Ghana has secured critical financing support for its climate adaptation and mitigation endeavors during the recently concluded 2023 International Monetary Fund (IMF)/World Bank Group (WBG) Annual Meetings. Finance minister Ken Ofori-Atta disclosed this to the Ghana News Agency.



At the forefront of this support is the World Bank&#8217;s International Finance Cooperation (IFC), pledging funding to bolster Ghana&#8217;s implementation of diverse climate change initiatives. These projects aim to fuel sustainable growth, foster a habitable planet, and generate employment opportunities.



Sharing his thoughts on this development, Ofori-Atta expressed optimism about the impact on Africa as a whole. &#8220;We have a huge seat at the table [of V20] now, and that will reflect on the whole of Africa, enabling us to design and understand where financing is going, especially in carbon credit financing,&#8221; he told the news agency.



He emphasized the positive outcomes of discussions with the World Bank and IFC, anticipating substantial resources and innovative financing schemes for climate mitigation and adaptation. &#8220;Beyond the stability that you bring with an IMF program, you need to look at growth,&#8221; he stated, underlining the focus on private investment and strengthening the system.



Highlighting the urgency of the climate agenda, Ofori-Atta pointed out its alignment with crucial sectors such as electronic vehicles and solar energy. &#8220;This aligns with the type of resources needed to make growth more effective and sustainable,&#8221; he added.



Ghana, as the headquarters of V20 (the Vulnerable 20 Group), is poised to lead and harness new ideas and global technology to accelerate the nation&#8217;s climate change agenda. Ofori-Atta affirmed that economic growth in Ghana would prioritize addressing climate change issues, with a commitment to translating stability into sustainable job opportunities for citizens.



Speaking with FORBES AFRICA, Ghanaian social entrepreneur Prince Fiadzigbe expresses optimism and cautious enthusiasm about the development.



Fiadzigbe highlights the critical importance of utilizing the funds effectively to address the pressing challenges posed by the climate crisis. &#8220;Hoping these funds are channeled into proper use by the government and leadership in the climate space for interventions whose results would see us better adapting to the climate crisis and mitigating it as a country,&#8221; he emphasizes.



Fiadzigbe commends the international community&#8217;s commitment to supporting climate initiatives in developing nations. He stresses the need for strategic and transparent allocation of resources to ensure that the intended goals are achieved.



&#8220;Ghana has been presented with a significant opportunity to bolster its resilience against climate change impacts and contribute meaningfully to global efforts in combating environmental challenges,&#8221; Fiadzigbe remarks. He calls for collaboration between government agencies, private sectors, and non-governmental organizations to implement comprehensive and sustainable climate solutions.



The entrepreneur urges the Ghanaian leadership to prioritize projects that not only address immediate climate concerns but also foster long-term environmental sustainability. &#8220;It&#8217;s imperative that we invest in initiatives that not only mitigate the current effects of climate change but lay the foundation for a more sustainable and resilient future for generations to come,&#8221; he states.



As Ghana navigates the complex landscape of climate adaptation and mitigation, Fiadzigbe remains hopeful that the secured financing will mark a turning point in the nation&#8217;s environmental efforts. He encourages ongoing dialogue and collaboration between stakeholders to ensure a coordinated and effective response to the climate crisis.



Fiadzigbe also emphasizes the importance of ensuring that these funds are deployed effectively to benefit local communities.



&#8220;While securing financing is a crucial milestone, it&#8217;s equally important to ensure that these resources reach the grassroots level, empowering communities to adapt to climate change and participate in sustainable practices,&#8221; he notes.

Ghana Debt is Sliding Into Distress

Ghana Secures Financing For Climate Initiatives At IMF/WBG Annual Meetings

Topline: After what has been one of the most difficult years in history, the highlights of South African finance minister Tito Mboweni’s annual Budget Speech today.



Key Facts



<ul><li>Economy expected to grow by 3.3% in 2021.</li><li>The budget deficit has been revised to 14% of GDP in 2020/21 in response to the spending and economic pressures of the COVID-19 pandemic.</li><li>Gross debt has increased from 65.6% to 80.3% of GDP for the year 2020/21.</li><li>To support economic recovery, government will not raise any additional tax revenue in this budget.</li><li>The government has set aside more than R10 billion for the purchase and delivery of vaccines over the next two years.</li><li>Mboweni said taxpayers would not have to pay more as no new taxes will be introduced to fund vaccines.</li><li>Moreover, the minister said: “We increase the contingency reserve from R5 billion to R12 billion to make provision for the further purchase of vaccines and to cater for other emergencies.”</li><li>In addition to looking at vaccines, there is also a provisional allocation totaling R11 billion for the public employment initiative. Mboweni said with this he hopes to create another 180,000 jobs by March, to add to the temporary 430,000 jobs.</li><li>Small businesses felt the brunt of the pandemic during the year. The Department of Small Business Development has allocated R4 billion over the medium term to the township and rural enterprises, including blended finance initiatives.</li><li>The tourism sector in the country also tanked quite a bit due to travel restrictions, thus why the Department of Tourism has reprioritized R540 million over the medium term to establish the Tourism Equity Fund (TEF) as one of the measures to support the tourism sector recovery. The fund will acquire equity stakes in existing tourism enterprises, support expansion of operations and development of new operations.</li></ul>



Crucial Quote



Mboweni made it clear that South Africa is deeper in debt than they have ever been. He further told members in parliament to note that the “government is not swimming in cash”. 



“&#8230;our assessment from the Supplementary Budget in June last year still stands: our public finances are dangerously overstretched. Our borrowing requirement will remain well above R500 billion in each year of the medium-term despite the modest improvements in our fiscal position. Consequently, gross loan debt will increase from R3.95 trillion in the current fiscal year to R5.2 trillion in 2023/24.”&nbsp;



Mboweni stated further that the country owes “a lot of people a lot of money”.

South African Finance Minister delivers the Mid-Term Budget Review in Cape Town

South Africa Budget: No New Tax For Vaccines

Treasury sets out plans to render on to Caesar what belongs
to Caesar. 



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 Revenue collection remains a bugbear for government due to weak economic growth and tax administration concerns, which were self-inflicted, South Africa’s Finance Minister Tito Mboweni told journalist in a Budget press conference. 



The revised tax revenue estimate for 2018/19 is R15.4 billion lower than anticipated by the 2018 Medium Term Budget Policy Statement (MTBPS) estimate. Thus the projected revenue shortfall of R27.4 billion is now R42.8 billion compared with the 2018 Budget estimate. 



This sombre news was revealed by Mboweni in his maiden Budget on Wednesday. To address this shortfall, tax changes designed to raise R15 billion in additional tax revenue in 2019/20 have been introduced.



These among others include:



<ul><li>Increasing the tax-free threshold for personal income taxes from
R78 150 to R79 000. No changes will be made to personal income tax
brackets.&nbsp; </li><li>Increasing the fuel levy by 29c/litre, consisting of a 15c/litre
increase in the general fuel levy, a 5c/litre increase in the Road Accident
Fund (RAF) levy and the introduction of a carbon tax on fuel of 9c/litre.&nbsp; </li><li>Increasing excise duties on alcohol and tobacco products by between
7.4 per cent and 9 per cent. The targeted excise tax burden for wine, beer and
spirits is 11 per cent, 23 per cent and 36 per cent respectively.</li><li>No change in the monthly medical tax credit for medical scheme
contributions.</li><li>Increase in health promotion levy from 1 April from 2.1c to 2.21c
per gram in excess of 4 grams of sugar per 100ml. </li><li>Limiting the RAF levy diesel refund for primary production
industries to ensure that diesel users in these sectors equitably contribute
towards their RAF indemnity.</li><li>The implementation of carbon tax on 1 June 2019. </li><li>Government proposes to align the tax treatment on ad valorem
excise duty on motor vehicles Because of the way ad valorem excise duty is
calculated, vehicles produced locally are taxed at a higher rate than imported
vehicles. </li><li>Government intends to publish draft legislation for public comment
during 2019 on a gambling tax. </li><li>Urban development zone tax incentive to be reviewed. </li><li>South Africa reviewing its oil and gas tax regimes in 2019. </li><li>Taxing electronic cigarettes and tobacco heating products. </li><li>Definition of fuel levy goods for tax purposes to be reviewed may
include mineral ethanol, illuminating paraffin, aviation kerosene, liquefied
petroleum gas, compressed natural gas – as well as biofuels such as bioethanol
and biogas</li><li>Tax on “single-use” plastics including straws, caps, beverage cups
and lids, and containers to curb their use and encourage recycling will be
considered. </li></ul>



Although few, government has also introduced a number of tax incentives. These include: 



<ul><li>From 1 March 2019, employers participating in the Employment tax
incentive will be able to claim the maximum value of R1 000 per month for
employees earning up to R4 500 monthly, up from R4 000 previously. The
incentive value will taper to zero at the maximum monthly income of R6
500.&nbsp; </li><li>From 1 April 2019, the list of items for zero-rating for VAT will
include white bread flour, cake flour and sanitary pads.&nbsp; </li><li>Energy-efficiency savings tax incentive to be extended to 31
December 2022. During 2019, government will review the design and
administration of the incentive to improve its ease of use, effectiveness and
economic impact.&nbsp; </li></ul>



Treasury has also recognised that to render on to Caesar, what belongs to Caesar it needs to restore the efficiency of SARS. To do this it plans to:



<ul><li>Appoint a new SARS Commissioner in the coming
weeks.</li><li>It has established a new Illicit Economy Unit to
fight trade in the illicit economy.&nbsp; </li><li>Officially launch the Large business Unit in
early April 2019.&nbsp; </li><li>Strengthen SARS IT team &amp; systems. </li><li>Establish information sharing agreements with
allies to help fight cross-border tax evasion schemes.</li><li>Set up an inspector-general for tax administration.</li><li>Through internal processes, SARS will implement recommendations
concerning inappropriate actions, fruitless and wasteful expenditure, unfair
labour practices and maladministration.&nbsp; </li><li>SARS will review contracts that breached public procurement
regulations and will act to recover funds spent.&nbsp; </li><li>SARS is normalising refund payments. </li></ul>

ED_0077667

#Budget2019 | South African government not taking on #Eskom’s debt

Tito Mboweni inherits Africa’s recession-hit country as president Cyril Ramaphosa chases growth.

If the performance of South Africa’s currency in the week since Tito Mboweni was picked as finance minister is any good, Africa’s only economy in official recession might be on to a good thing.
The rand, Africa’s most freely-traded currency, gained more than 5% against the dollar in the week since the former central bank governor replaced Nhlanhla Nene who quit after lying about his dealings with a business family, the Guptas, accused of bribing government officials including former President Jacob Zuma.
The former labor minister brings a no-nonsense approach analysts say will be needed to take Africa’s second-largest economy out of a largely self-inflicted second recession in less than a decade amid graft allegations. He will need to rein in government spending, six months before elections that may drop the ruling African National Congress’ (ANC) support below half for the first time since the dawn of democracy in 1994.
“Fiercely independent and often regarded as a bit of a maverick, Mr Mboweni is nevertheless likely to emerge as one of Mr Ramaphosa’s more inspired decisions,’’ says Gary van Staden, analyst at Cape Town-based NKC Research.
<blockquote>“He is certainly among the more highly-regarded choices the president could have made and we expect him to add momentum to the decisions of the job summit and economic stimulus package.’’</blockquote>
Mboweni served four years as labor minister in former President Nelson Mandela’s government where he developed the first post-apartheid labor law. At the South African Reserve Bank, where he was the country’s first black governor, Mboweni spent a decade, and built a reputation as a conservative banker and defender of the country’s newly-adopted inflation-targeting regime.
His major achievement was building the country’s foreign exchange reserves from less than $10 billion to $40 billion when he left in 2009 after two terms deemed by most as successful.
<a href="http://www.forbesafrica.com/woman/2018/06/16/one-on-one-with-naledi-pandor-sa-minister-of-higher-education/" target="_blank" rel="noopener">READ MORE: One on One With Naledi Pandor SA Minister of Higher Education</a>
“The economy is now in a safe pair of hands. It is someone senior both in the ANC and in the government as he served as a minister of labor previously. What is also important is we have ratings agencies watching us and this will bode well for them,’’ says independent economist Mike Schussler.
Mboweni takes charge of an economy that was in recession in the first six months of the year, hobbled by nine years of poor management under Zuma which left business confidence shattered. With the economy barely growing during the period, the country lost its investment grade rating from Standard &amp; Poor’s (S&amp;P) and Fitch Ratings.
Only Moody’s maintained its rating above junk and the company deferred a decision after Mboweni’s appointment, fanning hopes it will give him time to mend the country’s finances and present a credible growth plan.
But economists say it might be too late for a country that needs to cut spending while chasing economic growth.
“I am afraid we have overplayed our hand on the numbers,’’ says Dawie Roodt, an economist at Efficient Group in Johannesburg.
“The fiscal numbers are unsustainable and the debt numbers in particular are terrible. From a numbers point of view, I am afraid this is a downgrade.’’
The new minister has a full problem tray as he comes in: unemployment is sitting at 27.2% as companies grapple with soaring costs inflated by a weak rand, falling government revenues in a country where 17 million people depend on government grants, and weak business confidence.
But his appointment may provide the turning point the country desperately requires, according to Van Staden.
“The former Reserve Bank governor can be a difficult personality, but his skillset and deep understanding of financial markets are likely to see him embrace a market-orientated policy framework with a no-nonsense attitude and dedication to economic growth and social development. We expect the appointment to have a positive impact on the credibility of the Ramaphosa administration.’’
It is credibility Ramaphosa has been building and one he will need quickly, according to Ravi Bhatia, a director at S&amp;P which rates the country’s debt junk with a stable outlook. Its next rating decision is scheduled to be announced on November 23.
“He will have to get up to speed quite quickly,’’ Bhatia said pointing to the country’s Medium Term Budget Policy statement released in October. “He will have to push through measures that will deliver growth. We want to see growth being delivered and the fiscal line being controlled.’’
&#8211; Godfrey Mutizwa

Tito Mboweni sworn in as new finance minister in South Africa

Could Tito Mboweni Be The Turning Point?

In the space of few days, just before South Africa’s Finance Minister, Pravin Gordhan, was to appear in court on charges of fraud, the reputations of President Jacob Zuma and the country’s National Director of Public Prosecutions, Shaun Abrahams, were dealt damaging blows.
In an impromptu press conference on October 31, a day of Halloween that might haunt Abrahams for years to come, the National Director of Public Prosecutions announced that he was withdrawing the charges against Gordhan, along with those against two former employees of South African Revenue Services (SARS), Ivan Pillay and Oupa Magashula. From the word go, many suspected the charges were trumped up and politically motivated.
In a long-winded speech at the NPA’s headquarters in Pretoria, Abrahams was nervous as he fielded scathing questions from the media. It was a far cry from the man who seemed self-assured as he announced the charges less than a month before. While Abrahams was confident then, his actions sent shivers down the spines of investors. The markets plunged and the rand fell more than 3% in few minutes. It was just two weeks before Gordhan delivered his mid-term budget speech.
It raised questions about the leadership of Abrahams, who is in charge of National Prosecuting Authority (NPA), and Zuma, who appointed him.
“When you are in a situation like we are in at the moment, you need leadership in government. At the same time, get the timing right. Leadership, in this particular instance, is needed to inspire confidence. Confidence in your country, confidence in a future and confidence in yourself, that you can influence the present to change the future. That is what is missing at the moment. Some of us are trying, some of us are close. I think we can do it,” said Gordhan during an interview with CNBC Africa a week before the trial was to begin.
On November 2, the day Gordhan, Magashula and Pillay were meant to appear in court, the High Court in Pretoria ordered the Public Protector to release the report on state capture, despite attempts to interdict its release by Zuma, Cooperative Governance and Traditional Affairs Minister David van Rooyen, and Mineral Resources Minister Mosebenzi Zwane. All three are implicated in the report which raises questions over the influence of the Gupta family on the president, ministers and state-owned enterprises.
Members of the Economic Freedom Fighters (EFF) marched in Pretoria demanding Zuma and Abrahams resign.
In Pretoria, shops closed their doors for fear of looting. The only people making money were those selling food and EFF merchandise in the streets.
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An EFF branded truck entertained the supporters with music as a group danced and sang revolutionary songs at Church Square. Later, while addressing thousands of his supporters, EFF President, Julius Malema, lashed out at Zuma‚ saying that he’s “the country’s number one thief who sold it to the controversial and well-connected Gupta family.”
“We are putting a very strong argument that Zuma must pay the cost personally. We want to teach Zuma’s Mickey Mouses a lesson because these ministers are doing as they wish and they take matters to the court knowing that they won’t be affected,” says Malema.
“All those who captured the state of our institution must go. The CEO of [national power supplier] Eskom must go because he doesn’t have a place in our institution and that includes everyone else in government-owned companies who are controlled by the Guptas, if you can’t resign from the Guptas now; you’re going to be history. The Guptas must leave South Africa.”
The marchers dispersed while chanting: “Zuma the thief must voetsek (go)” and “Defend the democratic state”. Chaos erupted as they blocked traffic around the central business district. Police attempted to control the crowd after they burned a water tank.
The crowd ran amok and damaged property and looted shops. They assaulted the security who was trying to protect shops. The police used stun grenades, rubber bullets and water cannons to disperse the supporters after they reportedly tried to force their way onto the lawns of the Union Buildings.
In these few days, where chaos erupted in parliament, court and the street, South Africans were assured that the law will always trump political shenanigans. As Gordhan was able to hold his head high, Zuma and his cronies had to take cover and plot their way out of the mess they suddenly find themselves in.

‘Zuma The Thief Must Voetsek’

In a week of tumultuous South African political news, as Finance Minister Pravin Gordhan’s battle with the National Prosecuting Authority came to a head, a crucial infrastructure story broke to little fanfare.
The South African Forum for Civil Engineering Contractors (SAFCEC) announced that under its auspices, most of the major listed construction companies reached an historic, unique and far-reaching voluntary agreement with the South African government.
The signing of this settlement ends years of dispute between the construction companies and government following findings of collusion by the Competition Commission investigation launched in 2009. The agreement commits the parties to chart a new future co-operative trajectory underpinned by measurable commitments to empowerment and transformation.
Collectively, the construction companies will make a combined contribution of R1.25 billion ($87.5 million) over 12 years into a trust fund to be controlled by a board of trustees appointed from government, the construction companies and SAFCEC. Each year, individual companies will pay between R15 million ($1 million) and R21.25 million ($1.5 million).
This voluntary contribution is in addition to the R1.46-billion ($100-million) penalty imposed by the Competition Commission Tribunal on some companies in 2013.
The trust will use the payments to develop and enhance the construction industry in line with government’s transformation goals and to develop emerging contractors and suppliers in South Africa.
Initiatives to be supported by the fund will include financial support for young trainee artisans and engineers from disadvantaged backgrounds, support for the teaching of maths and science at public schools, funding for social infrastructure and the development and promotion of construction companies owned and managed by black people.
The funding will also be used for the appointment of professionals to provide the government with engineering, project management and other services to strengthen its capacity to deliver the public infrastructure.
Combatting large-scale collusion and corruption, opportunities for South African companies in infrastructure projects elsewhere on the continent will be identified.
The construction companies have also individually undertaken to either develop up to three emerging black-owned businesses or dispose of a portion of their South African basic construction businesses to majority black-owned enterprises.
The agreement provides a framework for settlement of claims by the industry regulator, the Construction Industry Development Board (CIDB), as well as civil claims by public entities against companies investigated by the Competition Commission.
The positive implications of the Competition Commission extend beyond South Africa’s borders. The investigation was active in other territories and being watched across Africa and the rest of the world. Foreign competitors gained ground in these markets because our construction groups were not supported by the South African government until a resolution was found.
That is all set to change now and perhaps South Africa can hunt as a pack and claw back markets and jobs for the benefit of people and suppliers in those territories and within South Africa.
Those who have followed my column will have noted my consistent call for an end to the destructive standoff between the South African government and the construction industry. In my latter years as a CEO in the industry, and now in retirement, I have been committed to resolving the industry’s future and was a member of the CEO group who helped craft the early foundations of this voluntary resolution program. I recall many late evenings driving back from ministerial meetings in Pretoria and intensive debate and strategy sessions within SAFCEC. Important stakeholders from black business, who will likely significantly benefit from this agreement, were included.
Simultaneously with this announcement came an uptick in the project outlook for gold, the announcement of two big private sector coal power plants, and momentum on nuclear power.
“Through the transformation commitments in the agreement, we can rebuild the relationship with the companies concerned and work in partnership in future,” says Gugile Nkwinti, the Minister of Rural Development and Land Reform, as well as the Chairperson of the Management Committee of the Presidential Infrastructure Coordinating Commission.
“This arrangement also demonstrates the commitment to a transformed, transparent and ethical industry, which has a major role to play in delivering much needed infrastructure,” says Webster Mfebe, the CEO of SAFCEC.
I was thrilled to learn of the successful conclusion of this agreement. It took seven years, but the benefits might be felt for decades to come.

Burying the hatchet  for a brighter future

On a bright summer morning in the leafy Johannesburg suburbs, investigators from the Hawks – South Africa’s FBI – knocked on the door with a summons for the country’s Finance Minister Pravin Gordhan. He wasn’t there and his family rang him to say there was a brigadier on the doorstep. This just two weeks before the crucial medium-term budget statement. A delicate budget that the ratings agencies will scrutinize as they ponder whether to downgrade South Africa’s economy to the dreaded junk status; a move that could mean higher interest rates, inflations, and more economic misery for an economy that’s already been 12 rounds with Mike Tyson in his prime.
“Not having found me at home, they proceed to go to the Treasury and I am not sure what happened there. Given the fiscal austerity, they might not have been given a cup of tea,” says Gordhan wryly.
<img loading="lazy" decoding="async" class="size-medium wp-image-5365 alignleft" src="/wp-content/uploads/2017/05/SA_FinMin_TimeLine-74x300.jpg" alt="" width="74" height="300" />
“A date has been set to collect my fingerprints, they have been in the system for a long time, I suppose they need to freshen it up in some way. But this is a moment when South Africans should really ask themselves who are the Hawks, or these few people in the Hawks, really serving, where do they get their political instructions from and for what purpose? All we are trying to do within the Treasury is represent South Africa, make sure we manage its finances properly, present the best foot forward we can on behalf of the country and do that which is right whether it is in respect of university fees or more housing to be built or more money to be made available for the right kind of procurement purposes or anything that a treasury does in a normal country. It looks like we are in for a bit of excitement going forward.”
This was the avuncular Gordhan at his dry best at a Gauteng Province event, in Johannesburg, a few hours after the summons landed. The former Communist Party member is used to blows in a lifetime in politics. He became active in politics in the late 1960s and spent four years in the political underground operating around his birthplace of Durban, on the coast of KwaZulu-Natal.
Gordhan was an unlikely revolutionary; he trained as a pharmacist, but lost his only job in the trade through his political activities. He spent the rest of the struggle in politics and was detained by police a number of times.
“I have known him through the liberation struggle for many years and I have never heard anything critical of him in all that time,” says Denis Goldberg, one of the men who faced the death penalty with Nelson Mandela in 1964.
Between 1999 and 2009, Gordhan was the Commissioner for the South African Revenue Service in the healthy years when the government used to take out advertisements to trumpet how the increasingly efficient system was gathering ever more revenue. It is from this abundant time that the fraud charge emanates.
On November 2, Gordhan will be charged, along with former colleague Oupa Magashula, with the misuse of public funds, said to be around R1 million ($71,000), in granting his former deputy, Ivan Pillay, early retirement, in August 2010. Lawyers say the case is wafer thin, but the very fact that a finance minister will stand in the dock will be enough to cause disquiet among foreign investors watching from afar.
The markets plunged on the day. The rand fell more than 3% within minutes of the announcement by the NPA.
Shaun Abrahams, the head of the NPA, has given Gordhan, Pillay and Magashula an opportunity to make representations to review the decision to prosecute or not. Magashula and Pillay have done so.
“I am currently considering the aforementioned representations… I have learned, through media reports, that [Gordhan] does not intend seeking me to review the aforementioned decision, I nevertheless invite [him]to make representations… by no later than 17h00 on 18 October 2016,” says Abrahams in a letter to Gordhan’s lawyers.
Gordhan refused. He says he has no confidence in the NPA’s willingness to give him a fair hearing.
“We have seen the letter by Freedom Under Law and the Helen Suzman Foundation dated 14 October 2016 in which we were copied. We invite you to withdraw the charges against our client in the light of the grounds set out therein. Our client does not intend to make representations to you for the considerations previously articulated,” his lawyer, Tebogo Malatji, of Gildenhuys Malatji Inc, said in a letter to Abrahams.
Political analyst Aubrey Matshiqi believes November 2 is merely the beginning.
“I think there will be additional charges. I think this case is far from over,” he says.
Matshiqi believes the rule of law is important and scoffs at the picture portrayed in the press of this being a case of good and evil; fiscal discipline versus the removal of a minister to ease access to  state funds.
“I think the only thing we can quibble about is who, of the two, is the less evil. As far as I am concerned these are two wolves in sheep’s clothing. The only difference is one has better quality sheepskin.”
CEOs took out full page advertisements in newspapers in support of Gordhan; everyone from the Chamber of Mines, to Gauteng Premier David Makhura, to the short-term insurance industry, made statements backing the man.
Marches are also planned and hopes fanned that one of Africa’s biggest economies can paper over the cracks in time to avoid the dreaded downgrade at the end of the year. The reality is the damage has already been done.

Protect Yourselves At All Times And  Come Out Fighting

It was a warm day for winter in Pretoria when I arrived to interview South Africa’s Finance Minister Pravin Gordhan, the man with one of the toughest jobs in African finance. He has to make cuts, balance the books, to stop the mighty South African economy falling over the cliff. This, following the crazy days of uncertainty in December when South Africa sacked Nhlanlha Nene; installed unknown Des van Rooyen; before retreating to the safe hands of Gordhan – finance minister between 2009 and 2014 – to steady the markets and resuscitate the currency. You could argue that a finger of one of those safe hands is in the dyke.
As the shafts of mid-morning light shone through the tall windows in the finance minister’s office, in the granite Treasury headquarters, it was getting warmer, but not as warm as the seat where Gordhan now sits.
In June, Gordhan helped South Africa stave off a downgrade, by the rating agencies, to junk status. If South Africa can show growth, prudence and greater fiscal discipline, it may escape a downgrade yet again at the end of the year.
The week of the interview was not a good one for growth in South Africa; it had just shown negative growth of -1.2%. Yet Gordhan, who chose his words very carefully, appeared more bullish than the economy.
&nbsp;
<h4>Forbes Africa: It’s been a rollercoaster six months, how are you holding up?</h4>
&nbsp;
Gordhan: I am used to rollercoasters in my life, so this is one more. This one has been very rewarding because the efforts that government has put in to join forces with business and labor have paid off as far as the first phase of our battle to remain outside of sub investment grade has been won. And largely through the joint efforts of all of us; and now we start the journey into the next five months which is a period where we must deliver on some of the things we have committed ourselves to. I am confident that as a country we will begin to do that because some of that momentum has already been building up.
&nbsp;
<h4>Forbes Africa: You avoided the downgrade to junk status; a lot of people are still saying the country has merely postponed it for another six months. How likely is that?</h4>
&nbsp;
Gordhan: It’s true that we have postponed it but you can’t call it mere postponement when you were about to fall over. Not falling over is a major and important victory for all of us; so it’s a question of  who is the narrative being created by; people who believe in a half full glass or a half empty glass… We still have investments coming in, we have kept to our fiscal targets and we will continue to actually do so. We will unite the key role players in this country behind the common program and we have got a few months to demonstrate we are capable of doing it. We have a clear program in terms of reforming key parts of this economy and making sure some of the key constraints are now taken out of the way.
&nbsp;
<h4>Forbes Africa: Look at the latest data and the economy contracted for the first quarter by 1.2%. Does that make your target that much harder to achieve? How much reform are we going to have to go through for the next five months to ultimately head for that 2% target?</h4>
&nbsp;
Gordhan: I set the 2% mark largely by saying we are going to get moving in the right direction. We all know that in terms of the National Development Plan, we ultimately want to move into the 5% terrain.
&nbsp;
<h4>Forbes Africa: Another question people are asking, as you know, civil service is about 50% of your budget, maybe less than that but it’s still a lot, I was with a lot of financial journalists last night and they were saying why doesn’t the minister cut civil service and save?</h4>
&nbsp;
Gordhan: How many more unemployed people do you want? Firstly, the cost of compensation is about R460 billion ($30 billion), currently that is about 37%, which is high. In the budget, we have said that we are now going to certain measures to start cutting that expenditure. Vacancies not being filled and the most recent report, that we have received from provinces, where a bulk of teachers and health staff are employed is very encouraging.
<h4>Forbes Africa: The ratings agencies have also stated that the risk of political instability, especially on the lead up to the August 3 municipal elections, could affect the economy.</h4>
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Gordhan: Elections happen as part of a democratic society in South African and elsewhere… We are nowhere near disruption but what we do require is for political leaders to recognize that there is a relationship between the way we conduct ourselves politically and the confidence in our economy that we create and today we live in a world where politics and the economy are closely related whether it’s here, Brazil or anywhere else in the world. The prospect of a particular candidate winning the elections in the Unites States is also giving people a wake-up call.
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<h4>Forbes Africa: You definitely can’t forecast the rand and I think that’s the problem right now; small businesses out there are saying they just need to know that there is some stability in the currency.</h4>
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Gordhan: Currency volatility is something that nobody has control over. There are mega forces and dynamics in the globe that influence what happens to a currency as much as there are domestic factors as well, so, look at what’s happening to the pound, so every day that something happens to the dollar, something happens to the rand which are not necessarily related to domestic considerations as well.
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<h4>Forbes Africa: In your efforts to reduce debt and cut expenditure, what kind of painful cuts do you think this country may be looking at in the next six months?</h4>
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Gordhan: We have made the cuts for this year and we have to look hard to find money for a zero increase for student fees, finding money for our subscription to the BRICS New Development Bank, and a few other items that need to be financed both as a result of expenditure cuts and managing the tax side. We have indicated, very transparently, that in the coming two years, we have to find R15 billion (around $1 billion) each year, either from the expenditure or the tax side.

The Finance Minister In The Trenches

Last month I suggested that the South African government is unsure of which route to follow to find a shared strategy with the private sector to deal with the infrastructure backlog preventing the region’s progress.
Has the ruthless march towards recession, higher unemployment, coupled with the prospect of credit ratings downgrades and potential changes in voter sentiment, finally struck home?
Finance Minister Pravin Gordhan’s recent bellwether meeting with 60 CEOs reminds me of the Union Buildings meeting I attended after South Africa successfully hosted the 2010 World Cup. The President and most of the Cabinet met with business in high spirits to reinforce the need to harness the collaborative momentum that had delivered so well.
Will the economic crisis that has followed the inaction and ineptitude after that euphoric session finally galvanize government and business into action?
Economic revival will not be achieved without massive investment in infrastructure and it cannot be delivered effectively without collaboration between the public and private sectors at the highest level.
In many countries there is a close relationship between the government, the national agenda and the construction industry. Many have transparent cross shareholding and collective arrangements that make for quicker infrastructure expansion.
The key is harnessing private sector funding for public infrastructure through commercially viable PPPs and concessionary projects, where each party takes a share in the risk for reward. This relieves the fiscus of having to fund everything and can then direct scarce public funds towards infrastructure that will attract industrial investment and drive long-term economic growth.
My previous company has decades of experience with this in Africa and Eastern Europe, but political ideology in South Africa has bedeviled this opportunity.
After 2010, we had numerous discussions with Brazilian groups and learned of this collective mindset in Brazil ahead of their 2014 World Cup and 2016 Olympics programs.
France has a deep collaboration between government and construction. The United States infrastructure is now undergoing massive rebuilding, with a strong private sector participation in both funding and implementation.
Likewise for overseas work, our competitors come into our region with robust political and financial backing from their governments.
The French approach to business is founded upon national interest and long-term foreign relationships, which was evident in recent years with the prospects for a fleet of nuclear power plants for South Africa. For several years, I participated in the developing French strategy for this work that encompassed major technology groups, their suppliers looking to localize in South Africa, the French national power utility and their government representatives.
Likewise, the Russians and South Koreans have strongly developed public/private trade institutions and strategies and have engaged with targeted partnerships with local companies. The success of South Korean business in our market is remarkable. The Russians are now firm contenders for nuclear power.
In stark contrast, in my experience in working across Africa and the Middle East, South African business generally feels alone and has to fend for itself internationally.
South Africa’s tax-payer funded development finance institutions have been known to fund projects in other African countries without involving any South African content. Most competitor nations would have contractual requirements that their funding has a high content from the lending nation.
This further diminishes South Africa’ growth prospects, the tax base and the desired employment and regional cooperation. The lack of support, and the time lost, is eroding the commitment to South Africa as the bigger companies shed local jobs and continue to shift to new international markets.
The construction industry has been through hell but it’s ready to make a difference. To do this it needs a champion in government, that has until now been absent.
The industry has tabled robust investments and long-term plans that include significant additional training and skills program. It has also offered to assist distressed municipalities and undertake social projects.
There is also a suite of execution strategies that will deliver on the commitment to collaborate with, mentor and jointly execute large projects with black-owned business to ensure the next generation of large construction companies are created from a solid experience base.
Perhaps out of adversity, the need for radical change in ideology and policy from government and for business to deliver more jobs, demographic and economic transformation and black industrialization, Gordhan’s new approach will find traction.
The engineering and construction industry in this country cannot wait much longer.

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