The departments of finance and local government were sent back to the drawing board by President Cyril Ramaphosa, who is demanding more of his Cabinet, particularly in the current bleak economic climate.
The government wants to roll out financial packages to stimulate growth and is looking to China to be one of its funders. It is projected the treasury will need more than R40-billion to begin the process but, with the government’s R2-trillion debt, other sources of funding will have to be found.
The government is also under pressure to be fiscally prudent to avoid further downgrading by rating agencies, a move that would make it even more expensive to service its ballooning debt. The current cost of servicing it is estimated at R180-billion for 2018-2019. This is expected to rise to R197-billion in 2019-2020 and R214-billion in 2020-2021.
Government officials who attended the Cabinet lekgotla said Ramaphosa was hands-on during the gathering, especially on issues of the economy, and demanded well-thought-out presentations. Reportedly, he did not hesitate to ask that those that were unsatisfactory should be redone. Ministers who found themselves at the receiving end were Finance Minister Nhlanhla Nene and Co-operative Governance Minister Zweli Mkhize.
“He referred so many presentations back, maybe twice or thrice, but in a good way. His argument was that we can’t be here and keep on saying the same things and not come up with [any] nothing new. In many instances he would say to ministers, ‘I hear you but I need more’,” the official said. “The economic cluster and local government were among those. He was just not happy about the quality. He felt the presentations were not thorough or detailed enough and that more could still be done.”
Last month, China declared its commitment to invest more than $14-billion in South Africa’s economy. It has already granted loans amounting to more than R30-billion to Eskom and Transnet through the China Development Bank and the Commercial Bank of China.
Asked about approaching China for money, the treasury referred the Mail & Guardian to a statement it released on Monday, which said funding would be secured “through the reprioritisation of existing budgetary resources”. It said Ramaphosa would give more details in due course. Government insiders said China was among the countries that had been singled out during treasury’s presentation on the stimulus packages.
“There was an idea to have some of these investments that are coming into the country right now to be targeted,” a senior government official said. “China was definitely referred to and singled out at the time when the presentation was made by the minister [Nene].”
Economists have warned, however, that besides stimulus packages, South Africa needs a clear long-term plan to resuscitate the economy and create jobs.
The government is also hoping that China will help to improve the efficiency of the public sector.
Public Service and Administration Minister Ayanda Dlodlo this week said South Africa had approached China, Malaysia and the United States to train young public servants. Besides improving efficiency, she wants 50% of government employees to be young people.
“There are quite a number of countries we want to partner with to help us train our young people. Not that we can’t train them in South Africa but it’s always good to have people exposed to different cultures and different work ethics,” Dlodlo said.
“The Chinese have a hugely regimented work ethic, [and] so do the Malaysians. So we are hoping that, if we send people there, they will come in with a new culture of a different work ethic … one of industriousness and high performance,” she added.
South Africa and China have had close relations and Ramaphosa’s administration appears to be drawing the East Asian giant even closer, amid cooling relations with Russia.
During the Brics (Brazil, Russia, India, China and South Africa) summit last month, Chinese President Xi Jinping paid a state visit to South Africa. But it came at the expense of a state visit by Russia’s President Vladimir Putin, who had been invited for an official visit by former president Jacob Zuma to coincide with the Brics summit.
Because of Putin’s snubbing by South Africa, saw Deputy President David Mabuza visited Russia in May, reportedly to mend fences.
Ramaphosa will lead a delegation of government officials and businesspeople on a state visit to China next month.