We have achieved much in a difficult post-recession period

Pravin Gordhan

By Mzukona Mantshontsho

“No one in this house can deny that the South African economy we have today is better than the one inherited by the ANC government in 1994,” were the words of Finance Minister Pravin Gordhan as he delivered the fifth and last R1.1trillion Budget Speech in Parliament yesterday at 2pm.

As we celebrate 20 years of democracy in South Africa this year in our lives individually, as communities, as government, and as business; the struggles and the victories, Gordhan used the platform as a way of reflecting on past, present, future and aspirational plans for government to improve the lives of the majority of South Africans and have an inclusive society that all would be proud of.

The political and economic landscape of South Africa in 2014 is a matter of great interest to domestic and foreign investors, business, political and institutional communities, decision-makers and thought leaders.

The budget deficit concerns, the weaker rand which supports our exports, the service delivery protests, some of them violent, rural development, the recent 0.5% basis points interest rate hike, the 24.1% unemployment rate, the inequalities in the country’s rich and poor, the delivery of the youth wage subsidy, the funding of the national health insurance, the concerns around crime and corruption and the delivery of the National Development Plan, were just some the pressing issues that all stakeholders and economists were going on about, hinting that they wouldn’t want to be in the Finance Minister’s shoes.   

Though 2013 started with a lot of promise, the country’s structural problems held back growth and job creation, leaving it increasingly vulnerable to emerging risks. The International Monetary Fund (IMF) has predicted that South Africa is destined to continued sluggish economic growth and higher current account deficits, leaving the economy exposed to both internal and external shocks.

On the continent level, though Africa’s prospects have improved and investors are optimistic about the continent’s future, Africa is receiving unparalleled attention from global companies, with substantial opportunities in oil, gas, mining and agriculture, closely followed by consumer-driven demand for fast-moving consumer goods, high value products, telecommunications, financial services, information technology and others.

Much like the State of the Nation Address by President Jacob Gedleyhlekisa Zuma on Thursday 13 February, which suggested that South Africa had a good story to tell, Gordhan echoed the same sentiments, but was bold enough to admit that as the World economy was still unsteady, South Africa had been able to turn the corner after the 2008 world recession that devastated the world in total. The SA economy had continued to grow, but more slowly than projected a year ago during the mid-term budget speech.

With a population of over 51million people in South Africa and only 6million taxpayers, R899billion was collected by SARS as compared to R114billion in 1994. The government expected a 2.7% growth in the year and a budget deficit of 4% of GDP. 216,000 houses would be built, 433 schools would be built, 950,000 houses would be electrified in the next three years, 11.4 million on child support grants, and 6million jobs would be created in the next five years.

Old age grants would increase to R1350 per month, foster care grants would be at R830 and child support grants would be at R310 from April 2014. 8.8million children would have access to free education. R847billion would be put aside for Infrastructure, R10.3billion to manufacturing, over R7billion for farmer’s grants in the Agriculture sector, R6.5billion to support SMME’s, R43.5billion to go to HIV/AIDS programmes and projects.

A personal income tax relief of R9.2billion was announced, beer would go up by 9cents per 350ml, 68cents rise for a 20 packet cigarette, petrol would go up by 12cents per litre and whisky would go up by R4.80. Carbon tax would be moved to 2016 to allow further dialogue.

In total, Gordhan announced that residents’ pleading was heard and government would and was doing its best to improve the lives of South Africans. Of the nearly 1million young people who would be turning 20 years this year, the government would made decisive actions to reduce unemployment, poverty, inequality and make fundamental transformation across the nation – the first phase of the National Development Plan. “This is definitely a good story to tell,” he said.

CEO at Vunani Fund Managers Romeo Makhubela said this was a great budget and showed the right direction that the Finance ministry was taking.

ACDP’s Steve Swart welcomed the balanced budget, policy certainty and R9.2billion income tax relief. The increase in fuel levy also showed the give and take approach by the government.

Tim Harris, DA’s spokesperson on Finance said the budget was too conservative and never made any major pronouncements worth talking about with the high levels of unemployment we have as a country.

NAFCOC President Reverend Hlongwane said they would be engaging the Minister on the R6.5billion allocation to SMME’s in the country.

The United Democratic Movement (UDM) had issues with implementation of all the policies set by government. “Implementation is always dismal. The encouragement of trade with Africa is commended and the reduction of red-tape is appreciated. Let’s cut down on the expenditure with the system which is about R25billion each year, they money could be used somewhere else to improve the lives of South Africans”.

COPE’s Nick Korenoff asked that Minister Pravin Gordhan be kept as Finance Minister for another 5 years.

 

 

Leave a Reply

Your email address will not be published.