Gigaba and co look for economic direction

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File: President Jacob Zuma appointed Malusi Gigaba as the new Finance Minister.

JOHANNESBURG - Finance Minister Malusi Gigaba and ANC leaders have met to try to figure out how to dig the economy out of recession. 

Government's economic cluster meets with President Jacob Zuma on Tuesday.

Gigaba is then likely to outline measures to respond to the economic crisis in the coming days.

Nearly a week after it was announced that the economy had plunged into recession, and days after yet another ratings agency downgrade,  the government's voice doesn't appear to be the one leading the discourse about these developments.

Investment Solutions chief economist Lesiba Mothata says: "We need to appreciate that Moody's relative to the other two [ratings agencies] has a more constructive view of South Africa. For them to have come out with a negative outlook after this downgrade I think is telling in that they're unhappy with the pace at which structural reforms are happening. That means the rate at which state-owned enterprises, for example, are reformed in order to lead growth as it has been argued that they have potential to do."

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Statements by both the finance minister and cabinet on the recession are seen as scant on details of an economic recovery plan, merely highlighting the need to build confidence.

That's something almost everyone agrees on, but it's easier said than done, especially in the post-cabinet reshuffle environment.

Enoch Godongwana, chairman of the ANC economic transformation committee, says: "For instance, if you look at the rating agencies, they've always been saying to us, 'Look, your numbers don't look good. So your growth story is not good. But we've got trust in your institutions, see what I mean.' Once then you interfere with those institutions, trust disappears. So that's one of the impacts of the cabinet reshuffle. What it did, it did impact on that part, it's an own goal in that sense." 

Econometrix chief economist Azar Jarmine agrees.

"We need to just generally improve the trust deficit between the government and business, which lies at the heart of the lack of investment in the country. And, above all, we need to make inroads into state capture and corruption, because, unfortunately, we're in a situation right now where whatever the minister says there is going to remain scepticism about whether or not he is truly independent and not captured by certain interested parties."

For his part, the president referred to the recession in broad terms and in passing last week, saying South Africans function best during such a crisis.

Whether this pep talk is backed by any concrete, implementable plans will hopefully become clear in the coming days.