Pockets of public sector excellence in despair

Published Jun 1, 2016

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The Moody’s rating of Johannesburg and Ekurhuleni shows pockets of excellence in SA’s public sector, writes Sechaba ka’Nkosi.

Something positive recently came out of our rather depressing national discourse. Away from the burning of public institutions and economic woes, international credit rating agency Moody’s last month upgraded both the global and national rating scales of the City of Johannesburg by four notches from A2 to Aa1.

The agency raised Joburg’s global ratings from Baa3 to Baa2, the same level as the sovereign rating.

Moody’s said it was impressed with the city’s prudence and consistency in managing its finances.

Moody’s also allocated the City of Ekurhuleni the highest investment-grade rating with a national scale rating of Aaa – four notches above the previous ranking.

What this means is that the two cities now have internationally accepted and prudent management systems on their finances. And if they were to go to the financial markets to borrow, they would pay lower interest on loans compared with their counterparts in other regions.

It is good news because Johannesburg is home to the continent’s largest stock exchange, and also its largest financial hub.

And Ekurhuleni has Africa’s biggest airport and undoubtedly its largest manufacturing base.

Welcome sign

The endorsement of their corporate governance systems should, therefore, be a welcome sign that investors do have a definite view on where they could put their money should they decide on South Africa.

Behind the ratings are Trevor Fowler, the Joburg city manager and his counterpart in Ekurhuleni, Khaya Ngema. The two managers show that there are still well-qualified and hardworking managers to be found in South Africa, even amid dismal performances in the public sector.

Except that these pockets of excellence are happening in a public sector that is slowly tearing itself apart.

They come in a climate poisoned by a low-intensity war that is taking place between two state institutions which should be working together to protect the sovereignty of our economy.

Last week the Presidency took an unprecedented step to deny officially that there was bad blood between President Jacob Zuma and Finance Minister Pravin Gordhan.

Don’t forget, it was Zuma who called Gordhan back to lead the Finance Ministry after the markets overwhelmingly rejected Des van Rooyen, his preferred candidate for the position.

So, while the denial probably sought to set the record straight, the body language between Zuma and Gordhan leaves a lot to be desired. And yesterday, the ANC said it did not discuss the tension during its national executive committee meeting, as this would have meant elevating Gordhan “into an institution that deserved special attention”.

Such a tone explains why Hawks boss Lieutenant-General Berning Ntlemeza saw it fit to press ahead with its investigation of the so-called rogue unit of the SA Revenue Service, which allegedly operated under Gordhan, just days after the Presidency distanced itself from a personal vendetta against him.

This relentless offensive against Gordhan takes place as rating agencies weigh their views on the prospects of the South African economy. In a different world, state agencies would be working together to stave off a potential downgrade and fallout from the markets.

We have seen the results of the war.

In December, just hours after Van Rooyen replaced the respected Nhlanhla Nene, the financial markets went into a tailspin, leaving the economy shaking and the rand plummeting to record lows.

Condemned

When the oil prices had reached their lowest levels in years, the weakening of the rand condemned the poor to even worse poverty as they had to pay more to buy basic needs such as paraffin.

If the rating agencies downgrade South Africa further this week, the whole country would be plunged further into a financial crisis.

The impact of the sub-investment grade would be felt in the bank funding costs and higher sovereign debt service costs.

But while this move is almost inevitable, given the lack of policy cohesion such as indicated between the Hawks and the Treasury, indications are that the agencies will leave the country’s credit rating unchanged at least for now.

So while we wait with bated breath for now, we should also not lose sight of the positives that we are witnessing, particularly in an election year, when negatives would be peddled to convince us that certain politicians are better than others.

We should also remember that rating agencies have no interest in our political machinations and that they view our economic profile without jaundiced eyes.

And that, as Fowler and Ngema have showed us, there are times when cadre deployment has more good than bad as has been the case in many instances.

I have been fortunate to interact with both Fowler and Ngema in my professional and personal capacity.

Under attack

Both men have impressed me as consummate professionals who are on top of their respective mandates.

So much so that in 2004, former president Thabo Mbeki saw it imperative to bring Fowler into the Presidency as the chief operating officer.

Ngema has also survived countless attacks on his integrity to steer Ekurhuleni to two consecutive clean audits by the auditor-general.

His detractors have gone as far as hiring private investigators to dig up any dirt they could use to remove him.

His aversion to anything that could cast a negative view on his ability borders on obsession.

Which is why South Africa should celebrate the two managers even in the midst of everything negative that has come our way.

In the corporate world, the two managers, Fowler and Ngema, would be awarded millions of rand in performance bonuses and their salaries would be reviewed in line with their abilities to deliver on their mandates.

Their bosses, Parks Tau and Mondli Gungubele, would also pat themselves on the backs for appointing such astute financial managers and reward themselves handsomely with more shares in the entities. This should be welcome news to the shareholders, who in this regard is the public.

And perhaps wake the ANC to an introspection that there are decent and suitably qualified cadres who can pull the country out of its misery.

* Sechaba ka’Nkosi is an Independent Media journalist. This opinion column - Sechaba’s Shake-Up - is published in Business Report.

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