/ 19 December 2011

Puzzle of the Limpopo takeover

Puzzle Of The Limpopo Takeover

Finance Minister Pravin Gordhan has always struck me as a smart operator, someone who would not easily kowtow to political pressure. Who could forget how he almost single-handedly turned around the South African Receiver of Revenue into one of the most effective state institutions in the country?

Equally, he has done a sterling job since he was appointed by President Jacob Zuma as finance minister. His commitment to prudent financial management is beyond doubt. He has on several occasions publicly registered his concerns about financial inefficiencies in government and higher-than-inflation wages for public servants.

For these reasons alone, I find it difficult to believe that his decision, recently approved by Cabinet, to intervene in three provinces — Limpopo, Free State and Gauteng — was politically motivated. Yet, given the new damning allegations by Gordhan’s own departmental officials that he deliberately singled out Limpopo for political reasons, it would be naive to rule out the possibility that he was forced by his political masters to apply harsh action against Limpopo to embarrass the provincial executive, led by premier Cassel Mathale, ahead of the ANC elective conference there.

It is not a secret that Zuma and his supporters see Mathale and his allies as a threat to his re-election as ANC president next year and will do anything to destabilise them, even if it means using state institutions to do so.

Mathale and his allies, including suspended ANC Youth League president Julius Malema, have made it clear that they want ANC Deputy President Kgalema Motlanthe and Sports and Recreation Minister Fikile Mbalula to replace Zuma and ANC Secretary General Gwede Mantashe respectively. Zuma has proven his ruthlessness in the way he has purged his opponents from key positions in both the ANC and government, replacing them with those who are loyal to him, in order to retain power.

The mere fact that Gordhan is not on the ANC’s national executive committee puts him in a vulnerable position as far as political pressure is concerned. He has to please Zuma, who put him in his Cabinet’s most powerful position. Senior treasury officials who spoke to the Mail & Guardian on condition of anonymity have attested to the fact that at times Gordhan allows politics to interfere with his job.

At face value, the reasons given by the treasury to intervene in Limpopo appear convincing and genuine. Yet I find it hard not to sympathise with those who have raised concerns about the timing of the intervention. Yes, there have been several allegations of corruption in Limpopo, and any move to bring to book those found on the wrong side of the law should be welcomed. But the financial crisis alluded to by the treasury is something different – it dates back to 2001.

Also, Limpopo is not the only province facing such a financial crisis. It is not clear why Gordhan waited until now before he acted on Limpopo, and has not acted on other provinces – provinces that support Zuma’s re-election as ANC president. Gordhan could have avoided this kind of criticism if he applied the same principle to other provinces as he did to Limpopo, and applied it to those who support Zuma’s re-election.

Speaking to senior provincial-government officials in Limpopo and reading confidential treasury documents, one does not get the sense that Gordhan gave Limpopo an opportunity to present its case, as he did with the Free State and Gauteng. If Gordhan accepted the Free State’s explanation of why it approved road projects amounting to R4.2-billion despite the fact that the provincial government did not have the budget for this, why did he not listen to Limpopo, which has explained in detail why the province found itself in such a financial mess?

Nerulal Ramdharie, Limpopo’s head of finance, has explained that the provincial government ran out of cash because it was instructed by the national treasury in September to effect back pay dating from May in salary increases agreed between unions and national government.

The provincial government, according to Ramdharie, was initially told that the salary increase for this financial year would be 5.5%. But it came to 6.8% — which meant Limpopo had to pay 1.3% more than what it budgeted for. Limpopo was also forced to pay “occupation-specific dispensation” agreed to by unions and national government, despite the fact that the national treasury has not allocated funds for it.

Like Gauteng, Limpopo says it has inherited a high overdraft from the previous regime and has since put in place measures to reverse the dire situation. This year alone it has reduced the overdraft from R1.7-billion to R1.5-billion, and was planning to wipe it out by 2013.

The provincial government has also cited the issue of “occupation-specific dispensation” as a factor contributing to the province’s financial situation.

The provincial education department and the health and social-development department are the main contributors to the high overdraft, with education sitting at R1.2-billion and health and social development at R350-million.

Perhaps it would have been justifiable for Gordhan to put the two departments under administration, but the whole provincial treasury, public works, roads and transport? There hasn’t been any convincing explanation from the treasury about why it also took over these departments, all of which are headed by Mathale’s close allies. Taking over these departments without providing any reason has created an impression that the intention was to weaken Zuma’s opponents and embarrass Mathale — and this a week before the ANC provincial conference, which is likely to set the tone for the ANC national conference in Mangaung next year.

The feeling that Gordhan has been drawn into factional battles reflects badly on the finance minister and threatens to undo the hard-earned reputation for good work the treasury has earned over the years.