New SA Finmin Wants It Both Ways: Maintain Existing Programs And Redistribute Wealth

By Reuters Published: April 3, 2017, 9:55 am
redistribute wealthMalusi Gigaba, then-Minister of Home Affairs with President Jacob Zuma on July 4, 2016. Photo: Siyabulela Duda/GCIS/Daily Maverick

From Reuters. Story by Mfuneko Toyana, Olivia Kumwenda-Mtambo and James Macharia

South Africa’s new Finance Minister Malusi Gigaba said on Monday he would pursue “tough and unpopular choices” to oversee economic growth and a redistribution of wealth to the country’s black majority and help grow a flagging economy.

Africa’s most industrialized economy faces the risk of being downgraded to junk status owing to weak growth and the political upheavals after it got a reprieve last year.

The economy grew by 0.3 percent in 2016 versus 1.3 percent in the previous year.

“As government, our focus is now very much on the radical transformation of our economy so that all who live in South Africa can benefit from the economy. Tough and unpopular choices will have to be made to ensure such a vision,” Gigaba told a media briefing, without elaborating.

In his maiden media briefing on Saturday, Gigaba also signaled he would oversee the redistribution of wealth to the black majority, in line with a populist line taken by President Jacob Zuma, who sacked former finance minister Pravin Gordhan.

The ruling African National Congress (ANC) has been criticized by its supporters over inequality in a country where blacks make up about 80 percent of the population of 54 million, but ownership of land and companies remains mostly in the hands of whites, who account for about 8 percent of the population.

Gigaba has said he will stick with fiscal plans set out in the February budget, including plans to seek up to $2 billion per year in foreign funding in the next three years.

Previously home affairs minister, Gigaba said he was an “experienced politician” and well-educated, adding that nobody should doubt his ability to adapt to the new portfolio.

Some analysts fear that budget discipline will falter despite a risk that the country’s credit rating will be downgraded to “junk” status. Moody’s is expected to issue its latest review on Friday.

“The assurance we can give is … we are not a bunch of wild gunmen running amok, gung-ho into Treasury, to do different things. We are going maintain the programs that are being implemented,” Gigaba said.

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