Finance Minister Nhlanhla Nene walked straight into a cabinet meeting on his first day back in the public sector on Wednesday. By lunchtime, he had begun taking stock of the country's fiscal situation as, one by one, senior Treasury officials lined up outside his office at his request to brief the country's fourth finance minister in two years.
"I am indeed quite encouraged with the wave that is sweeping the country; that we have the potential to be able to make this work," Nene told Business Times in a series of conversations between marathon meetings that continued into the night ahead of a handover briefing from his predecessor, Malusi Gigaba, on Thursday morning.
At Nene's side was new Deputy Finance Minister Mondli Gungubele, and both were aware of the responsibility of executing one of the most important jobs in the country and the challenges that lie in store.
Not lost on Nene is the need to appease credit ratings agencies whose adverse ratings could be the death knell for credible investment in the economy. He is to meet them soon, mainly to convince them of the credibility of government plans and assumptions in the national budget presented last week.
He would have to review the issues that arise from the budget and interrogate "what informs our budget, because those numbers need to make sense to the ratings agencies", he said. He would also have to advance a convincing case that the government will stimulate the economy with structural reforms and by inspiring investor confidence.
"I would imagine that some of the developments, including the cabinet reshuffle, talk to the issue of stimulating and inspiring confidence," said Nene. He had reluctantly accepted President Cyril Ramaphosa's request to return from the private sector, he said, where he was "beginning to get comfortable". It was a sense of duty to country that struck a chord, he said.
This, after all, is the man who was fired in 2015 by Jacob Zuma after Nene tried to remove Dudu Myeni as SAA chairwoman.
Gungubele, 61, a former mayor of the Ekurhuleni municipality, has also earned a reputation for fearlessness, by being critical of Zuma when it was not popular to do so.
Nene, born in KwaZulu-Natal, was the type of leader who made the correct decision even if it was the least popular, said Lungisa Fuzile, former Treasury director-general, on Wednesday. During his first term as finance minister, from May 2014 to December 2015, Nene focused on working within budgetary constraints when spending needed to be reprioritised.
He introduced the first wave of tax increases since 1994. "In reality it was about preserving the fiscal sovereignty of South Africa," Fuzile said. "When we dealt with state-owned enterprises like SAA, he stood his ground ... when they took decisions he thought were not in the best interests of the country."
Nene has returned with the same zeal and counts among his priorities the restoration of the credibility of SARS. Tax morality is low and a cloud hangs over its leadership after the return of Jonas Makwakwa, the second-in-command, who, although cleared by an internal process, has been linked in a Financial Intelligence Centre report to corruption and money-laundering allegations.
SARS commissioner Tom Moyane's image was dented during his protracted battles with Pravin Gordhan during the latter's second term as finance minister, from late 2015 to early 2017, as Moyane allegedly pursued spurious charges against Gordhan, whose relationship with Zuma had soured.
A tax inquiry into the SARS administration is imminent and apparently has the cooperation of Moyane, 65, whose five-year contract expires next year.
"The fact of the matter is that we are confronted with serious challenges of growth," Nene said. "It's important that we restore the credibility of that institution. Whatever it is we do, in the absence of a citizenry that pays its taxes and has confidence in the institutions that are responsible for that, we will not be able to achieve our objectives."
But Nene dodged all questions on whether SARS needed fresh leadership.
It falls on his shoulders to see through punishing tax hikes Gigaba announced last week to close a revenue gap and pay the R57-billion free higher education bill over the next three years.
Weaning state companies off government guarantees is also on Nene's wish list. "That is going to be one of the critical tasks."
SAA could be moved back under the Department of Public Enterprises from the Treasury, where it has been under administration since 2016, as soon as restructuring at the airline was complete, Nene said. The R20-billion short-term funding Eskom received this week was a vote of confidence in the new administration's ability to ensure institutions were managed properly, he said.
In a more politically stable environment, he feels confident to make tough decisions without fear of reprisal. "A number of developments point in that direction." These included how the cabinet reshuffle was managed. "So there is hope, in my view."
Fuzile said: "I don't think the political environment now would be any more difficult. He is the right man for the job." But there remained a risk that the "pace and content of change may not be necessarily consistent with what is expected. The changes that are necessary are quite fundamental."
Charles Robertson, Renaissance Capital's global chief economist, said: "The outlook for South Africa is looking up, but to lift [economic] growth to 6%-7% will require reform of labour market legislation and more investment in export-orientated and job-creating manufacturing."
Striking a balance between the developmental state and business-friendly reforms could be Nene's defining legacy.
Kalu Ojah, professor of finance at Wits Business School, said the fruits might be a long way off, but the Treasury could not operate as it had been doing. "You are not going to grow, particularly for the kind of growth we're talking [about]," if the economy relied on commodity cycles, for example. Rather, the focus needed to be on expanding the production base and including more young people in the economy.
"If these gentlemen in finance begin to think in those terms then it's not a one-dimension-type of Treasury where you're only listening to the needs of business and not to the needs of the polity."
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