Mboweni’s choice is straightforward: SOEs or SMEs – IRR

Press Release 

The success of Minister of Finance Tito Mboweni’s critical performance today will hinge on whether he introduces the pro-growth, pro-enterprise reforms desperately needed for a recovery capable of getting South Africa and its people back to work.

He faces a stark yet simple choice: SOEs or SMEs – state-owned enterprises or private small and medium-sized enterprises.

Today’s emergency budget is Minister Mboweni’s opportunity to show that the government is on the side of individual citizens who want to create prosperity, employment, economic upliftment and recovery through their own hard work and enterprise.

The alternative is to side with the ideologues in the South African Communist Party who insist, along with their allies in the trade union movement, that protecting failing, expensive, bloated and corrupt vanity projects, and supporting an unaffordable public sector wage bill, are more important.

With five common-sense announcements, Minister Mboweni could reinvigorate the South African economy, and show that he is on the side of job creators rather than rent seekers.

He should:

• commit the government to ending the ANC’s disastrous policy lockdown with immediate effect;
• announce that the government is slashing expenditure on all SOEs, maintaining only necessary expenditure on SOEs such as Eskom to provide at least a measure of infrastructural stability for economic recovery;
• summon the courage to ruthlessly cut the bloated public sector wage bill;
• relieve the enormous tax burden that is smothering South Africa’s SMEs and curtailing their potential to recover from the current crisis; and
• commit the government to protecting the property rights of all South Africans as a key step to attracting investment.

If President Cyril Ramaphosa’s government is serious about getting South Africans back to work, these five points must form the fundamental thrust of what Minister Mboweni announces today. Failing to do so will make it clear to South Africa and the country’s current and prospective creditors that the ANC government is incapable of bringing about necessary reforms without severe external pressure.

The ANC has thus far shown itself to be stubbornly opposed to changing course for prosperity, but Minister Mboweni now has the fate of many in his hands. He has already shown leadership in managing to get the government to the negotiation table with the International Monetary Fund (IMF). To highlight the urgent need for a gear change in economic policy, the IRR has launched a global initiative to engage with the most prominent IMF donor nations. The objective of this initiative is not to oppose the funding South Africa desperately needs, but to ensure such funding is granted only if the ANC shows its willingness to end the economic lockdown it has imposed on South Africans for the last decade.

The ANC under Nelson Mandela understood that liberalised markets bring prosperity, growth, and jobs. South Africans are counting on the ANC learning from not just the economic failures of its past decade in government, but more importantly from the economic successes of its first decade in power.

Put simply, Minister Mboweni must today rediscover the courage and leadership of former Finance Minister Trevor Manuel and be bold and steadfast enough to stand up for straightforward economic common sense.

Said IRR Deputy Head of Policy Research Hermann Pretorius: “The Covid-19 lockdown has shown that the people of South Africa have the power to demand change, and to achieve victories against the will of the state. The IRR will continue playing a leading role in applying pressure on those in power to serve those in hardship. If the ANC cannot use this critical moment to bury its worst ideas, their failure will bury the ANC. The Covid-19 lockdown has brought home to South Africans just how much power they wield. The government must get its act together or it will go the way of previous governments that ignored the hunger of the people to #LiveFree.”

Media contact: Hermann Pretorius, IRR Deputy Head of Policy Research – 079 875 4290; hermann@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za

Kelebogile Leepile Tel: 079 051 0073 Email: kelebogile@irr.org.za

Ends