PROFILE

MEET YOUR NEW MINISTER OF FINANCE: ENOCH GODONGWANA

Minister Godongwana highlighted the need for stepped-up structural reforms, bettering the local government system, and paying down debt, while retaining a pro-poor budget

Mr Enoch Godongwana was appointed Minister of Finance of the Republic of South Africa on 5 August 2021. He holds an MSc degree in financial economics from the University of London and is a member of the National Executive Committee of the African National Congress (ANC) since 1997.

Godongwana was born in Cala in the Eastern Cape and matriculated from St John’s College in Mthatha. He started his career in the trade union movement, first as a shop steward in the Metal and Allied Workers’ Union in 1979 and later as an organiser for the National Union of Metalworkers South Africa (Numsa).

By 1994, he was general secretary of the union and served on the executive of Cosatu.

After graduating in 1998, he entered politics, becoming the Eastern Cape’s MEC for provincial treasury, economic affairs, environment and tourism from 1994 to 2004.

In government, Godongwana served as the Deputy Minister of Economic Development, Deputy Minister of Public Enterprises, Member of Parliament, Member of the Eastern Cape Provincial Legislature, and a Member of the Executive Council in the Eastern Cape responsible for finance, economic affairs, environment and tourism.

MEDIUM-TERM BUDGET POLICY STATEMENT

In his very first Medium-Term Budget Policy Statement in November of 2021, Minister Godongwana underscored SA’s debt-service costs problem, and the need for stepped-up structural reforms. The minister put forth that a permanent solution in responding to these challenges is to achieve high and sustained levels of economic growth. To that end, the new finance minister is continuing on the path set forth on by his predecessor that leads towards reining in expenditure and paying down South Africa’s R4.3-trillion debt. Already 21 cents of every R1 collected for tax goes to debt-service costs.

The minister reminded his audience that government spending is pro-poor, as just short of 60% of consolidated non-interest government spending, or R1.06-trillion, goes to the social wage, which includes subsidised housing, education, public health and employment programmes. He made mention of pension reform to allow hard-hit workers to withdraw at least some of their funds – this has long been a union demand – and soon-to-be-published proposals to boost flexibility by allowing partial access in a “two-pot system” once required legislative changes are approved.

The minister also highlighted a series of discussions since August 2020 to ensure a better local government system. Substantive changes are required to improve municipal capabilities, he said. The review proposed a new framework to build a capable local government by improving the current system incrementally and identifying pilot sites for innovation and experimentation.

At the time that the Medium-Term Budget Policy Statement was made, South Africa’s numbers were looking up. Tax collection was boosted by R120.3-billion, predominantly through a mining tax windfall. South Africa’s gross domestic product (GDP) growth is forecast at 5.1% for 2021, settling at 1.8% in 2022 and 1.6% in 2023. The 2021 Budget deficit stands at 7.8%. Gross debt is 69.9% of GDP in 2021, or R4.31-trillion, growing to 77.8% of GDP in 2022.

“We welcome this. It’s a pro-poor Budget,” said ANC national spokesperson Pule Mabe in response to the speech.