It hasn’t taken new Finance Minister Malusi Gigaba long to stuff an elegantly shod foot in his mouth – and he did so in a spectacular way.
Addressing the vexing issue of the controversial nuclear build programme – Gigaba maintained it is still firmly on track – but the minister admitted that the question of affordability had yet to be determined.
It doesn’t need nuclear physics to understand that in our economy’s present straitened circumstances, the simple answer is we cannot possibly embark on a programme that requires guarantees of R350 billion. So the affordability issue should never have been raised at this juncture as central to the debate.
That figure equates to a staggering 7% of the country’s estimated gross domestic product for 2017. Recent history also tells us it will undoubtedly balloon as hold-ups, mismanagement and corruption arrive to claim their respective shares of the action, turning any predictive spreadsheets into so much shredded waste paper.
Standard & Poor’s decision to downgrade the South African economy to “junk” status – not, we would add, anything to do with Gigaba, other than that he agreed to fill the Cabinet seat so hastily pulled out from under Pravin Gordhan – has placed centre stage the viability of state-owned enterprises as one of the major concerns in deliberations.
“We estimate Eskom will have used up to R300 billion of this framework by 2020,” was the S&P estimate.
Add to this a warning from outgoing Treasury director-general Lungisa Fuzile that even though Eskom is the procurer of the nuclear build programme, if the power utility defaults on its debt, it will still be the responsibility of the public to foot the bill.
The way Gigaba should have approached the nuclear conundrum is to have raised the unaffordability of the exercise. But then he admits he just follows orders.