Tutwa’s first Webinar Series of 2022: Capacity-Building Webinars on Industrialisation and the  AfCFTA

Tutwa’s first Webinar Series of 2022: Capacity-Building Webinars on Industrialisation and the AfCFTA

AUDA-NEPAD, with support from JICA, commissioned Tutwa to conduct Capacity-Building Webinars on Industrialisation and the African Continental Free Trade Area (AfCFTA). The webinars aimed to create momentum on dialogue around industrialisation in the context of regional integration and intra-African trade. Three Webinars were held on 26 February, 3 March and 10 March, marking Tutwa’s first trade event of the year.

The webinars drew experts from various organisations, with participants hailing from most African countries and some international ones too. They included participants from the private sector, public and regional economic communities across the continent. Within the context of industrialisation, the webinars considered a range of topics focusing on policy-making and trade facilitation; the role of FDI and linkages to local economies; with a final session drawing on practical case studies of African countries’ readiness for the AfCFTA and ASEAN (The Association of Southeast Asian Nations) FTA agreement experience.

Through the numerous back-and-forth attempts to find speakers and send interviews into the stratosphere, our goal was always to have maximum impact. In just one month, I had learned the intricacies of Zoom webinars, how to embed a survey and how to extract attendance reports on zoom. I had built relationships with the graphic designers and various panelists and experts that I’m sure we will continue to rub shoulders with in future. After weeks of planning, and assisted by efficient Zoom Masters Marco and Cindy Jacobs, we were finally able to get the webinars off the ground.

The webinars featured keynote speakers that gave some opening and closing remarks on the work underway. These distinguished guests included AUDA-NEPAD’s Mr. Amine Idriss Adoum, the Director of Programmes Management and Delivery; JICA’s Mr. Minoru Honma, the Chief Representative of South Africa; the AfCFTA Secretariat’s Ms. Demitta Gyang, Head of Customs Cooperation, Trade Facilitation, and Transit; Dr Bernice McLean, Ag. Head Industrialisation Division at AUDA-NEPAD; with Mr George Murumba from AUDA-NEPAD closing of the last webinar.

Webinar 1: Trade Policy and Trade Facilitation was facilitated by Tutwa’s Catherine Grant Makokera and introduced participants to the trade policymaking process and how it is linked to industrialisation objectives in African countries. It outlined the policy-making cycles and introduced ideas about how trade agreements are domesticated, including through industrial policy tools. It further outlined the role of various stakeholders, including the private sector and civil society organisations in the trade policy formulation process. Speakers included Dr. Francis Mangeni, Head of Trade Promotion & Programs, AfCFTA; Ms. Demitta Gyang, and Dale Mudenda, from the University of Zambia.

The webinar also outlined the components of the trade facilitation agenda, including as set out by the WTO Trade Facilitation Agreement, relevant regional free trade agreements, and the AfCFTA. Participants were exposed to the views of the private sector on trade facilitation challenges to develop a broad understanding of the impact on business from a panel that included: Mr. Elisha Tshuma, a Customs, Tax, and international Trade Advisor; Dr. Richard Adu-Ggyamfi, a Small and Medium-sized Enterprise and Trade Expert; Mr. Tulo Makwati, Coordinator of the SADC Business Council; and Mr. Ziad Hamoui from Borderless Alliance in West Africa.

Webinar 2 was facilitated by Tutwa’s Judy Smith-Höhn and focused on the role of FDI and linkages with local industries, looking at the importance of phase II negotiations of the AfCFTA to support industrialisation. It introduced participants to the developments and changes around globalisation, regional integration, and its links to industrialisation. It outlined the renewed call for localisation and what this means for regional integration and industrialisation in the African context; while also highlighting the need for innovation, digital transformation and technology transfer. Experts unpacked how investment can support the AfCFTA and its linkages to local economies. There were presentations from Dr. Laura Páez Heredia, the Chief Market Institutions, Regional Integration, and Trade Division at  UNECA; Ms. Treasure Maphanga, Director at the African Electronic Trade Group; and Dr. Richard Adu-Ggyamfi, a Small and Medium-sized Enterprise and Trade Expert.

The second webinar also featured a panel with Mr. Tambe Oswarld, CEO of the Cameroon Intellectual Property Awards Association, and Legborsi Nwiabu, Esq. a Trade Lawyer and Private Sector Specialist who highlighted experiences from RECs and African organisations involved in phase II issues, with a particular focus on intellectual property rights. Mr. Victor Djemba, Chief, Regional Division Africa at UNIDO, provided some feedback on the webinar and its importance in influencing the industrialisation agenda.

I facilitated the last webinar on The AfCFTA and Member States, which introduced participants to the developments around the AfCFTA taking place and how it is linked to industrialisation objectives in African countries. It outlined how national governments can align and domesticate the objectives of the agreement towards ‘national AFCFTA strategies’ to ensure effective implementation. This was presented by Mr. Cham Etienne Bama, a Senior Trade Policy Advisor.

What was beneficial from a grassroots perspective, according to feedback from participants, were the case study presentations. The first case study presentation was by Dr. Aladdin D. Rillo, a Senior Economic Advisor for the Economic Research Institute for ASEAN and East Asia. He highlighted the evolution of ASEAN and its current initiatives, including the various FTAs that it has established with dialogue partners. He pointed to the challenges, successes and lessons that African countries could learn from the ASEAN integration process. The Nigerian case study by Dr. Adebayo Adedokun, from the Department of Economics, University of Lagos, and the Cameroonian case study by Dr. Manfred Kouty, a Lecturer, Trade Policy and Trade Facilitation Expert, educated participants on how these countries’ government institutions, private sector formations and other stakeholders have prepared and readied themselves for the AfCFTA.

As we evaluated the webinars, I believe we achieved the maximum impact we were aiming for. We had good audience participation; the first webinar had over 100 participants online for the entire duration of the session. Those who are all too familiar with zoom fatigue will know that this is a solid achievement for a 3-hour session. Similar levels of active participation were achieved for the two other sessions. The positive responses received from webinar participants are a testament to the commitment of the Tutwa and AUDA-NEPAD organising team, supported by JICA. Moreover, the feedback we received indicated an appetite for continued engagement on this particular topic. My/Our hope is that this is but the beginning of fruitful engagements that seek to address the challenges of industrialisation in Africa through programmatic interventions in support of the AfCFTA.

*Click on the links to access the information from the webinars: Webinar presentations; Recordings for  Webinar 1Webinar 2;  Webinar 3.

 

A natural transition to gas – reflections from the Africa Energy Indaba

A natural transition to gas – reflections from the Africa Energy Indaba

Anna Ngarachu

I attended the annual Africa Energy Indaba, two weeks back, which brought together key experts from
private and public sectors and other interested participants to talk about the next steps for Africa’s
energy transition, as well as networking and exhibitor, displays all packaged very well on a virtual
platform.

Luckily, there was no stage 2,3 or 4 load-shedding that week (on my side) but what an irony it is that
we still have to focus on powering Africa to participate in virtual platforms that enable us to, in fact,
‘Power Africa’. Overcoming the energy deficiency issues was mentioned at the SONA, with some
specific mentions on the way forward for government:

“Over the last year, we have taken action to urgently and substantially increase generation capacity
in addition to what Eskom generates… The Department of Mineral Resources and Energy will soon
be announcing the successful bids for 2 000 megawatts (MW) of emergency power… Government
will soon be initiating the procurement of an additional 11 800 MW of power from renewable
energy, natural gas, battery storage and coal in line with the Integrated Resource Plan 2019.”

The bidding for emergency power is likely to call for liquefied natural gas (LNG) imports and the
mention of natural gas highlights its strategic importance in South Africa’s energy mix. This could not
be timed more aptly, in light of South Africa headlining its gas finds by Total in February 2019 at
Brulpadda and 2020 in Luiperd (both located off the shore of Mossel Bay on Block 11B/12B in the
Outeniqua Basin). Total predicts that the potential for the discovery of the net gas could hold 1.5 to
3 billion barrels.
Tutwa’s interest has be

en in understandings South Africa’s gas industry, and the Gas Forum at the
Energy Indaba provided some insightful takeaways.

Most African countries, for a variety of reasons, lack power – be this the long, ongoing droughts that
affect hydroelectric power, or the bad policy planning and historic coal-driven industries. There is
now a thorough understanding that a thriving economy cannot be built without a stable energy
supply – for households, industry, and transport. Moreover, this energy stability will need to
transition to cleaner, greener sources in line with international protocols to which South Africa has
signed up, such as the Paris Agreement.

An immediate shift away from fossil fuels may not be realistic for Africa; where the major source of
fuel for many Africans is still wood. Africa will need to find localised means to deliver its
development needs, including its re-industrialisation and in how it will utilise energy technologies
and delivery solutions in a phased transition.

Renewables are well suited for this point of transition, and natural gas – while decidedly a fossil fuel
provides an interim solution to a full green transition. Natural gas is a cleaner-burning fuel than the
current higher polluting alternatives. Gradually eliminating more polluting fuels, while allowing more
people to gain access to energy, is both an environmental and ethical decision. Therefore, natural
gas will play a bridging role to renewables, for however long that bridge may be.
For South Africa, the current focus by government looks at a three-step approach: importing LNG
from the globe, then from the region, and thereafter tapping into its own gas reserves.

To tap into its gas reserves requires monetisation which is challenging. The reality is that without
capital investment, particularly private capital, these Total finds could remain ‘dead in the water’.
Also, the gas extraction may be viable but may come in too late, as it will take 10 years or so to
develop and thereafter, to see returns. With global developments shifting towards greener sources
of fuels, the gas prospects may remain unrealised.

Infrastructure constraints present another hurdle for the country as it does not have a massive gas
infrastructure network of pipelines to transport gas to various supply nodes. I learnt, at the Indaba,
that pipelines also don’t need to be mutually exclusive to other solutions – using ships, rail and road,
known as “virtual pipelines” could be an option for the country to transport imported LNG to various
supply nodes in the country. So ultimately, there is a chicken and egg scenario to beat; where you
need the market to develop the gas fields but then you also need the gas fields to develop the
market. Small-scale options like virtual pipelines may assist to build a market for gas in a step-wise
fashion.

The infrastructure invested to transport natural gas should also be fit for purpose for renewables
later on, including for a hydrogen gas economy, dubbed the next greener gas alternative in the not-
so-distant future.

Natural gas will make a significant dent in the industrial sector, especially towards reducing their
power costs and by ensuring efficiently run operations. Using compressed natural gas to fuel
vehicles offers another array of benefits; especially long-haul trucks. The running of large hospitals
will see benefits through combined heat and power (CHP) systems that generate power onsite.
Natural gas development will also boost the development of the chemicals industry. The gas
network is, unfortunately, not set-up to supply natural gas to households en-masse (especially those
in rural areas), so this may be a long-term option, if at all.

There is a timing issue, however, with the trajectory of global developments. Gas has an immediate
opportunity within the next 5-20 years; and beyond that, it gets hazy, due to global greener
developments and policies. Policy windows for investors are also closing for developing countries,
and developing countries may be caught in between and become subject to developed countries’
policies around renewal energy sources. However, natural gas has an immediate opportunity today,
including in South Africa.

It’s time to willingly take the red pill

It’s time to willingly take the red pill

The post-2009 era is characterised by several events that include the Zuma-era patronage, consistent – sometimes late-night – cabinet reshuffles, the State Capture years, crumbling state institutions typified by the rot in SOEs and weak law enforcement agencies. This era represented the height of State Capture. What is synonymous with this period is how the path outlined by the ruling party was presented to the citizenry through its so-called ‘the second phase of the transition’ policy which is mainly anchored in the concept of a developmental state. The Zuma years, a period which did the country no favours, appears to be one in which the government had deliberately or ignorantly thrown wool over our eyes, forcing us to take the blue pill and ride the wave of promised reforms.

Reflecting on where the nation is in 2020 and before Covid-19, it is a no brainer that the country was already going downhill before pandemic struck. The onset of Covid-19 cannot take all the credit for the predicament we find ourselves in. What Covid-19 has done is to expose and exacerbate the cracks. The poor Aloe Ferox has fallen on hard ground and consequently is being swallowed up by the cracks. Some may argue that it is “drought-resistant”, but I leave that to you to decide.

The pandemic is like the red pill that we were all presented with to take a hard look at what is at stake. What got us here was mainly the delay in implementation of reforms, as a result of institutional capacity decay, which ultimately set South Africa on its fateful trajectory. Now, if you’ve been keeping tabs since 2009, you must be familiar with this choice; and apologies for the cliché. The country (government, private sector and the citizenry) needs to willingly take the red pill and wake up to the fact that reforms must be implemented now.

Socioeconomic challenges continue to plague the country and that is why these reforms are needed. Gross inequality, a history of exclusion, excessively high unemployment, poor education standards, poor service delivery and skills shortages, to name a few, reflect the country’s structural challenges that inhibit inclusive growth. Economic policy uncertainty and lack of implementation capabilities are some of the major challenges that undermine the government’s ability to undertake bold economic reforms towards inclusive growth.

While the MTBPS – which was supposed to provide a clearer picture on the resource allocation for the Economic Reconstruction and Recovery Plan (ERRP) – lacked the necessary detail on how the ERRP will be funded, it offered some insights on the intention to walk the fiscal consolidation path (an attempt to reduce debt and expenditure).

Even though the MTBPS made it clear that the debt-to-GDP ratio is spiralling out of control and gave a much grimmer projection of the 2020 economic contraction in comparison to the June 2020 budget i.e. 7.1{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} vs 7.8{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1}, it still gave a more optimistic projection than the OECD estimate of an 8.2{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} contraction. Key to note is the slippage on debt. Authorities must arrest rising debt, otherwise, the country will be unable to finance its budget deficit. Currently, SA’s debt burden is escalating faster, with interest rate growth outstripping economic growth. The concern, however, is the debt which does not generate economic growth. Debt incurred towards things that spark economic recovery may be a better option than advancing fiscal consolidation with no clear plan on how the government intends to raise its revenue besides over-burdening citizens with taxes. With the 2.2 million jobs shed in the second quarter already, revenue-raising measures from an already shrinking tax base is concerning. This means that SA will still be forced to borrow to sustain certain basic and social provisions, which will not aid the economic resuscitation efforts.

According to Michael Sach’s latest paper on “Fiscal dimensions of SA’s crisis”, he attests that the dynamics of debt are driven by interest rates, growth and the primary budget surplus – the budget excluding debt costs. The primary budget surplus is said to be politically driven meaning that it depends on political will whether taxes are imposed or whether expenditure cuts are made. Therefore, the primary surplus needed to ensure the debt is stabilised, is not feasible due to political reasons, meaning a debt crisis is imminent. The best option is the restoration of private sector investment to boost economic growth enough to reduce the debt burden. This would mean improving confidence in the economy, policy consistency, affordable borrowing costs, and improvement in doing business reforms for instance. Either way, the looming debt crisis is expected to drive policymaking for the next 5 – 10 years.

Monetary policy reforms are also needed to reduce financial instability as this can have serious fiscal consequences. As elaborated by Nombulelo Gumata from the Wits School of Governance, what the post-2009 developments have shown is that focusing on inflation as a stabilising mechanism may not be sufficient condition for macro-economic stability and robust employment growth that leads to reducing the unemployment rate in a sustained manner. This is evident because price stability and financial stability are not the same as was witnessed by the GFC. What this means for the SARB is there is a need to have a specific financial stability mandate. “We need a different approach to solving the current economic challenges and policy co-ordination lies at the centre of this approach.” Gumata’s suggested approach has been adopted by countries like Malaysia, the Czech Republic and Singapore for example; and since 2009 there have been various changes in many country’s central banks’ laws relating specifically to their financial stability objectives.[1]

The kind of policy coordination required to drive the country out of this mess rests on a capable state. It requires the bureaucratic competencies within the state to be enhanced and proper alignment of policy programmes across different departments and spheres of government. This also necessitates for appropriate policy instruments to be designed for desirable policy outcomes.

The lack of capacity within the state has been laid bare at the State Capture Commission through testimonies of various witnesses. While most testimonies are based on SOEs, the rot and weakness extend to other state institutions. The SAA that Mboweni decided to fund once more is in the current predicament because of incompetence and pure thuggery. The continued funding of SAA and other SOEs, despite their poor performance, is reflective of a public service that has to be perpetually funded while serving South Africans incompetence. This is also reflected by the rising employment numbers in the public service and rising public wage bill while service provision is deteriorating.

While officials ought to be fairly and competitively remunerated, South Africans cannot continue to fund incompetence, year in and year out. It is expected that the proposed wage freeze for the next three years in the MTBPS will set government and labour unions on a collision course. This will be fuelled by the government’s hesitation to honour the 2018 multiyear wage increase agreement among others.  As it is, there are already talks of a union shutdown.

While labour unions are up in arms about their members’ wages, the lack of state capacity persists and this has made the greatly needed reforms elusive. The fiscal consolidation path adopted requires South Africa to achieve more with little. As indicated earlier, while we were already on a downward trajectory before the onset of Covid-19, the pandemic is threatening to plunge the country into a socioeconomic pandemonium.

What is of the essence now is to have a comprehensive policy framework that addresses the separate – yet interconnected – challenges we face. Policies that will engineer the necessary structural reforms. However, policies on their own will not do the trick. We require a capable public service to reignite our journey towards our desired path. This will take extensive political will as it requires the reversal of the decay in our public institutions and the curtailing of patronage and cronyism.

[1] Bank for International Settlements. Redesigning the central bank for financial stability responsibilities. https://www.bis.org/speeches/sp140606.pdf

A call for action and transformation of thought

A call for action and transformation of thought

I’m pretty sure you’re as outraged and stunned as I am by the recent hair product advertisement that “lacked sensitivity” – actually, it was outright discriminatory! I recently came across the expression “my hair is tired” which is just a different way of expressing genuine fatigue without negatively affirming it to your psyche. I think it is a fitting expression, reflecting on the TRESemmé /Unilever/ Clicks debacle. Essentially, as many agree “our hair is tired” of how individuals of questionable competence, ethics, or backbone become decision-makers. We’re tired of witnessing ongoing occurrences of discrimination and wondering whether decision-makers are aware of the impact of their actions and choices – or maybe it’s their inaction and apathy.

The base of the problem is likely much deeper than racial discrimination. Eloquently described by a colleague, what we are missing is the diversity in thought; not just skin colour – and this is true in all aspects of business and politics. For example, one can have black representatives making decisions, without raising any red flags on racially discriminatory issues. This reflects an entrenched response of glancing the other way because that is what’s common in a particular ethos, company, or group. Or perhaps it is that you fear for your reputation—that disrupting a prevailing sense of peace prevents us from calling out what is blatantly wrong. If the latter, then really… you shouldn’t be a decision-maker in the first instance. Leaders and decision-makers cannot afford to look the other way or be blasé about issues that can so seriously affect others and society in general.

So, the ‘White versus African hair’ incident was out in the media for all of us to scrutinise, but what about those incidences that take place away from the public eye?

The #BlackLivesMatter campaign took centre stage this year and entered our personal spaces. It pitted our sports heroes against one another, mostly on the basis of race. How does sanity prevail when we cannot see beyond a privileged position that has been yours since birth? How do you understand what discrimination is when that has never been your reality? According to the Native American proverb, the answer is ‘empathy’.

Never judge another man [or woman] until you’ve walked a mile in his [or her] moccasins.

It is not enough to simply believe that you stand against something. It is not enough to sit on the fence and be passive– we are way beyond that. A line has been drawn and we are on either side of it. I am not advocating for thinking we are above the law and acting outside of it. But, when we witness or hear something offensive, we need to act. That is the only way we start challenging ourselves and those around us to think differently and do better.

If this kind of indifference can pass at a company level, what about at governing levels?

Of course, some institutions put legislative measures to ensure checks and balances. It then begs the question whether these are being used effectively. From a government perspective, policy decisions made at national, provincial and regional level require effective leadership to ensure the right policies are implemented that cater to all, ensuring equality. This leadership is effectively stewardship. It is on loan to decision makers to serve the citizenry. However, abusing this leadership privilege is a well-sung chorus in the African space. All too often we are confronted with leaders and decision-makers who have positional authority but lack moral authority. The right processes must be in place to select the correct leaders so that we don’t perpetuate a more of the same mantra. Leaders that embody moral authority, those who are accountable, will help society cross the line.

So, the old adage that “time cures all ills” means that transformation will just happen, right? Sorry, no! Hoping for a long-term culture shift is … well…not an adequate strategy. There comes a point that we must address insensitivities, tactlessness, and lack of accountable leadership, instead of waiting for a cultural shift. For example, black women have been subjected to the Caucasian standards of aesthetics for beauty for centuries.  We cannot expect to continue constantly proving that black women’s beauty has equal worth or show that they too, equally deserve respect. Time too has consequences, perhaps action is much more urgent to pivot towards a more inclusive and mutually respectful society.

As we look to transform as a nation, we must look to transformation in diversity in our thinking that ensures mutual respect. It takes a conscious effort to challenge our own positions, to change our mindsets, and to choose to speak out rather than look the other way. We too have a responsibility and a measure of influence, as individuals, by what we perpetuate. Let’s respond to what is not working, finding solutions within each of our spaces – let us be true leaders. If not, our society teeters on the brink.

A lean mean Cabinet?

A lean mean Cabinet?

The leaner looking Cabinet has been trimmed down through the merger of several ministries. As a result, President Cyril Ramaphosa reduced the size of his cabinet by eight ministers (from 36 to 28) and reduced one deputy minister post. In the past, there has been a perception that selections were very much subjective based on presidential preference. Clearly, there was significant ballooning during the Zuma administration as shown in the table below.

Box 1: Cabinet trends (including the president and deputy president and deputy ministers -TCB 1,2,3)

It is not surprising to see a bloated cabinet during the Zuma era, with perhaps a need to ensure that his patronage networks were further entrenched. Ramaphosa has spoken out on his commitment to the continued “reconfiguration” of government, which would mean we are likely to see smaller cabinets from now on.

Taking from the SONA, President Ramaphosa noted that the merged departments were focused on greater coherence and coordination. The number of ministers was reduced from 36 to 28.

  • Trade and Industry is combined with Economic Development to form the Department of Trade, Industry and Competition.
  • Higher Education and Training is combined with Science and Technology to form the Department of Higher Education, Science and Technology.
  • Environmental Affairs is combined with Forestry and Fisheries to form the Department of Environment, Forestry and Fisheries.
  • Agriculture is combined with Land Reform and Rural Development to form the Department of Agriculture, Land Reform and Rural Development.
  • Mineral Resources is combined with Energy to form the Department of Mineral Resources and Energy.
  • Human Settlements is combined with Water and Sanitation to form the Department of Human Settlements, Water and Sanitation.
  • Sports and Recreation is combined with Arts and Culture to form the Department of Sports, Arts and Culture.

We had already combined the portfolios of Communications and Telecommunications and Postal Services.

We have also decided to add responsibility for infrastructure to the Public Works portfolio and to add responsibility for employment to the Labour portfolio.”[1]

Cabinet comparisons – internationally

South Africa’s leaner cabinet is still larger than most other countries (Figure 1). The closest in size is the Indian cabinet, which has 55 members, for a population of almost 1.4 billion, in comparison to South Africa’s 57 million. Trump’s Cabinet, for example, constitutes the Vice President, Mike Pence, and the heads of the 15 executive departments, serving a population six times larger than South Africa. While it is not necessarily practical to equate countries at the same stages of development, compared with Nigeria’s cabinet – that serves roughly 190 million in population – South Africa’s is still larger. Notably, larger economies tend to have smaller cabinets, which raises concerns about the efficiencies and capacities of our executive.

Figure 1: Comparison of the number of ministers in various countries

Source: Citibank

On a positive side, 50{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} of the ministerial positions are held by women for the first time in South Africa. This is an exemplary change as, on average, female representation in European cabinets is 28{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1}, according to The Economist.

It is important to understand that the size of the cabinet may have decreased, and this may look good at face value. What is important to note is the number of tasks per cabinet may have also increased meaning that the capacity issue may not be entirely addressed. What one may find are bloated services within some ministries, while others have diminished services, due to the merger. Will this lead to the appointment of new advisers to ensure a smooth transition?

Cost-saving towards trimming the cabinet

According to some annual reports of government departments, the ministerial administration cost of government departments averaged R30.5 in the 2017-2018 financial year. These costs include the upkeep of ministers and deputy ministers and their related expenses (cars, housing benefits, security, travel, and advisers or people in the minister’s inner circle and other privileges) which were outlined in the ministerial handbook of 2007.[2]

Initially, according to President Ramaphosa, the smaller executive was meant to reduce government spending, and effectively should mean a saving of R21 million a year, in salaries alone. As an example, in terms of salaries, ministers earn an annual salary R2,401,633, while deputy ministers get R1,977,795 according to Africa Check. This implies that, on average, the state spent roughly R 146 million a year on the Zuma Cabinet (73x R2,000,000) on salaries alone. With a reduced cabinet of 64, this is an estimated saving of up to R 146 million a year.

It is clear that the diminished number of cabinet members has slightly dented the wage bill, positively impacting the fiscus. However, this does not change the fact that government wages as a percentage of GDP are at around 14{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1} — higher than the global average of 10{fdf3cafe0d26d25ff546352608293cec7d1360ce65c0adf923ba6cf47b1798e1}.  To understand these cost dynamics better, whether paying fewer salaries cancels out departmental costs, Overall, a focus on policy implementation, amidst the restructuring, would make the cabinet reorganisation more worthwhile.

[1] https://mg.co.za/article/2019-05-24-00-cutting-the-fat-from-cabinet-could-save-r300m

[2] https://www.gov.za/speeches/2SONA2019

Image: TimesLive