gordhan faces tricky task in first 100 days

BIG business in South Africa and abroad has welcomed the appointment of Pravin Gordhan, former chief of the South African Revenue Services, to the position of Finance Minister.

This is largely because of the general assumption that Gordhan and his predecessor, Trevor Manuel, are cut from the same cloth.

But Gordhan walks into office during difficult times, made worse by the global economic crisis and the dominance of leftists in President Jacob Zuma's cabinet.

The business community is keen to know whether he will be as forthright as Manuel was in resisting pressure from left-leaning organisations - Cosatu and the SACP - which are part of the ruling alliance with the ANC.

Under the current administration, the left-leaning organisations have increased their efforts to force the SA Reserve Bank to do away with its inflation targeting policy to stimulate economic activity on the lower rungs of society and the so-called second economy.

Gordhan's tendency to wink at suggestions that there is room to discuss the future of current economic policies, including inflation targeting, has left big business cringing and concerned.

So it is worth wondering what will be in Gordhan's in-tray during his first 100 days in office.

In his first two weeks on the job, the minister spent the better part of his time defending his premature position on inflation targeting.

"Inflation targeting is our policy and it will remain like that, "he said

"What is often misunderstood is that debating something does not mean changing it.

"Around the world, there are discussions around inflation targeting and we are saying we as South Africans should also engage in this discussion.

"The discussion is in the public domain but it's important as government to ensure that we are sensitive to the concerns of various stakeholders in our country.

"Engaging is an important new quality that President Jacob Zuma wants all of us to be able to demonstrate so that people feel they are part of an inclusive process."

With a background that includes playing a major role in the ANC underground struggles, being a member of its intelligence force while Zuma was the ANC chief of intelligence in the late 1980s, it is worth wondering whether Gordhan will be pressured by Cosatu and the SACP to shift focus slightly left.

He recently told Summit TV that Cosatu and the SACP have a right to make their views heard.

"I think its early days. What we must still emphasise is that the left has as much a right as the right, if there is such a thing, to express their point of view and if either side gets their way, then the other is actually going to complain.

"But I think it's important that South Africans and business distance themselves from these tags because they are not helpful.

"Some years ago I was called a terrorist because I opposed the apartheid government, does this mean I'm still a terrorist today?

"To answer bluntly, there is no pressure from the left at the moment."

In that interview, Gordhan said he and Manuel came from a similar struggle background.

"But, my immediatepreoccupation is to ensure that we continue with the good work Manuel has done and that we enable the government and people of South Africa to survive this crisis as best we can.

"We also want to manage the fiscus in a way that ensures we continue with economic stability."

As South Africa sinks deeper into a recession, Gordhan says there are encouraging signs because the country is not in as bad a situation as the economies of the US and UK.

In terms of saving jobs in an economy that shed 208000 jobs in the first quarter of the year, he suggested the government could use the Unemployment Insurance Fund to intervene where companies have no option but to cut jobs.

"We will start looking at the UIF and other similar resources to see where we can make interventions.

"Some of these things have been discussed in Nedlac meetings and the presidency process and we will be taking ownership of this space."

Because the economy has shrunk by 6,4 percent in the first quarter, Gordhan has called for a new entrepreneurial spirit to lead the recovery of the economy in the last quarter of this year.

"We need a better entrepreneurial spirit in South Africa, we need more people who are prepared to take risks and create small businesses and create employment.

"The second concern is the job question and we are going to see more engagement between the ministers in the finance cluster around how do we create jobs and which economic policy choices we make.

"The third, to manage our own situation within this crisis in a way in which we remain least worst-off and we minimise the damage to jobs and to our people in South Africa."

For big business, Gordhan said the government remained committed to retaining the current economic policies.

His first three months in office will be judged by how big a difference government's R787billion economic stimulus makes towards ensuring less jobs are lost and that there are signs of an economic rejuvenation by Christmas. So far, the big promise from Gordhan is that government "will find creative ways of funding the government's programme".