Finance Minister Malusi Gigaba.
Cape Town – Current Finance Minister Malusi Gigaba is the “biggest enabler” of state capture, according to Business Leadership South Africa CEO Bonang Mohale.
Mohale was speaking at the launch of Business Insider South Africa on Friday, where he offered advice to new President Cyril Ramaphosa.
“Root out state capture. The numbers are stupendous,” he said. “This Gupta family siphoned on average R100bn a year every year for the last 10 years.”
Mohale explained how the Guptas had been carrying out the state capture project over many years, and that it manifested through the repurposing of state-owned enterprises (SOEs) to benefit two families.
A weak and parallel governance system was created. “You get rid of the good guys, so that we ‘stuff it up’ with bad guys. That is why the current minister of finance has been the biggest enabler of state capture.”
Gigaba was confronted with questions by media this past week about his future at Treasury. He said multiple times that he serves at the pleasure of the president, who ultimately makes appointments and removes ministers.
Mohale went on to call out Gigaba’s poor track record while he was the minister of public enterprises. During his tenure, chairpersons and CEOs of SOEs were decided in Saxonwold by “visitors”, said Mohale.
Recalling the Guptas’ efforts to take the final prize by capturing Treasury, Mohale explained that they tried to influence former deputy finance minister Mcebisi Jonas, who blew the whistle when the Guptas tried to bribe him with R600m to sack Treasury’s director general and take the position of finance minister.
Other suggestions for Ramaphosa included fixing the state of SOEs. “The bailouts we have given in the last five years amount to 0.8% of GDP,” said Mohale.
Speaking only of Eskom, Mohale described how the power utility, which is R471bn in debt, has already used R295bn of the R350bn worth of government guarantees allocated to it.
The fact that it had to approach the Public Investment Corporation for a R5bn lifeline to continue doing business for February demonstrates what bad shape SOEs are in, said Mohale.
“Government has no business in running these award-winning African errors,” he said.
During the State of the Nation Address last week, Ramaphosa announced his commitment to stabilise SOEs.
The president will set up and chair a State-Owned Company Coordinating Council, which will be responsible for “high level strategic direction” of SOEs. He also plans to effect changes to the ownership model of SOEs and the appointment of board members.
Venture capitalist Michael Jordaan, who was also at the breakfast, advised Ramaphosa to privatise and sell SOEs to black-owned companies to bring about transformation.
“Putting more money behind badly-run SOEs is complete folly,” he said. Government should get rid of SOEs and prove that they can do a good job in delivering basic services like health, education and safety.
Reduce bloated government
Mohale also proposed that Ramaphosa reduce the size of the “bloated” government. More people were employed in the public sector under former president Jacob Zuma’s administration because it was crucial for votes.
“Now we have to retrench at Eskom. We have to retrench at SAA,” he said. “As painful as it is, it’s like pruning a plant. You have to cut and prune a few leaves to grow. If it does not, it will die.”
If government gives public sector employees an inflationary increase instead of the 7.3% being demanded, it will raise R20bn, he added.
He also called on the president to include society – labour, communities and civil society – on a policy making level. “Then we will know we are on a sustainable path.”
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