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In his first medium-term budget speech, Minister of Finance, Mr. Enoch Godonwana, pointed out the importance of the private sector several times, but South Africa’s policy does not create an environment of trust for this sector.

 

Mr Godonwana is seeking private sector investments, partnerships to fill funding gaps for various Economic Reconstruction and Recovery Plan projects and help addressing the country’s unemployment crisis.

 

“If the government needs the help of the private sector, it must loosen the hands of this sector with a policy environment that inspires confidence. Then there is no more room for things like expropriation without compensation, also BEE must be done away with, which indeed implies cadre deployment that causes expertise shortages,” said Mr. Bennie van Zyl, TLU SA’s General Manager in response to the medium-term budget speech.

 

“The government likes to make statements such as structural reforms in the economy. What does it mean? Is it to move towards centralised socialism and communism or is it to make the necessary adjustments in an environment of private ownership and market-oriented economy to create the necessary confidence for entrepreneurs to be positive and to become actively involved in the economy?”

 

Mr. Van Zyl is grateful for the announcements about the importance of addressing corruption, crime, transparent tenders, training.

 

However, it is the fact that some 27 million people in the country receive social grants that causes the red lights to flicker.

 

“The amount of social grants is out of control. It is not sustainable given the weak economic growth, the country’s debt burden and junk status. The government must realise you can only hand out something if you have it yourself! The government is in fact in the process of driving our country into a socialist order.”

 

Mr. Van Zyl was also pleased to see the references to the stable energy supply.

 

“It is very important that the private sector becomes involved in the generation of electricity with ease as soon as possible. That is what will make the difference.”

 

The country’s debt service costs are non-discretionary – in other words, we cannot avoid paying them. Its effect is therefore other spending priorities are neglected. Debt service costs are expected to increase from R269.2 billion in 2021/22 to R365.8 billion in 2024/25. It is higher than the budget for health and police services.

A positive aspect according to the Minister is the tax collection that exceeded expectations in the short term. Revenue for 2021/22 is now estimated to reach R1.5 trillion, compared to R1.4 trillion at the time of the 2021 Budget in February. This is an upward revision of R120.3 billion. The consolidated budget deficit is expected to be 7.8 percent of GDP in 2021/22, gradually lowering to 4.9 percent in 2024/25.

Additional funding was also allocated to the South African National Defence Force and the Police Services.

 

There is a general feeling that the right issues were identified, but whether the government has the capacity to deliver – given years of cadre deployment – is questioned.