An old corporate joke has it that the outgoing CEO of a company that was in difficulties handed his successor three numbered envelopes and told him to open them should he run into trouble, starting with the first.
Three months into the job the new CEO opened the first and found a note that read: “Blame your predecessor.” When this didn’t work a few months later he opened the second: “Restructure.” Then the last: “Prepare three envelopes.”
SA finance minister Enoch Godongwana has reached the stage for the third envelope. It’s time for the fellow to ride into the sunset. His mishandling of the VAT saga, which at best has created uncertainty, has wiped out whatever credibility he has built since assuming the role in August 2021.
The role of finance minister is second to that of the country’s president and therefore can’t be occupied by someone who has lost credibility — political or economic. The role of finance minister is a tough one, even in the best of economic conditions, which SA hasn’t seen for more than a decade. The state of government finances on both sides of the accounting matrix, revenue and expenditure, is also dire.
It’s not only high debt levels and interest payments. Finances have been mismanaged in all three spheres of government, so much so that the quantity of public services has been declining. And so has the quality.
Which explains why the private sector has moved in. My Facebook page has been flooded by private sector advertisements for residential water and human waste treatment plants. These are services that should be provided by a municipality.
SA hasn’t been well run for some time, and most South Africans have hung their hopes on the country’s finance ministers — bar Mr Weekend Special and Mr “We’re-gonna-be-alright”, both of whom had very short stints.
Though Godongwana hadn’t done badly since he took over, his recent performance has wiped out whatever stock of credibility he had. The finance minister has political authority over two crucial economic institutions — the National Treasury and the SA Revenue Service. Both play a key role in the management of the country’s economy.
On top of this, the holder of the portfolio is the face of the country’s economy, bearing the responsibility to market its viability to financial markets and other investors. The minister also represents the country in international and multilateral forums — Godongwana has just returned from the spring meetings of the IMF and World Bank in Washington.
And he and the Reserve Bank governor represent SA in the Group of 20’s finance track. With SA holding the presidency chair, the two are leading the finance track this year.
Then there’s the role of the finance minister within government. This is a tough assignment even under the best economic circumstances, because it is the role of the finance minister to tell the cabinet what’s affordable and which priorities should be pushed out.
The finance minister’s responsibility also means he is always looking over the shoulders of his cabinet colleagues. This is important because cabinet colleagues often yield to the temptation to pursue policies that can stretch government resources beyond the limit.
Then there’s the impact of a finance minister’s performance on the political standing of his president. As British academic Richard Toye said in 2012, a chancellor of the exchequer is the one minister who has “the capacity to define, or indeed to destabilise, a premiership”.
By all these measures, Godongwana has become a liability.
• Sikhakhane, a former spokesperson for the finance minister, National Treasury and SA Reserve Bank, is editor of The Conversation Africa. He writes in his personal capacity.
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