prescriptions that he had been enthusiastically recommending to his quarter million twitter followers this year? The last thing the economy and the treasury needs is a finance minister who proudly draws his policy insights from Marxist-Leninist theory, the national democratic revolution and radical economic transformation. And then there are his racialist and pan-African sympathies, such as in the case of land redistribution: “The Land in Afrika belongs to Africans!!”