A recent newspaper headline reads: “Godongwana recoils from R73.5 billion ANC spree.” Why a spending spree? The ANC offers very little to voters in the upcoming municipal elections on 1 November 2021. The ANC is even battling to get itself onto the ballot paper. To lure back voters, the ANC wants to “buy” votes. To “buy” votes the ANC has prepared a wish list of projects with a total value of R73.5 billion (bn). For this it needs the help of our new finance minister, Enoch Godongwana. He was not impressed.

The projects on the ANCs wish list are: (1) R10 bn for a state bank. (2) R19.6 bn for wage increases for state employees. (3) R4.6 bn to forgive (in other words, write off) unpaid highway tolls in Gauteng. (4) R8.2 bn to bailout Denel and the Land Bank. (5) R15 bn to forgive student debt. (6) R16.1 bn to bailout provinces that have not paid their debts. Total, R73.5 bn. We have much more pressing needs. Not one item refers to the needs of unemployed and poor people. Not one. Why start a state bank when the Land Bank must be bailed out? The ANC has never been good at managing State-Owned Enterprises (SOEs) and municipalities. It cannot even pay its own staff on time. Godongwana cautioned against forgiving road toll debt, saying the “request has serious long-term consequences if the user-pay principle is rejected”.

In addition, government has already committed to spend R38.5 bn to respond to the ongoing impact of Covid-19 and the recent spate of riots and rampant looting. This is money that was not budgeted for. One wonders whether SASRIA, the state-owned insurance company (another SOE), will be able to pay out all the insurance claims. SASRIA is the only short-term insurer in South Africa that provides cover against special risks such as civil unrest, public disorder, strikes, riots and terrorism.

Godongwana surprised with a wish list of his own. He called for significant economic reforms to be implemented before President Ramaphosa presents his State of the Nation Address in February 2022. These include: (1) Resolving a legal dispute delaying the allocation of additional spectrum to telecommunications companies. (2) Announcing an overhaul of the way work permits are processed to address a skills shortage. (3) Ensuring state ports company, Transnet SOC, issues a request for proposals to encourage private investment in port infrastructure. (4) Accelerating the award of contracts from an already held tender to generate renewable power and hold another bid round. (5) Establish state power utility, Eskom’s transmission unit as a separate legal entity. (6) Submit the National Water Resources Infrastructure Agency Bill to Parliament to boost confidence that the country’s water supply problems are being tackled. These reforms are strategically very important and must be addressed as a matter of urgency.

At a cabinet meeting last week to discuss ways to boost our economic recovery, the potential implementation of a Basic Income Grant (BIG) was also discussed. This grant is nothing more than a tactic of the ANC to attract more votes in the coming elections. It is understood that Pres Ramaphosa is pushing hard for the grant, despite sobering warnings from Godongwana. Godongwana made it clear that the country simply cannot afford a BIG, nor could it fund the various other projects on the wish list.

With its wish list, the ANC is throwing money at a crisis it created itself – its mismanagement of the economy and its inability to stimulate growth and create jobs. The ANC’s demands for a wish list and a BIG mark a key test for Godongwana, who is new to the cabinet. Will he be able to withstand the pressures and demands? Government needs to spend less, not more. Government cannot give to anybody anything that government does not first take from somebody else. It is not rocket science. “The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of socialism is the equal sharing of miseries.” – Winston Churchill.

Government needs a paradigm shift in its thinking – a shift away from socialism to capitalism. It should foster, not hinder, the conditions for businesses to create employment. Government cannot be the employer to all the unemployed masses. Creating an environment that makes it easy for businesses to operate in, will do a much better job of absorbing unemployed people. It will grow the tax base. There is absolutely no doubt – government (Godongwana) will have to raise taxes to fund any shortfall. With our shrinking tax base, mainly caused by emigration, and a growing resistance amongst taxpayers to pay tax, it is unlikely government will meet its income targets. The ANC dug themselves into a hole. The first Law of Holes states: “If you find yourself in a hole, stop digging”.