To stay or not to stay the course . . .

11 Jan, 2019 - 00:01 0 Views
To stay or not to  stay the course . . . Finance Minister Mthuli Ncube

eBusiness Weekly

Taking Stock Kudzanai Sharara
One of the most important things as a leader and policy maker is to pick a lane and to stay with it until you reach a specific result — no matter how challenging it is. If it’s going to be austerity for prosperity, then let it be, no half-hearted measures, no second thoughts, no unwavering, you just have to make bold decisions.

This level of commitment and focus make a lot of people and institutions uncomfortable, but it’s to be expected, and there is no need to switch back and forth when things get difficult, if you do that you will thwart your progress.

A plane cannot expect to take off, if it keeps circling the runway because it will not have momentum, and without momentum there is no leverage.

I would like to believe this is the situation Finance and Economic Development Minister Mthuli Ncube finds himself in. The measures he pronounced after his appointment and in his 2019 National Budget Statement have made a lot of people uncomfortable, but he must stay the course.

As an economist he must have anticipated all this and his stance that what is required is urgent and bold action is what will get us out of this mess. Just as he puts it, these measures will be felt by all, but are unavoidable if we want to get our economy back on track.

The decision to introduce a 2 percent tax, is one such move which has been blamed for causing untold sufferings in the country, but it is necessary as it now captures the informal sector in the tax net — more than $570 million was collected in December alone. Instead of calling for its removal in its entirety it just needs to be fine-tuned, probably by reducing Pay As You Earn (PAYE) so that there is no double taxation or increased burden on the formal tax payer.

Continued use of the multi-currency system so as to maintain a 1:1 exchange rate amid calls to re-dollarise or adopt the rand has also been problematic, but unlike many, whose view only go as far as their own pockets, Prof Ncube has to consider other factors, like what’s going to happen to savings and pensions or what dollarisation will do to the country’s export competitiveness.

There is, however, need for step-by -step guidance on how he intends to solve the currency conundrum, because just saying we are dealing with the twin challenges of a budget deficit as well as a trade deficit is not good enough to quell people’s anxiety.

Denying MPs and ministers their luxury benefits is also a first, and no doubt, it is making many uncomfortable. Such a decision was always going to be met with resistant, but all the same, the minister should have stayed the course.

Unfortunately, Prof Ncube has increased Parliament’s budget by 80 percent after MPs from across the political divide were united in demanding an increase.  There are many other demands that will come his way with Government employees already knocking on the employer’s door with increased wage and salary demand. This obviously mean the austerity course will not be an easy ride.

Now, a common question around staying the course is, “How do I know if I’m meant to keep going or change direction?”

The only answer to this is that once you pick a lane you stick with it for a specific period of time until a specific outcome is achieved. And no matter how hard it gets there is need to stay the course.

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