With critical challenges facing our economy, it was always going to be impossible for SA Finance Minister, Pravin Gordhan, to satisfy everyone with his mid-term Budget Speech. But in the context of the eight-point plan proposed by financial sector business leaders in pre-SONA meetings with government, Hollard CEO, Nic Kohler, believes there is much to applaud.
8 Point Plan
Expressing its support for the government and National Treasury, the sessions with the CEO Collective focused on the steps necessary to avoid a sovereign downgrade, improve South Africa’s economic prospects, and stimulate inclusive growth. Some of the messages highlighted by business leaders included:
- The need for all South Africans (including government, business and labour) to unite behind a cohesive narrative and plan, in the form of the NDP
- The need to over-deliver on fiscal consolidation
- The need for more effective State Owned Enterprises to halt the drain on the fiscus
- The need to review legislative implementation for consistency and certainty
- The need for labour regulations to contribute to inclusive growth, especially for the youth
- A proposal to accelerate PPP’s for infrastructure development along the lines of the renewable energy programme
- A proposal to establish a standing committee to deal with corruption in both the public and private sectors
- Support, by business, of the National Treasury and Government in achieving these goals and preparedness to take tough measures where needed.
Although it is impossible to provide sufficient detail in a Budget speech to quell the concerns of all analysts right out of the gate, it is clear that the input from corporate South Africa was heard.
The budget’s cost containment measures are cleverly balanced against selective tax increases in an effort to avoid negatively affecting growth. Other encouraging aspects are: a more pragmatic approach to state owned enterprises (including the prospect of private sector participation and improved governance); a significant allocation for drought relief; and a number of commitments to stimulating growth.
Certainly, there are aspects that need to be fleshed out in the weeks to come but there is no ambiguity about either the extent of the difficulty we’re in, or the tough action the Minister expects us all to take to overcome it.
Action is imperative and it needs to be swift if the flicker of confidence the budget speech has sparked is to be consolidated.
Rebuilding This Economy Will Take All Of Us
Kohler fully endorses Minister Gorhan’s repeated message that we are ‘strong enough, resilient enough and creative enough’ to manage and overcome our economic challenges, on the understanding that we will put aside our political and ideological differences and pull together.
As the Minister made plain, ‘partnership between government, business, organised labour and civil society is the key to policy coherence and more rapid development’. The positive and generally supportive pan-political reaction to the budget speech is an excellent indication that all South Africans are, indeed, starkly aware of the crisis we are in and are united in their determination to prioritise addressing the fundamentals and take the pain that may come with it.
Having the National Development Plan squarely back on the table is important and its use as the overarching framework for long-term inclusive growth is an encouraging development. As is positive reaction to the working groups that have sprung from the recent engagements between government and business.
In Conclusion
In Kohler’s view, this budget presented a very sober view of the challenges we face as an emerging economy and a pragmatic yet serious approach to fiscal discipline that, we hope, will help to restore investor confidence.
“Of course, the proof of whether or not this budget achieves our collective objectives will depend on the extent to which our economic growth measures up to the Minster’s forecasts, and whether Government follows through on these fiscal commitments in a disciplined manner. It seems the Minister has done enough to avoid a potentially disastrous downgrade for now, and the focus will shift to monitoring implementation.
“That is something we can and must work on. Together.”
