Ex-deputy finance minister David Masondo optimistic on economic policy reforms under SA's GNU

Former deputy finance minister David Masondo, previously tasked with spearheading structural economic reforms under the previous administration, is calm and optimistic about policy continuation under a Government of National Unity (GNU). 

Although Masondo’s ANC will dominate the next government, with the party securing 40% of the national vote, there are no guarantees that the pending pro-growth and investment reforms will continue or accelerate in their implementation. 

After all, it is yet to be seen whether the 10 political parties that are signatories to the GNU — each with differing ideologies on how to manage the economy — will be able to work together. 

The worst-case scenario would be a gridlock in policy implementation, constant infighting, reversal of recently achieved milestones in energy and logistics sectors, and regression in service delivery. 

Masondo doesn’t see this dire scenario playing out.  

“My optimism is based on the fact that President Ramaphosa will still be the president of whatever government arrangement we are going to have. The president is determined to get the reform agenda going forward. I’ve worked with him, and under his leadership, I’ve seen him taking very decisive decisions,” Masondo told Daily Maverick. 

Masondo’s optimism goes beyond Ramaphosa. It is also rooted in the statement of intent that was signed by the 10 parties that have thrown their weight behind the formation of the GNU and outlines their commitment to, among other things, good governance, respect for the Constitution, and accountability.

Read more in Daily Maverick: The GNU must put people’s interests first, not tussles over positions or party squabbles

The DA was the first of the parties to sign the statement of intent with the ANC. Since then, they have been joined by the IFP, Patriotic Alliance, Good, PAC, Freedom Front Plus, UDM, Rise Mzansi and Al Jama-ah.

“If you read the GNU statement of intent, the reform agenda is there. Structural reforms and transformation are right there as one of the strategic intents. The parties that have joined the GNU are willing to accelerate the structural reforms,” Masondo told Daily Maverick on Tuesday on the sidelines of a conference hosted by SA-TIED and the Presidency.

At 49 years old, Masondo is considered one of SA’s up-and-coming ministers, serving as deputy since May 2019, initially to former finance minister Tito Mboweni, who was later replaced by Enoch Godongwana.

Masondo, a former national chair of the Young Communist League of SA with left-leaning ideas on managing the economy and public finances, is frank about the government’s failed attempts to reform the economy.

In an interview with Daily Maverick nearly four years ago, Masondo attributed the government’s failures to, among other things, technical difficulties in implementing reforms, “lengthy legislative processes, a lack of capacity in some departments and agencies, conflicting political considerations and, in some cases, a lack of buy-in and the need for further consultation”.

Read more in Daily Maverick: SA Inc turnaround: Masondo seeks that implementation groove

Arguably, his diagnosis is a case of stating the obvious, but it’s also candid considering that his peers in the government often blame the private sector or legacy issues for ongoing failures relating to economic reforms and good governance.

While financial markets and investors await Ramaphosa’s Cabinet under a GNU, it is expected that Godongwana will continue in his position. It is unclear if Masondo will make the cut. 

Masondo and Godongwana had already begun the work to stabilise public finances and wean state-owned enterprises such as Eskom and Transnet off taxpayer-funded bailouts. They also threw their weight behind reforms in the energy and logistics sectors.  

Masondo said he was in the dark about his fate in the public sector and was awaiting Ramaphosa’s Cabinet announcement. 

There are those in business circles who hold Masondo in high regard and anticipate his return to the finance ministry.

“He is measured and has done well in pushing through reforms that are key to economic growth and boosting private sector investments,” said one analyst close to the business and public policy communities. 

As the former deputy finance minister, Masondo headed Operation Vulindlela, a joint initiative between the Presidency and National Treasury that sought to support and motivate government departments to change the fabric of the economy by implementing several pro-growth and investment reforms.

Operation Vulindlela lobbied for reforms that would reduce the cost of doing business in SA and promote productivity and competition by increasing the role of the private sector in all areas, including energy, telecommunications, logistics and others to lessen the state’s power over the economy. Since its inception in October 2020, it has notched up some wins.

After 18 years of inaction, digital spectrum was auctioned, regulatory changes were made to open up the electricity market to renewable energy sources, the backlog for water-use licence applications was cleared, and Transnet is embracing the private sector as a partner to fix its rail and port network. This is important as the ANC has long been distrustful of the private sector and pushed for policies that exerted state control over the economy. 

Masondo, who also serves on the ANC’s national executive committee and the economic transformation committee, is pro-private sector collaboration. He said Operation Vulindlela had bridged the long-standing divide between the public and private sectors. 

“I think the level of trust and collaboration between the private sector and the state has significantly increased. That was enabled by President Cyril Ramaphosa,” said Masondo. 

It is now up to the GNU to continue with the reform agenda. 

The potential for SA’s economic development is promising, according to a model presented at the SA-TIED and the Presidency conference by Craig Lemboe, a deputy director of the Bureau for Economic Research (BER). 

Lemboe said the BER’s model predicts that SA’s economy is expected to grow at a baseline average of just under 2% in the next five years. However, growth could lift to 3.5% by 2029 if Operation Vulindlela reforms are further accelerated. DM

*Masondo is the ex deputy finance minister because the sixth government administration has ended. The seventh administration is yet to be formed.