LUMKILE MONDI: Crisis continues as leaders put companies and political parties first

SA’s economic potential is no guarantee of good economic performance, irrespective of what finance minister Tito Mboweni tables in the medium-term budget policy statement next week.

When unemployment, poverty and inequality worsen with no outcry I have now understood that the current crop of leaders in both the private and public sectors cannot punch above their  weight.

Leaders in both sectors have put their own companies and political parties first, with no passion for resolving our crisis. I have sat in meetings and heard a number of times leaders in the corporate world complain about the domestic policy environment and the uncertainties it presents regarding injecting capital into new projects. In the public space, apartheid is blamed for all our ills. When corrupt individuals are caught, they insist they don't need to resign until found guilty in a court of law.

These are tough times for SA, but it is common to hear the leadership I have described above consoling itself that SA is not alone. They pat themselves on the back, pointing out that SA’s relatively low debt-to-GDP ratio is a cushion against currency and financial crises. This is what you get when you are led by mediocrity.

I remember Mboweni as one-of-a-kind, who with "the Lion", Trevor Manuel, and former president Thabo Mbeki, were often referred to as the “Triple Ms”. They delivered an economic miracle that caused unemployment, poverty and inequality to improve. Manuel is called a lion since he is part of the team that is hunting for $100bn investment in SA over the next five years. The Triple M team expanded social wages but became entangled in the HIV/Aids debacle, which blighted their achievement. Even so, these three served SA well.

I hope Mboweni does not use the word austerity next week. It is true that South Africans in general have lived beyond their means and I for one have been trying to tighten my belt. But my economic position has been worsened by ANC deployees in government who have mismanaged the economy. I have not been spending recently due to a shrinking disposable income. The increases in VAT and fuel levies have worsened my position, and hence I am hoping Mboweni will be braver and bolder than his immediate predecessors and put SA’s interest first.

I would like him to stand up and show his Keynesian side. Let us stimulate aggregate demand to increase economic output. This will require closer co-ordination with the Reserve Bank, the Presidency and the ANC to manage the political fallout that is likely after such a bold move.

The Bank has announced that it is likely to tighten monetary policy at least five times by 2020. Yet to stimulate aggregate demand we need a co-ordinated effort from governor Lesetja Kganyago, Mboweni and President Cyril Ramaphosa toward what I refer to as a Keynesian Moment for Reconstruction (KMR — Kganyago, Mboweni, Ramaphosa).

This will entail cutting interest rates, rather than the envisaged increases, by a maximum of one percentage point, fiscal stimulus that increases SA’s debt-to-GDP ratio to about 60%, a wage freeze for government employees and a wage restraint from the private sector, and a reduction in the size of the cabinet to a maximum of 18 ministers in the medium term, including a consolidation of economic ministries.

The funding for the increased spending should come from SA’s savings and retirement institutions, supported by the leaders of these institutions in an attempt to resuscitate the economy by increasing output, thereby reducing unemployment, poverty and — in the long run — inequality.

Mboweni’s goal must be to make life better for all, not only for the elite in the private and public sectors.

• Mondi is a senior lecturer in the Wits School of Economic and Business Sciences.