Business Welcomes Sachs’ Appointment as Reform Momentum Increases
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JEREMY MAGGS: President Ramaphosa has appointed Michael Sachs, a pivotal figure in South Africa’s post-apartheid budget planning and former National Treasury budget chief, to serve as his economic advisor.
This move has mostly been welcomed by the business sector as an indication that fiscal responsibility and economic reform may be regaining prominence within the government.
Read: Ramaphosa appoints former treasury budget chief as his economic advisor
But will this appointment truly change the economic trajectory, or is the real hurdle in its execution? Let’s unpack this.
I’m now joined by Martin Kingston from Business for South Africa. Martin, welcome. What’s the key message the president conveys by choosing Michael Sachs?
MARTIN KINGSTON: Thank you, Jeremy. Michael is highly regarded in the business world, well-known across the country and the investment community.
During his time at National Treasury, he excelled in his budgetary responsibilities, and many have missed his influence since his departure.
We are thrilled to see him returning as a significant advisor to the president.
I believe he has a comprehensive and insightful understanding of the challenges our nation faces and the solutions that need to be implemented.
His close rapport with the president will certainly empower him to shape economic policy in the upcoming months.
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As you pointed out, it’s not just about setting policies; it’s also about their execution.
We have already started discussions with Michael regarding our collaboration with the government, and we aim to amp up our initiatives. I hope he shares our focus on many of the same critical interventions.
JEREMY MAGGS: Is this just a strategic political move, or does it signify a shift in economic thought within the government?
MARTIN KINGSTON: I think it signifies progress rather than a complete overhaul. There is a growing recognition of the need to balance our budget – which has been regularly emphasized by Finance Minister Enoch Godongwana and the Director-General – and also a commitment to implement structural reforms that leverage our competitive advantages.
As a nation, we haven’t been concentrating on addressing the obstacles to truly inclusive growth.
In my opinion, Michael is fully cognizant of these issues and knows the importance of mobilizing private sector resources wherever possible.
JEREMY MAGGS: Do you think this appointment enhances the position of reform advocates within the government, or are they still underrepresented?
MARTIN KINGSTON: No, I believe our experiences over the past three years of economic collaboration demonstrate a shift towards reform that many in parliament and government support.
Indeed, Michael’s appointment symbolizes the need to amplify and accelerate these efforts, rather than indicating any resistance within the system.
It’s essential to note that the president has been without an economic advisor since Trudi Makhaya’s exit about three years ago.
Read: Job creation in SA: the president’s advisors discuss the necessary steps
Thus, this appointment is both timely and essential, indicating a sincere commitment to reform.
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JEREMY MAGGS: Realistically, how much influence can an advisor exert if the tough political decisions rest with the cabinet?
MARTIN KINGSTON: Advisors can have significant influence. We’ve seen this with Dr. Alistair Ruiters, who has played a crucial role not only in bilateral relations but also in catalyzing investment and removing critical barriers in the system.
Advisors possess the capability, flexibility, and sometimes autonomy to act effectively.
When someone like Michael Sachs, who has strong relationships with key decision-makers in cabinet and the presidency, comes on board, we must not overlook the considerable impact they can have on achieving essential outcomes.
JEREMY MAGGS: What should be his top priorities? Fixing public finances, boosting investment, or speeding up reforms?
MARTIN KINGSTON: I hope he places a strong emphasis on strengthening public finances. Recent comments from the Finance Minister regarding the City of Johannesburg highlight an urgent crisis that needs to be addressed.
Municipal financial reform should be a key focus, especially considering the challenges faced by Johannesburg. The business sector is ready to collaborate if the conditions are right.
This must be one of the primary areas of concentration.
Another important issue is the ongoing challenges surrounding state-owned enterprises and municipalities in general. I am confident he will give significant attention to these issues, working not only with the National Treasury but across all branches of government to tackle these challenges.
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As you’ve pointed out, accelerating structural reforms and facilitating the interventions under discussion with the government must also be a priority.
JEREMY MAGGS: No doubt rating agencies will view this positively.
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MARTIN KINGSTON: Absolutely. We’ve already seen a favorable response from rating agencies regarding our progress. They recognize it’s not coming fast enough or in sufficient breadth. However, someone like Michael joining the team will certainly enhance their confidence that our progress will be both accelerated and diversified.
Over time, I am optimistic that we will observe improved responses from the rating agencies if we continue on our current path.
JEREMY MAGGS: Do you believe this appointment is partly to assist the president in establishing a legacy before he leaves office?
MARTIN KINGSTON: I hope that whether it is the current president or his successor, the positive trajectory continues.
Deepening the ongoing reforms and establishing a consistent fiscal policy will indeed be part of President Ramaphosa’s legacy when he eventually leaves office.
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However, we need to weave this approach more broadly into the cabinet and across our national macroeconomic strategy. If we can achieve this in the next year or two, it will certainly contribute to the legacy that President Ramaphosa can leave behind.
JEREMY MAGGS: To wrap up with the classic saying, you can’t manage what you don’t measure. What kind of changes should investors and businesses expect over the next year if this appointment is indeed successful?
MARTIN KINGSTON: As you know, and we’ve discussed before, we need to monitor our progress in a regular and transparent way.
Listen: 60% unemployment: Why young South Africans are still struggling to get a foothold
I believe if we can demonstrate a gradual rise in GDP, tackle unemployment, and increase fixed investment levels, these will be key indicators of our progress.
JEREMY MAGGS: Thank you very much, Martin Kingston.