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ANC nearly approves range of proposals from Mboweni’s blueprint

President Cyril Ramaphosa Picture: Rodger Bosch/Reuters

President Cyril Ramaphosa Picture: Rodger Bosch/Reuters

Published Oct 3, 2019


JOHANNESBURG - The rand received a breather yesterday, clawing back nearly 1 percent against the US dollar after the ANC yesterday broke with tradition and came close to embracing private sector involvement in the restructuring of troubled state-owned enterprises. 

The rand changed hands at R15.26 to the greenback after the party nearly approved the range of proposals from the contentious discussion document surreptitiously released by Finance Minister Tito Mboweni last month to reinstate economic growth. 

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In a carefully staged press conference, ANC head of economic transformation Enoch Godongwana said the party appreciated the contingent liabilities imposed by enterprises such as Eskom, SAA and Denel on the economy. 

Godong - wana said that, among the set of issues the government was dealing with at Eskom were operational efficiencies and the amount of debt which had put the power utility in an unsustainable financial position. “In terms of the strategic thrust of the structural reforms that we have put across, they are an important policy dimension and provide certainty. 

There is one puzzle missing. The Eskom issue is to fully complete without closing the funding model for Eskom, which I think by the time [Mboweni presents the medium term budget] that matter would have been dealt with,” Godongwana said. Eskom has debt of more than R450 billion, which is just more than a third of the country’s total gross domestic product.

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Its liability has been described by the rating agencies as the single-biggest risk to the country’s fiscal position. The rand ended September on the back foot, weakening the most of emerging-market currencies as global factors weighed on risk sentiment. A senior dealer at TreasuryONE, Andre Botha, said the ANC’s stance on economic reforms boded well for the markets, as business confidence remains subdued. “It’s positive news. We have seen the rand reacting slightly to that from the levels of R15.40/$ this morning to around R15.23/$ levels. 

What is really positive is that the ANC came out and said they have not rejected Tito Mboweni’s recovery plan,” Botha said. 

“It was very important that they said they will discuss it with the political alliance and that an alliance council will deal with areas of disagreement. But (ANC secretary-general Ace) Magashule said there were not many areas of disagreement.” 

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Unlike in the past, the party entrusted the outlining of its economic vision to Godongwana and Mboweni. In April, Magashule spooked the markets when he said the NEC Lekgotla had agreed to expand the mandate of the South African Reserve Bank beyond price stability to include growth and employment and to consider constituting a task team to explore quantity easing measures to address intergovernmental debts to make funds available for developmental purposes.

The announcement sent the rand plummeting nearly 2 percent against the dollar. Botha said the embracing of a new recovery plan would send a positive signal to foreign investors who have been selling off an average of R2bn of South African government bonds. 

He said the ANC and the government’s next challenge would be to get the buy-in of the alliance partners, since they have already dismissed the plan as furthering a neo-liberal agenda that would result in massive job losses. 

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“The adoption of the restructuring plan officially by the alliance would be investor friendly and investor positive,” he said. “Does all of this package provides certainty to the investment community? Ninety percent yes. We have not closed one chapter which government has to close, not us.”


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