South Africa’s wrecking ball minister

Renowned economist Dawie Roodt said Pravin Gordhan is the worst Finance Minister South Africa has ever had, and he is partly to blame for the mess at state-owned enterprises (SOEs).

Speaking to State of the Nation, Roodt said Gordhan should be blamed for the poor state of South Africa’s fiscal accounts.

Although there were many reasons for South Africa’s rising fiscal deficit, Gordhan was the minister who put it all in motion.

Under his leadership, South Africa’s debt-to-GDP increased tremendously, undoing the good work of his predecessor, Trevor Manuel.

Manuel was able to significantly reduce the country’s debt-to-GDP, which points to good and responsible fiscal policies.

However, after he handed the reigns to Gordhan, matters quickly changed. He gave huge increases to civil servants and gave billions to SOEs.

“He was the one who set the collapse of the state-owned enterprises in motion. He is now the minister of state-owned enterprises and continues his destructive work,” Roodt said.

South Africa’s SOEs, including Eskom, Transnet, the South African Post Office, and the SABC, are in deep financial trouble.

The Post Office is in business rescue, the SABC records huge losses and requires bailouts to survive, and the state had to take over a chunk of Eskom’s debt to prevent big problems.

Transnet also requires support from the state to implement its turnaround plan to reverse the collapse over the last few years.

“He is a communist and an ideologue. He is a wrecking ball who causes tremendous destruction,” Roodt said.

Roodt said Gordhan may be a nice person, but his ideology simply does not work in a modern economy.

“Pravin Gordhan was a horrible Minister of Finance. I can’t understand why people think he walks on water,” he said.

The chart below shows South Africa’s debt-to-GDP percentage. Manuel was Finance Minister from 1996 to 2009, and Gordhan from 2009 to 2014 and again from 2015 to 2017.

The DA’s shadow Public Enterprises Minister, Ghaleb Cachalia, said Gordhan had become a national and economic liability and must be fired.

“Pravin Gordhan’s 5-year tenure as Minister of Public Enterprises has turned SOEs into a financial wasteland,” he said.

He said Gordhan had collapsed the finances of the department and had extended this failure to SOEs reporting to him.

Over the past five years, the seven SOEs that fall under Gordhan – Eskom, Transnet, Denel, Safcol, Alexkor, SAA and SA Express – have collapsed.

These enterprises have incurred R300 billion in irregular expenditure and R1.3 billion in fruitless and wasteful expenditure.

“The only reason Ramaphosa still keeps Gordhan in his cabinet is for political expediency to insulate himself against the faction-riddled ANC,” Cachalia said.

He provided five reasons President Cyril Ramaphosa should fire Gordhan in the national interest –

• Breaking the backbone of the South African economy – The rapid decline of Transnet under Gordhan is costing the country R1 billion a day in economic output.
• Plunging SOEs into a governance crisis – Gordhan has presided over unprecedented governance chaos at the executive and board levels in SOEs.
• Downplaying corruption at Eskom – Gordhan downplayed allegations that criminal cartels active in Eskom’s coal-supply chain have connections with high-ranking politicians.
• Selling SAA on the cheap – The Auditor General highlighted that the SAA transaction was problematic and that the due diligence performed on preferred partner Takatso was poor.
• Failure to open the SOE sector to private participation – The slow pace of opening up the SOE sector to private participation has been a drag on the national economy.

“The South African taxpayer has forked out R195 billion in bailouts to these failing SOEs from 2019 to date,” Cachalia said.

“With this overwhelming evidence of failure, Gordhan should not be kept in office any minute longer and must be fired as a matter of urgency.”