Enoch Godongwana (Photo: GCIS/X)
South Africa is in a better position today than it has been in a long time. This year’s budget must reflect that progress and credibly outline how the government will build on it, says Business Leadership South Africa (BLSA) ahead of Wednesday’s budget speech.
This independent organization believes that South Africa’s structural reform program has the potential to deliver significant economic growth – the kind of economic growth that will make a significant difference to unemployment and raise people’s living standards, especially when the reforms begin to take effect at the municipal level.
Busisiwe Mavuso, CEO of BLSA, pointed out in the run-up to this week’s budget speech that reforms, although they will take a long time, are already beginning to yield results such as less load shedding and the handling of higher volumes of cargo thanks to improved logistics.
“The results are improved credit ratings, removal from the gray list and a well-performing stock market.
“We hope that Enoch Godongwana, minister of finance, will build on these gains with his budget speech on Wednesday.”
Mavuso writes in her latest newsletter on Monday that this year’s national budget should provide strong support where necessary to drive and accelerate reforms.
“What we want to see from Minister Godongwana is confirmation that the fiscal framework is in place, that the expenditure reviews he launched – which identified R37.5 billion in potential savings – will manifest in real changes in the 2026 Medium Term Expenditure Framework (MTEF) cycle, and that underperforming programs will indeed be closed, as he promised.
Minister Enoch Godongwana (Photo: Jairus Rabbit/GCIS).
“We also want to see that the additional allocation of R7.5 billion to the South African Revenue Service is followed up, which according to the minister could generate between R20 billion and R50 billion in additional annual income.”
Mavuso believes it is also important that Godongwana sends a clear message to state enterprises with his budget that there will be no further bailouts.
“The fiscus cannot continue to absorb the losses of underperforming SOEs. An impartial assessment of each entity’s return on investment – using proven tools to measure social impact where relevant – is long overdue, and some tough decisions must follow.”
Mavuso also believes it is important that Godongwane sends an unequivocal message with his budget this year regarding taxes.
“This time last year we endured three (versions) of the budget and narrowly escaped a VAT increase of two percentage points.”
Mavuso would like to hear that there will be no further tax increases this year.
“The national treasury previously raised the idea of lowering the corporate tax rate from 27%, and although fiscal constraints currently make it premature, it is the right long-term decision,” Mavuso believes.
She therefore believes that with this year’s budget speech the government should lay the foundation for a future reduction in VAT and other taxes if it only shows fiscal discipline and concentrates harder on the reform programme.
“Getting our tax competitiveness right – for businesses and consumers alike – is just as important to the investment climate as reliable power and efficient logistics. If we stay on the current fiscal path, the room for tax relief will open up.”