21 February 2023

BUSA: Pre-Budget Speech Commentary- A Fine Balancing Act

The Budget Speech to be presented by Minister Godongwana tomorrow is amid severe crises SA is facing. These include the ongoing loadshedding and broader energy crisis, which has already led to a revision downwards of growth forecasts to Reserve Bank 0.3% (SARB) and 1.6% (National Treasury), the severe crisis in logistics (with particular emphasis on the failures at Transnet, but also related to the crumbling roads infrastructure), the breakdown in law and order and prevalence of organised crime, an impending water crisis and low levels of investment. This is exacerbated by a seeming inability on the part of government to recognise the urgency of addressing these crises and a lack of capacity to implement much needed interventions and reforms.

 

The private sector has, over the last four years, consistently offered to work with government to bring its capacity and resources to bear in addressing some of these crises, and we have undertaken detailed work on energy, logistics and law and order, but have not been able to convince government to partner with us.

 

We thus expect Minister Godongwana to pronounce a budget that sends out a clear message that all stops need to be pulled out to enable substantially greater private sector involvement in the socio-economy. The budget must allocate funds, with conditionalities that such funds must be utilised in a way that invites, in real partnership, the private sector to work with government to make a fundamental impact on addressing the crises and instilling confidence in the country, with resultant investment and growth. An example of how the creation of an environment for private sector led growth is the investment into embedded energy after the President announced the lifting of the ceiling to 100MW.

 

We expect Minister Godongwana to address the following matters in his budget:

 

  • Give clarity to the plans for the sovereign to absorb some of ESKOM’s debt.
  • Announce subsidies for rooftop solar power, for both commercial and private citizens.
  • Defer raising taxes at a time we need to encourage business investment and businesses are reeling under the impact of loadshedding and the logistics problems.
  • Increase funding to enable critical action on the crises referred to above but put checks and balances in place to encourage utilisation of funds responsibly and in a way that substantially pulls in the private sector.
  • Consider subsidies and facilitation for the manufacture of electric cars, given our reliance on exporting vehicles.
  • Give some indication of how government will manage a real risk of “grey listing” by FATF and plans to extricate ourselves from this as quickly as possible.
  • Maintain the pattern of limiting expenditure so that we limit borrowing, particularly in a global high interest environment.

 

In short, we expect the minister to stay the course on moderate growth on the expenditure side and encouraging an environment for investment and growth to enable private sector led growth, which will begin to address the crises we face.

ENDS

 

Cas Coovadia

Business Unity SA CEO

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For more information, please contact:

Sizwe Maswanganye

Tel: 011 784 8000/0766516444

Email: sizwe.maswanganye@busa.org.za