/ 17 December 2022

Godongwana: Economic policy driven by the party, not the president

South Africa's Finance Minister Enoch Godongwana Presents Budget
Finance Minister Enoch Godongwana noted that South Africa’s position on Israel’s occupation of Palestine has always been clear. (Dwayne Senior/Bloomberg via Getty Images)

Finance Minister Enoch Godongwana has assured that there will be continuity in the ANC’s economic policy, regardless of who is elected to lead the party at its 55th elective conference.

Godongwana was speaking at a business breakfast hosted by the Progressive Business Forum on the second day of the ANC’s conference at Nasrec, on Saturday. 

“Unlike in the USA, where the policy belongs to the president, policy belongs to the party. So irrespective of the change in government, the party will pursue its policies,” he said.

The minister, who formerly served as the chair of the ANC’s economic transformation sub-committee, added that he was not panicking about the outcome of the election. He expressed his confidence in both presidential candidates, Cyril Ramaphosa and Zweli Mkhize, saying they both have a strong grasp of the country’s economic problems.

The party’s elections have seen Ramaphosa’s camp come up against the so-called radical economic transformation faction, suggesting that a policy shake-up could be on the cards, creating a situation that could spook investors.

Earlier this month, when it seemed the president would resign in the wake of the adverse findings of the section 89 panel on the Phala Phala scandal, the uncertainty shook the markets and the rand slumped.

Maintaining policy certainty will be important in the lead-up to the national elections in 2024. As ratings agency Fitch observed earlier this month, political instability and increased uncertainty about the policy outlook could weigh on near-term investment prospects if they weaken business sentiment. 

Poor business confidence stands to further constrain economic growth, which has been identified as a key credit weakness. In his political report, delivered on Friday, Ramaphosa underlined the importance of growth as part of the ANC’s pursuit of economic transformation.

When asked about how factional differences may affect economic policy, Godongwana said: “There will be different styles ….  When you have that responsibility, you look at the resources and the challenges that face the country and you take a rational approach.”

Much of Godongwana’s address focused on the country’s energy crisis, which has had a detrimental effect on the economic growth over the past 15 years or so.

In his October medium-term budget policy statement, Godongwana announced that the government would be taking on a portion of Eskom’s debt in the hopes that addressing the utility’s dire financial situation would lead to its rehabilitation. Godongwana will announce the exact quantum of the debt takeover in February, when he is set to deliver his budget speech.

There are still a number of factors that need to be considered before the debt relief amount is determined, including the National Energy Regulator of South Africa’s (Nersa’s) tariff decision which was expected last week but delayed. 

Eskom’s woes were top of mind on the first day of the elective conference. Days before, André de Ruyter resigned as Eskom’s chief executive and, to add insult to injury, delegates and the rest of the country woke up to yet another bout of stage six load-shedding.

As Ramaphosa prepared to deliver his political report, there was commotion from the floor and some delegates chanted “load-shedding”.

Speaking to the media on Saturday, Godongwana said he was less concerned about De Ruyter’s resignation than he was about the Nersa delay.

“The volatility at Eskom is more about the Nersa delay than the CEO. So the Nersa decision is quite critical for a number of reasons, including for stabilising the market …. If they have got a deadline, I’m quite happy. All I want is that decision,” the minister said.

“The sooner they make that decision, the better for me, because I must then start sharpening my pencils and say how we are going to deal with things moving forward.”