The Nelson Mandela Bay Business Chamber fears that Finance Minister Malusi Gigaba’s maiden Medium-Term Budget Policy Statement (MTBPS) delivered on Wednesday may not be enough to turn the economy of South Africa around.
We are deeply disappointed by the revised economic growth projections, downwards from 1.3% as tabled at the Budget earlier this year, to just 0.7% for 2017. Minister Gigaba’s growth projections of just 1.1 % in 2018, and 1.5% in 2019 is extremely concerning.
Another major point of concern is tax revenue projected to fall short of the 2017 Budget estimate by R50.8-billion. We are not entirely convinced by Minister Gigaba’s plans to resolve this setback in fiscal consolidation, and would have liked more detail in his speech.
The MTBPS also lacked sufficient announcements on economic stimulation for the ailing economy.
We are cautiously optimistic about the sale of a portion of government’s Telkom shares, but our economy requires much more practical interventions in terms of decisive and urgent reform of state-owned entities (SOEs).
In particular, no mention was made of the effect the proposed 19.9% electricity increase would have on the South African economy next year.
While we welcome the announcement of infrastructure investment of R948-billion over the next three years, we caution that extreme fiscal discipline and oversight by Treasury would be needed when it came to the SOEs’ infrastructure spend.
Lastly, as a matter of urgency, we appeal to Minister Gigaba to stick to the words delivered in the MTBS today to root out corruption at SOEs and stopping more bail outs for dysfunctional SOEs. We welcome his concern over Eskom’s “governance, leadership and financial management” and welcome the appointment of a new board at Eskom.
We can no longer be expected to bail out poorly run SOEs, at the cost of businesses and ordinary citizens of this country. The weaknesses of SOEs have contributed greatly to the current South African fiscal status, despite collaborative efforts by the business fraternity to grow the economy and local jobs.
Lastly, we welcome Minister Gigaba’s announcement of Preferential Procurement Regulations and as the Nelson Mandela Bay Business Chamber would certainly support national business fraternities in adopting a Proudly South African campaign and expanding it.
