You are currently viewing our desktop site, do you want to download our app instead?
Moneyweb Android App Moneyweb iOS App Moneyweb Mobile Web App
Join our mailing list to receive top business news every weekday morning.

My tips for Tito

Ahead of the February budget.
Dear Minister Mboweni … we are looking to you to inform your cabinet colleagues that we will not change society by improving our economy so much as we will improve our economy by changing society. Image: Waldo Swiegers, Bloomberg

Dear Finance Minister,

I want to tell you a story.

My family’s domestic worker when I was growing up was a wonderful, generous woman who laughed like Oprah Winfrey. The two most precious things to her in the world were her children, and the Zion Christian Church. She never missed the annual Easter pilgrimage to Moria.

Sadly, she died not long after I left school. She was only in her 50s, and her youngest son was still a teenager.

In all, she had four children. The youngest is now 24, and the eldest passed away in her 30s. All of them have struggled to find permanent employment.

Why is this of any significance? Well, unfortunately, it isn’t. These are four typical young South Africans who are products of an inferior education and excluded by the formal economy that has failed to expand and embrace the kind of township in which they live. 

Where to begin?

I realise that, in a broad sense, I am not telling you anything you don’t know. No doubt you appreciate better than I, the conditions in which the majority of young South Africans are living.

I also don’t doubt that you are genuine in your interest to change this – to deliver ‘faster and more equitable’ economic growth that will ultimately break down the barriers between South Africa’s two economies.

However, I do wonder whether we are starting in the right place.

Economic growth is a desperately needed, and worthy, goal, but it has to come from somewhere. As Athol Williams, a social philosopher and senior lecturer at the University of Cape Town’s Graduate School of Business, points out, an economy is a product of society:

“To grow the economy, you have to grow the society,” says Williams. “And our society is broken … To build a thriving economy, we need to focus on what we put into it.”

Read: Special report: We need more than GDP growth

There is a dangerous narrative that if we could just get 5% or 6% economic growth, this would fix all of our problems. Employment would surge, poverty would evaporate, and violent crime would fade.

This is, however, a bit like the indebted consumer who believes that if they could just get more money, all their problems would go away. Yet you don’t solve a debt problem by increasing your income. In fact, it is often the opposite – those who earn more are often more highly indebted.

The only way to get out of debt is to change your behaviour. And, quite logically, if you get out of debt, and no longer have to service it, you will find that you have more money.

Set a foundation

The same is true of a country’s economy.

We will not change society by improving our economy so much as we will improve our economy by changing society.

I appreciate that you are the Minister of Finance, and your job description does not include social policy. However, the best economic policies in the world are not going to sustainably alter South Africa’s fortunes unless there are fundamental changes in society that can support them.

As the Minister of Finance, this is what I would hope you are telling your cabinet colleagues. What is your collective vision for the kind of country you want South Africa to be? How are those values reflected in areas like our schooling, our health system and our policing?

At the moment, what is most prominently on display there is dysfunction and indifference. You don’t fix those things simply by growing the economy faster. And you can’t grow the economy faster in a sustainable way if you don’t fix those things.

So my tip for you ahead of the budget is to ask what sort of vision this government has for South Africa, and to what extent that is actually reflected in society. It is to consider not just the country’s economic growth, but its state of well-being.

Most importantly, it is to see societal change as the foundation from which economic upliftment is possible, and not the other way around.

Because, even with all the good intention in the world, your job is impossible unless you have something to build from.

The Minister of Finance Tito Mboweni will deliver the 2020 National Budget on February 26.

Mboweni has invited South Africans to share their views about economic conditions and other issues they would like government to highlight in the budget. In particular, the minister would like public views on what government can do to achieve faster and more equitable economic growth.

Contributions can be sent via:

  • Twitter: @TreasuryRSA with the hashtag #TipsForMinFin and #Budget2020

  • National Treasury website: www.treasury.gov.za under the heading ‘Tips’

AUTHOR PROFILE

COMMENTS   46

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

Patrick, I am not sure your sentiments will be shred or be appreciated at all, but nice try in any case.

I do agree in principle, that to build a save-house for the family (nation), one where proper family values will be instilled, where love and trying times will be shared – one have to give focused attention to where you build your little house or shack and to ensure that it is done on stable ground where storms, flooding, wild fires or neighbourhood crime will not decimate such noble vision and where your neighbours appreciate more or less the same value system.

South Africans needs to first clean house and sort out our value system before family growth (economic improvement) can be realised. The well initiated rainbow nation have become at odds with itself and its so- called leaders of straw. The urge for financial gain at all cost, resultant misappropriation and plain looting, the insatiable socialistic grant give-away’s promoting capable people to sit at home, the very small tax base having to care for the masses, the real lack of proper services on all levels of society and the inability to maintain, improve or to create substance have clearly become this countries Achilles Hill.

The author fails to address another societal behaviour issue: Why does someone who earns a domestic worker income have four children.

And loved every one of them!

No doubt. But there is a strong correlation between the number of children you have and your economic circumstance.

Simple, to get 4 times the child grants that keeps the cANCer in power.

That question should not be asked, any way but the answer is…”IT IS NONE OF YOUR BUSINESS”.

Actually, Boombang, not to be confrontative, but ‘IT IS OUR BUSINESS’. Why? because fewer than 3 million South Africans are paying 97% of income taxes (actual SARS figures). Ponder that figure for a moment: THREE MILLION out of a population of 57 million!! These same few are also paying most of the VAT, most of the CGT and the dozens of other ANC stealth taxes. Now, please tell me: how much longer can this miniscule 3 million continue to support 17 million people on social grants, especially when they are further diminishing through emigration? Do the maths, man.
Taxpayers are are already hugely hard-pressed, but our lower-income section (who pay little or no income tax) keep making more and more babies, and thus are demanding more and more social grants. That’s why it IS our business – the people who actually pay for SA to run.

While I agree with you, if I am paying (via my taxes) for four child support grants, it is very much my business.

Dougalan: Spot on.

Judging by the embarrassing response from Boombang it seems the nail was hit on the head. Another case of sticking ones head in the sand and underlines the fact that common sense is not so common.

@Dougalan, I thought I would not reply but I think the nation together with you must be re-educated…

For starters we know how much the child grant you are worried about is…

Secondly, these 4 children who you say are a burden to “holy you”… will need clothing, they will need food, shelter and so many other things which this so called grant of yours will by far never be able to cover… by the way all these things they buy carry the same VAT you mentioned and they pay it 4 times compared to your one child family.

As kids will grow and their needs grow and you don’t know who pays for those needs. They will buy cell phones, pay for public transport, go to movies, buy at McDonalds, they will smoke cigarettes, drink alchohol, soft drinks, eat meat and vegetables… the list goes on and not your grant pays for all that… People find a way, they always do. They are part of the economic ecosystem. Not your grant. Remember they eventually reach their time on earth and they die… their death too is an economic activity. How much of your grant pays for all this.

If we create an environment that they are self sufficient they will actually participate fully and more meaningful in society by creating opportunities for the above mentioned businesses leading to jobs for others and increasing the tax base for the country, yes we will pay more grants but we will have more economic participants.

I hope what I wanted to get through, has gone through in my little way. Thank You…

The child grant needs to be changed to an education voucher!

I’m of the opinion that government needs to learn to get out of business.. government is to govern..not to be in business.

Want to fix South Africa? Make it such that each MP or serving appointment has to declare every business or investment and cannot be a director during time they serve.

2ndly.. people who go on and on about number of kids. I’m sorry.. last time I check Human Rights does not allow anyone to dictate how many kids you can have. While I agree it adds some burden on the state.. it also means we have another consumer.. you know the oke who his paying a profit margin for the crap you selling. See globally what happens when this stall.

Education & Urbanization go hand in hand with birth rate decline globally.. Africa is the exact same. Only difference here is that while Apartheid ended.. our society has become 2 tier and the bottom tier has very few success stories due to pathetic level of education recieved. I reckon government t should rather invest in independant boarding school vouchers.. ie from 4-5 to 19 the kid goes to boarding school on a state bursary. This reduces burden of kid directly and removes abuse of grants.Slap on incentives for supporting such systems and we can transform this economy.. but simply preaching birth control without fixing education is something that’s never worked globally.

On birth control.. I think people need to get off their high horse and stop treating others like animals. This is 2020.. last time the US caught on crap like this it was still the 70s (yah they did this will into the 20th century.. the arrogance). While I agree lower income families have bigger families.. most families in the 80s were big too.. you saying your parents were the same? What’s good for the goose is good for the gander. The most successful birth control deployments involved education AND livable (where economic outcome working was better) employment.. we failing to fix this because most SA doesn’t valuE people outside their own community!

This is an asinine comment. What business is it of yours if she has 4 children? That’s like asking why do users of domestic help pay them low wages. In fact, the article is not about her.

A better education will hopefully lead to better thinking and understanding.

The ruling party needs to keep the pass mark low in order to keep the population uneducated and simple in order to keep getting their votes at a cost of 1 T shirt and a bag of mielie meal.

All fair comment and another critical and first thing for the finance minister to do is to say the ANC is NOT united.

It is common knowledge that most cadre’s and deployees are corrupt. Even if just one person was corrupt how could the ANC be united.

Does the good guy’s unite with the bad guy’s?

This is what our beloved president is trying to sell us. They are united.

If they are united it means NOBODY in the ANC can be trusted.

Mr. Finance Minister? Your call. Are you part of the united (Corrupt) ANC?

No matter which political-economic system is chosen, it always works perfectly. The South African system delivers precisely the expected results. We do not like the results, I agree, but the results are still the logical consequence of the chosen system.

Family planning is not part of the collectivist mindset. No form of individual planning forms part of the collectivist mindset, because the Chief, the State, the Party is the Central Planner and controls what people think. This is the opposite of individualism. How can any individual take responsibility for the consequences of his choices, when the accountability lies with the collective? This culture frowns upon individualism. The “black tax” is a modern-day manifestation of this mindset.

We are judging the results of the collectivist system through western, free market, individualist glasses. We are so used to our system that if forms the frame of reference from which we judge the results of the collectivist system. This is not fair or reasonable.

Free market capitalism with the attributes of individualism, accountability, responsibility and the rule of law, developed spontaneously from a previously collectivist community for one reason only. Free market capitalism delivered the only escape from the Malthusian Trap that constantly works to bring equilibrium between the population size and the available resources. When a society moves away from capitalism, towards socialism, it embraces the Malthusian Trap and moves away from food security and prosperity. These are not the intended results but are the unavoidable, logical results, inherent to the system.

I say again, when people in a collectivist culture are poor, unemployed, hungry, without medication, lacking water and electricity, when the sewage run down the streets and the people are unemployed, the system works perfectly.

The point is, if we want different results, we should embrace a different system. We should embrace free-market capitalism that guarantees the results that we do want.

The president cannot change the reality because he is the leader of a collectivist organisation and he received a collectivist mandate from his supporters. He can only deliver the normal, logical results of his mandate. The people struggled for the right to vote for unemployment, a lack of service delivery and for premature death. We should allow them to have this.

The problem with a free market capitalist system is that there’s little guarantee of individual success as a direct result of the highly competitive nature of the system. But in a collectivist system there is a perceived safety/protection in numbers. For this reason, if you’re unsure that you can wing it on your own, you will always opt for collectivism over individuality as espoused by capitalism.

The problem is there are probably at least 10 generations before the voters recognize this.

I think that the capitalist society is actually also rather collectivist. Why else would one have collective investment schemes, insurance risk pools, taxes paid to the state, or even non-profit organisations caring for the less fortunate in times of need? Even hardcore capitalists can embrace a shared humanity, the need sometimes for the support of others. I think the difference lies in the freedom to collaborate and share reciprocal benefits with a chosen group, compared to the tyranny of being forced to sacrifice for people who may never be willing or able to do a good turn to you.

There are no property rights in a collectivist system. We should not confuse collectivism with charity. The individuals who make the largest financial contributions to humanity are capitalists. Each and every one of them. They own the fruits of their labour. They own the means of production.

Collectivism can never be democratic. The old Eskom and the old SADF were collectivist organisations that produced amazing efficiency. These organisations were the best in the world because law and order and accountability were strictly enforced. There was no freedom of choice in those entities. You followed the rules, or you ran 4km with a pole.

When you have a democratic collectivist system where accountability is not enforced, the system will implode. We see this at Eskom, the SOEs, and at most municipalities.

China is an example of a collectivist system that has accountability in some areas, just look at the one child policy. Also there is a lot of accountability in achieving economic targets.

Great comment. The only logical conclusion of the patriarchal, communal structure is the return to the mean. Africa has done so for the last 70 years. From a historical perspective, South Africa is the final colonial story and it will end like all the others have done. This is a historical and even a scientific fact. The Big Man culture, superstition, subsistence farming and living, lowering of life expectancy, civil war and a complete erosion of Western-liberal values. Its not a judgment, its just a fact

Read Douglas Gibsons take on the recent bye elections where the ANC was still re-elected despite service delivery protests! There is a serious disconnect re-electing the very same people you demonstrated against.Hence, you get the Government you deserve.

This observation is obvious (but evidently not widely understood) and needs to be repeated a thousand times and more. Deserves as many votes up.

China is the posted child for central planning, communism, one party democracy, al, that is bad They did VERY well off the one-child policy. Imagine if we had that policy since 1995. We would now be entering the stage where single children would be becoming parents and probably choosing not to go forth and multiply at a huge rate.

In contrast to china, India is going backward at a rate of hurricane knots and will overtake China population soon.

Granted, China did one other thing beside one-child : they pursued selected western industries with a capital support program that fired job creation at negative return on equity capital as we measure that, but IMMENSE return on social benefit. I can name multiple industries where china crushed western dominance purely because they chose to make and sell products at prices that did not need to service equity or debt. Once a german or british or american factory closes, it never restarts. Game over = they used the most basic pillar of capitalism (high equity and debt returns) to crush capitalism

Sorry, but I understand something completely different. The Chinese one-child policy has had a dire and devastating effect on China. Within a few decades her population will have dropped from its present 1.4 billion to 700 million.
India will keep growing for a while, so she will do better than China and is the Asian hope.
But, in this peek of global population, people believe we are too many and everything must be done to reduce our numbers. This is wrong.
The global fertility cycle has turned. And from 2050 global populations will go into terminal decline. Studies have show that when a population starts losing fertility, it never recovers this. Maybe this will be good for the environment but it will be bad for the economy. Additionally, I am a firm adherent that man’s innovation and his science would have enabled him to overcome the problem of resource constraints as it always has.
Our children, our numbers are our blessing. That anyone has 4 children is a source of joy, not derision.
Furthermore, in your assessment of China, China never took part in the Western capitalist bandwagon. They misused their inclusion, thieved and abused the situation. Their time is coming as the might of America stirs.

I don’t think you read enough on the China birth control policy nor did you on India.. people who use this as an example of birth control working are actually making a fool of themselves like the Chinese who now pushing two child and soon three. I wonder if they will start incentivizing people reproduce too like they do in Europe or start importing families like they do in Japan. I know a lot of Chinese men are marrying foreign women lately because the one child policy meant a lot men.

Again.. have you been to India? Did you know their Gini Coefficient was way worse than ours and they turned it around.. living in SA has a lower social mobility score than most places including India. And if you been to the poor areas in India you have to ask what aren’t you seeing when you drive on the highway past the shack townships.

The difference, India to SA is education system, focusing on IT & engineering, being brutal with business ie none of this monopolistic crap every local company tries to push. I’m sorry to burst everyone’s bubble but most companies are not competing fairly in SA. This is partially why our CEOs mostly suck in a competitive market.. they don’t experience the same level of competition here.

India, Bangladesh.. South East Asia is a very interesting case study as they also one of the few nations (Bangladesh) where birth control worked.. going from 7 to under 2,3. Why? They took a holistic approach.. preached benefits of small families, benefits (financial) of both parents being able to work etc. in SA.. they tried that without the work aspect or where the work done doesn’t change the financial standing of the family and well.. SA is what it is.

My point remains.. SA’s biggest problem is that we do not value each other. Apartheid may have ended.. but people do not value each other the same especially the wealthy to the poor (even in the same race & culture). Combo that with extreme income disparity and birth control is a tough sell.

I am sorry, but I have to disagree on the facts.

In 1985 China and India had similar per capita GDP. Today China is 4.6 times India. By virtually any measure of a country’s financial wellbeing China is better off. Debt:GDP 50 v 64, deficit:gdp 4.8 v 6.4, life expectancy, homicide rates, vehicles per 1000

Both have virtually the same Gini at 38 and 35 (world bank definition). China however scores far higher in the Human Capital Index which looks at the prospects of a child born today.

On some of the other points I agree though. Several countries face a crisis few comprehend in scale of financial disaster : entirely unfunded defined benefit pensions due to negative population growth and longer life expectancy.

But, we first need to get our population growth under control to say 2.1 so that we can build a house worth living in.

The biggest tip is to stop corruption.

When your very own deputy president of the ‘house’ or the ‘nation’ is involved in corruption it is difficult to stop it but the only way of turning it around.

Read this news from MG:
“Eskom is investigating how its team, mandated to negotiate a 5% price decrease in a multimillion rand maintenance contract awarded to the relative of former board chairperson Jabu Mabuza, came back with a recommendation to increase the price by R10-million.”

The challenges facing this country are far greater than what Tito can solve through a budget speech alone, well-intentioned as it might be. It’s all but impossible for him to divvie up half a loaf of bread between 20 children sitting around the table. He gets little help from the lame duck talking head at the top of the table or from the other family members who have stolen the jam and butter from the cupboard and couldn’t give a rat’s about the 20 starving children. Unlike the other family members, Tito probably knows and cares, that he is raising a family of beggars and thieves but there is precious little he alone can do to stretch a half white out any further.

Is it possible to turn this ship around ? Eish I don’t think so.

The country is directionless – are we aiming to be the next Singapore or the next Zimbabwe?

Singapore’s success rests on high economic growth and low population growth.

Zimbabwe has low (no) economic growth and high population growth.

Just like SA.

My only tip for the minister is to increase the donations tax exemption from R100,000 p.a. to R200,000 because it has remained stagnant for the last 10 years and has not recognised the effect of inflation. (In that way I can get some of my growth assets into my trust meaning there will be nothing left for these thieves to tax in the form of estate duty when I die.)

Fantastic article! Thank you.

nothing that is built on a poor foundation, will last. the ANC set out to build an inclusive SA but got lost along the way. now after all the looting there are such MASSIVE issues facing SA that the small stuff can’t be sorted out. every day there’s an article about how much money was stolen from some state owned company. we’ve become so accustomed to it that we just shake our heads and move on. infighting within the ANC comes at the worst possible time – but it may be for the good of SA as we can now see clearly those that want to keep SA in the captured state that Zuma built.

I think it is even simpler than that. If the finance minister can cut tax (specifically PAYE), it will put more money in the consumers’ pockets. Which means more “black tax” going to the townships and rural villages. Which means more opportunities for “black” businesses and wealth creation.

Remembering that you don’t have to pay someone a grant if they have a job, its time to kickstart the economy.

“As the Minister of Finance, this is what I would hope you are telling your cabinet colleagues.” An admirable piece of advice, but useless I’m afraid in the context of the intellectual capacity of his colleagues.

This is a long, long-term project which can only be attempted in increments. Identify what is absolutely crucial and attack it with every resource available.

Think of an analogy with a runaway train where the driver has died of a heart attack: do you warn the passengers, telephone the stations ahead on the line, tell the kitchen staff to hold lunch, scream “we’re all going to die!” or grab the brake and pull with all your might?

In my opinion, corruption is the prime cause of our demise, so put cadres and the corrupt into court and into jail tout suite. Announce a deadline of three months.

Sigh …

It’s quite simple.
To lure investors back and give them confidence to invest in this country which will boost economic growth you (ANC) have to create an attractive economic environment by:
– Doing away with all of the EWC talk (re-instilling property rights).
– Removing labour union power.
– Scrapping BBEEE BS policies.
– Cleaning up all SOE’s (even if this means downsizing the bloated incompetent workforces).
– Apply proper rule of law.
– Etc., etc., etc, the list can go on.
Will you propose these changes Tito?
I’m certainly not holding my breath.

Mboweni: ‘I can tell you, the train is moving’ – but it is moving backwards.

You can not expect an economy to thrive if the government has policies in place that exclude skilled workers due to the colour of their skin, it’s absolutely ludicrous.

Those skilled workers and business owners are the direct result of job creation yet they are not able to do business here because of there skin colour, so they leave, by the tens of thousands monthly, and they never come back!

Governments ridiculous policies are destroying this economy!

There seems to be the attitude that the government is to tax the state (existing taxpayers) more to create wealth. Unfortunately that doesn’t work. This is just distribution of the existing pool of resources. Eventually, entropy (i.e. inefficiency and corruption) will destroy the dwindling wealth, as is happening at Eskom and other SOEs.

What is required is to increase the pool, to get more to flow into the pool (e.g. foreign investment and trade balance, which happens through private enterprise business).

But as long as the government, as the custodian of the State, treats business (which has the potential and capability to create wealth) as the enemy, this cannot happen. Talk of killing the goose that lays the golden eggs.

Successful economies like Singapore and Rwanda are founded on enabling business, opening trade channels and supporting the flow of wealth into the country (being the state, not the government). Trump builds America by protecting its exports of resources such as oil and gas, to the extent that if USA could shut down OPEC, it would.

But here, the ANC government panders too much by its partners the unions and the communist party and is too scared to confront them, for fear of losing votes.

So, Tito, until this is corrected, we are just stirring the pool around from taxpayers to grant recipients and the to off-flows of corruption, until we run out of taxpayers, instead of enabling flows into the resource pool to build it up.

Comments like these are dangerous and just feeds the likes of the EFF and the RET wing of the ANC. Yes of course we want to live in a more humane and equitable society, but no matter how you slice the cake, SA is a poor country and for people to have a materially better standard of living we need more growth.

My tip for Tito.
Come clean, admit you were part of the group with their fingers in the cookie jar. Admit you have nom clue on how to be a finance minister. Then resign.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: