Pravin Gordhan's mettle to be tested
The country breathed a collective sigh of relief this week when President Jacob Zuma reinstalled Pravin Gordhan as the finance minister.
Gordhan’s press conference, organised less than 24 hours after his reappointment, could not have been more different than the brief statement given by his short-lived predecessor, Des van Rooyen. Gordhan was flanked by his director general, Lungisa Fuzile, the Reserve Bank governor, Lesetja Kganyago, and Deputy Finance Minister Mcebisi Jonas.
The only thing that separated it from being a replica of a budget briefing was the absence of the South African Revenue Service (Sars) commissioner, Tom Moyane.
Despite the relative calm that this united front returned to the economy, it remains to be seen whether Gordhan will be able to achieve what Nene was trying to when he was so unceremoniously fired.
Just days before his axing, Nene had refused to sign off on a deal at SAA, which had been restructured by its board, chaired by Dudu Myeni, citing wider financial risks to the government.
Nene also emphasised the importance of properly assessing the affordability of the government’s nuclear procurement ambitions.
Gordhan also has to deal with the controversy surrounding the alleged operations of an investigative unit in Sars which he has publicly defended.
At the press briefing, he was scathing of the media coverage of the Sars, unit, which he called “reporting on rumours and cooking up things”.
In the wake of the controversy, long-serving officials have left Sars.
South Africans should be very worried about attacks on the credibility of institutions such as Sars, the treasury and the Reserve Bank, Gordhan said, because the damage affected “generations to come”.
He said those who view state-owned entities as their “personal toy from which you can extract money when you feel like” could not longer do so.
Alan Hirsch, the director of the graduate school of development policy and practice at the University of Cape Town, said the proof would be in what kind of decisions were taken over procurement plans such as the nuclear deal. It would be critical to see whether “the finance minister is going to be able to prevent bad decisions from being made”, he said.
Gordhan confirmed that there would be a formal procurement process for nuclear power, but he stressed that the country “can’t spend money we don’t have”.
Nene’s summary dismissal and Van Rooyen’s appointment sparked worry that the position of the internationally respected treasury would be significantly weakened. Speculation immediately began that Fuzile would leave the department, possibly precipitating the departure of other senior staff.
With Gordhan’s reappointment, the expectation is that the treasury’s position will be shored up.
Ralph Mathekga, the head of political economy at the Mapungubwe Institute for Strategic Reflection, said Gordhan had battled in the past to get the government to institute spending cuts. Mathekga gave the example of how former North West premier Thandi Modise bought an expensive BMW, in defiance of an instruction by Gordhan to the government in 2013 while he was finance minister, to limit costly vehicle purchases.
But, Mathekga said, this time around Gordhan was operating in a environment “that allows him to be more firm”. Zuma’s loss of credibility meant he “will be licking wounds”.
“Unlike Nene … Pravin is presiding at the treasury at a time when the president can no longer be seen to be blocking or frustrating the treasury.”
Political analyst Nic Borain said Gordhan was an “excellent finance minister” and, given that he was backed by whoever had ultimately overruled Zuma, suggested he was the most powerful finance minister South Africa had ever had.
The attack on his integrity through the “smear campaign” on Sars suggested that Gordhan was not going to be a “pliant or compliant” minister, said Borain.
On Wednesday, according to a report by the Daily Maverick, the Sunday Times was sanctioned by the press ombud for its coverage of the Sars unit, in particular over a story published in October that called for an investigation of Gordhan about the unit’s operations. The Sunday Times is appealing the ruling.