5 Things We Know About SA’s New Finance Minister

Enoch Godongwana, newly appointed Minister of Finance. Image sourced from News24.

SA President Cyril Ramaphosa announced several changes to his executive cabinet yesterday, amongst the more high-profile changes were a new Health Minister, new Communication and Digital Technology Minister and a new Finance Minister.

Replacing Tito Mboweni in one of South Africa’s most vital and exasperating government jobs is the ANC’s head of economic transformation, Enoch Godongwana. Just a week before his appointment as SA’s new money man, Godongwana penned a column for Business Day outlining what he believes the country needs to do to fix its unemployment issue.

Business Insider writes that the column is a perfect position to understand the new minister’s economic leanings – that he has a socially liberal, yet economically conservative mindset. Views not so different from those of the previous minister, Mboweni.

Here are 5 things we know about South Africa’s new Minister of Finance:

1. He believes that a basic income grant is essential but will only be imposed in the future

“[A basic income grant] is a reasonable and legitimate call given the high level of poverty,” writes Godongwana in his recent column.

“No one would disagree with the need to protect vulnerable members of our society.”

This position reflects the ANC’s position on the matter, that a universal basic income grant is both a moral and political imperative. However, the new minister does not believe he will be the policymaker to implement the grants, instead, he would like to keep temporary COVID-19 interventions like the R350 grant for people with no other income as an emergency measure only.

Godongwana is also yet to add anything to the debate of how a basic income grant would even be funded, staying well clear of the topic.

2. He believes South Africa requires more pro-investment reforms

Godongwana believes that South Africa should impose more pro-investment reforms and that the country must get more money – both from private and public sources – flowing into economic and social infrastructure.

3. He believes more taxation won’t work in the longer term

Earlier this year, Godongwana outright told the ANC that the government was spending on the wrong things at a party policy meeting.

He said that the country can no longer “tax our way out” of the ongoing economic crisis, pointing to recent tax increases that did not yield substantial additional revenue.

4. He believes in an active labour market policy

Active labour market policies, or ALMPs, are sets of interventions imposed by governments to get more people into steady employment and keep them there, including through subsidies and training. ALMPs have been described as the “cornerstone of modern welfare states” in the past.

In SA, there is a low labour force participation rate as millions of people have lost hope that they will be able to find a place in the labour market, Godongwana believes.

“The structural nature of unemployment requires a multipronged approach, sometimes termed an “active labour market policy”, combined with a growth strategy. While it is a broad concept, I will confine myself to one element of an active labour market policy, helping young people transition to work,” the new minister writes on the topic, leading us to our final point.

5. He is focused on economically empowering young South Africans

Giving young South Africans the opportunity to work, rather than having them dependent on grants, is a key priority for Godongwana. The majority of unemployed people in South Africa, he says, are between the ages of 15 – 35 years (62% of the unemployed).

“The question then arises: why should we condemn these young people, the majority of whom are black, to a life as grant recipients? Should we not be investing in their transition into the world of work and more productive, better paying economic activity?” he writes.

The new minister’s policy proposals are often based on giving young people more work opportunities. He believes that sustained economic growth is needed so more young people can work, that access to capital must be broadened so more young people can start new businesses, and that basic infrastructure must be in place for the above two ideas to even be possible.


Edited by Luis Monzon
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