You can also listen to this podcast on iono.fm here.
JEREMY MAGGS: President Ramaphosa has appointed Michael Sachs, a pivotal figure in South Africa’s post-apartheid budgets and former National Treasury budget chief, as his economic advisor.
This decision has been largely embraced by the business community as a sign that fiscal responsibility and economic reform may be re-emerging within government.
Read: Ramaphosa selects former treasury budget chief as economic advisor
But will this appointment truly change the economic course, or is implementation, as I suspect, the real challenge ahead? Let’s explore this further.
I’m now joined by Martin Kingston from Business for South Africa. Martin, welcome. What is the most significant message the president is sending by appointing Michael Sachs?
MARTIN KINGSTON: Thank you, Jeremy. Michael is a highly respected figure within the business community, recognized nationwide and in the investment sector.
During his time at National Treasury, he excelled in budgeting responsibilities, and many have felt his absence since his departure.
We are glad to see him return as a crucial advisor to the president.
I believe he has a comprehensive understanding of the challenges our country faces and the solutions that need to be implemented.
His close relationship with the president will certainly empower him to shape economic policy in the coming months.
ADVERTISEMENT
CONTINUE READING BELOW
As you pointed out, it’s not just about policy; execution is critical too.
We have initiated discussions with Michael concerning our collaboration with the government, and we aim to accelerate our efforts. I hope he shares our focus on many of the same interventions.
JEREMY MAGGS: Is this merely a savvy political move, or does it signify a shift in the government’s economic perspective?
MARTIN KINGSTON: I believe it reflects a progression rather than a complete change. There is a current recognition of the need to balance our budget – which the Minister of Finance Enoch Godongwana and the Director-General have consistently emphasized – along with a commitment to implementing structural reforms that utilize our competitive advantages.
As a nation, we have not adequately addressed the barriers to truly inclusive growth.
In my opinion, Michael understands these concerns well and recognizes the importance of mobilizing private sector resources whenever possible.
JEREMY MAGGS: Do you think this appointment bolsters the position of reform advocates within the government, or do they remain underrepresented?
MARTIN KINGSTON: No, I believe our experiences over the past three years of economic collaboration illustrate a shift towards reform, which many in parliament and the government support.
Michael’s appointment indeed reflects the urgency to enhance and expedite these efforts, rather than indicating resistance within the system.
It’s also important to note that the president has been without an economic advisor since Trudi Makhaya’s departure approximately three years ago.
Read: Job creation in SA: the president’s advisors discuss what it will take
Thus, this appointment is both timely and essential, highlighting a deeper commitment to reform.
ADVERTISEMENT:
CONTINUE READING BELOW
JEREMY MAGGS: Realistically, how much influence can an advisor hold if the difficult political decisions still lie with the cabinet?
MARTIN KINGSTON: Advisors can wield significant influence. We’ve seen this with Dr. Alistair Ruiters, who has been essential not just in bilateral relations but also in driving investment and removing critical barriers within the system.
Advisors have the ability, flexibility, and sometimes autonomy to act effectively.
When someone like Michael Sachs, who has strong connections with key decision-makers in cabinet and the presidency, comes on board, we must not underestimate their potential impact on attaining critical outcomes.
JEREMY MAGGS: What should be his initial focus? Fixing public finances, promoting investment, or accelerating reforms?
MARTIN KINGSTON: I hope he prioritizes strengthening public finances. Recent remarks from the Minister of Finance regarding the City of Johannesburg underscore an urgent crisis that needs urgent attention.
Municipal financial reform should be a high priority, particularly concerning the issues faced by Johannesburg. The business sector is ready to collaborate if the conditions are favorable.
That definitely must be one of the essential focuses.
Another vital area is the ongoing challenges surrounding state-owned enterprises and municipalities in general. I am confident he will closely examine these matters, working in collaboration with National Treasury and all branches of government to confront these challenges.
Listen/read:
Only 39 municipalities receive clean audits – AG report
Cronyism within key municipalities hampers major business – BLSA
South Africa’s economic future is shaped at the municipal level
As you mentioned, hastening structural reforms and facilitating discussed interventions with the government must also be prioritized.
JEREMY MAGGS: Unquestionably, ratings agencies will react positively to this.
ADVERTISEMENT:
CONTINUE READING BELOW
MARTIN KINGSTON: Absolutely. We’re already observing a positive response from rating agencies regarding our advancements. They acknowledge that it’s neither quick enough nor extensive enough. Nevertheless, someone like Michael joining the team will certainly enhance their confidence that our progress will be both accelerated and diversified.
Over time, I am optimistic we will see improved feedback from the ratings agencies if we continue on our current path.
JEREMY MAGGS: Do you think this appointment is also aimed at helping the president create a legacy before he leaves office?
MARTIN KINGSTON: I hope that whether it’s the current president or his successor, the positive trend continues.
Deepening ongoing reforms and establishing a coherent fiscal policy will form part of President Ramaphosa’s legacy when he eventually leaves office.
Read/listen:
However, we need to embed this approach more broadly within the cabinet and in our national macroeconomic strategy. If we are able to achieve this over the next year or two, it will indeed be part of the legacy that President Ramaphosa can leave behind.
JEREMY MAGGS: To wrap up with a classic expression, you can’t manage what you don’t measure. What kind of changes should investors and businesses look forward to over the next year if this appointment is successful?
MARTIN KINGSTON: As you know, and we’ve discussed previously, it’s essential to track our progress regularly and transparently.
Listen: 60% unemployed: Why young South Africans still can’t get a foot in the door
I believe if we can demonstrate a gradual increase in GDP, address unemployment, and boost fixed investment levels, these will be vital indicators of our progress.
JEREMY MAGGS: Thank you very much, Martin Kingston.
