Something funny happened on 11 February 2009. Most South Africans totally missed it, though. The minister of finance, Trevor Manuel, delivered his budget speech – and everyone loved it. The Left was happy, the business community was ecstatic and ordinary South Africans lauded it.
The South African Communist Party, usually ready with a withering comment about the country’s macroeconomic policy and the government’s commitment to poverty reduction, issued a statement that said: “The South African government is responding to the challenge of the crisis … by consolidating our public-sector spending, by expanding public-sector employment and our public works programmes, and by seeking to drive a much greater strategic coordination of our development finance institutions”
On the other side of the spectrum, the South African Chamber of Commerce weighed in thus: “The spending priorities focus on poverty alleviation, employment growth and infrastructure investment. Business particularly appreciates the proposals to bring relief to both the automotive and mining industries.”
It must have been the first time that both sides of the ideological range had so enthusiastically endorsed a budget and its macroeconomic policy thrust.
A typical comment after last year’s budget came from Congress of South African Trade Unions secretary-general Zwelinzima Vavi, for example, who criticised Manuel for announcing a budget surplus: “You can’t announce a budget surplus in the midst of such huge challenges of underdevelopment. It’s a wrong policy.”
In the midst of one of the most serious economic downturns the world has seen since 1929, how did Trevor Manuel – now 13 years into his job – manage this laudatory consensus? After all, this is a man who every February delivers a budget loved by ordinary South Africans and yet gets caustic comments from the Left wanting him to spend more and business demanding that he give them bigger tax breaks. There was little of that this year. Why?
If there is one area of governance in which South Africa can hold its head high it must be the National Treasury under Manuel and its agency, the South African Revenue Services. It has become almost impossible to find fault with their delivery, their services and their commitment to their work.
As if their efficiency was not enough, this month it was also announced that our government’s budgeting system has been rated as the second most transparent in the world – ahead of such wealthy democracies as the US, New Zealand, Norway and Sweden.
The International Budget Partnership said in its Open Budget Survey 2008 that the world’s most transparent countries are the UK (with a score of 88 out of 100), South Africa (87), France (87), New Zealand (86), and the US (82). The survey classified these five countries as “providing extensive information”.
MediaClubSouthAfrica.com reported that the IBP said in a press release that the strong showing of South Africa, as well as that of Slovenia, Sri Lanka, and Botswana (all of which provide significant information to their people), demonstrated that developing countries can achieve transparency given sufficient willingness of their governments to be open and accountable to their people.
Manuel has steadily built up a team over the past 13 years which has seen South Africa’s annual GDP growth go from 0.5% in 1998 to 4.5% in 2004. He has been central to debates on macroeconomic policy in the African National Congress (ANC) and the country since 1991 when he headed his party’s economic planning unit – and this experience shows in the respect he has gained worldwide.
He is regularly called upon by prime ministers and presidents to give advice on the restructuring of the global economic framework in light of the current market crisis. Manuel has become one of the main speakers and agenda-setters on international platforms such as the World Economic Forum.
One of the pillars of Manuel’s successes has been budgetary reforms such as the Medium-Term Expenditure Framework and the Public Finance Management Act, both measures aimed at better reporting, auditing, and increased accountability. Through these initiatives, Manuel has introduced transparency and predictability to the system, leading to plaudits from business and civil society alike.
For years Manuel was pilloried for running a budget surplus, with his critics saying he needs to spend to create jobs and grow the economy. South Africa’s deficit was over 9% of GDP during the 1993/4 fiscal year, when the ANC won elections.
This year the deficit – despite his decision to increase spending on the poor and infrastructure – is only 3.8% of GDP and he has run a surplus for several years. Manuel is now applauded for his restraint in previous years because in exuberant times we saved, and in these lean times we can enjoy the fat of those years.
The biggest question around Manuel is whether he will stay in Cabinet or not after April 22 elections. The man himself said after delivering his budget on 11 February: “All I can hope for is that the systems we’ve developed will stand up to scrutiny and counter any capricious behaviour.”
Given his success in the past, many of us are sure that even if he goes, he does leave us with strong systems that will withstand whatever storms may lie ahead.
Justice Malala is an award-winning former newspaper editor, and is now general manager of Avusa’s stable of 56 magazines. He writes weekly columns for The Times newspaper and Financial Mail magazine, as well as a monthly media and politics column for Empire magazine. He is the resident political analyst for independent television channel e.tv and has consulted extensively for financial institutions on South African political risk. Malala was also an executive producer on Hard Copy I and II, a ground-breaking television series on SABC 3. Hard Copy I won the Golden Horn Award for best television series. Malala’s work has been published internationally in the Wall Street Journal, The Guardian, Financial Times, The Independent, Forbes, Institutional Investor, The Age and The Observer.