Godongwana’s Mini-Budget Yet Another Indication of the ANC’s disrespect for South Africans

26 October 2022 

The Medium-Term Budget Speech delivered by Minister Godongwana has once again illustrated in perfect clarity how a prosperous South Africa and an ANC-government can never coexist.

Rather than taking responsibility for the tragic condition of the economy on behalf of the ANC, Godongwana perfectly executed the ANC’s core modus operandi of running from accountability at all costs.

We acknowledge that the South African economy operates in a severely constrained and challenging global environment. We also agree that the predicted growth rate of 1.6% over the next three years will be insufficient to bring about any positive change to the lives of millions of South Africans.

We agree with Minister Godongwana that unreliable electricity supply, costly and inefficient ports and rail network, crime and corruption, weak state capacity and barriers to entry for small businesses are holding South Africa back.

What Minister Godongwana and his comrades fail to understand is their role in creating these conditions. Thanks to ANC-sponsored State Capture and years of incompetent governance, our government is simply incapable of addressing the needs of South Africa and providing dignity to our people.

Today’s speech will do little to provide hope that our government is capable of addressing South Africa’s significant challenges with energy, logistics, water supply and attracting investment. The proposed measures to address our energy crisis is particularly concerning, as it again shows that the government is simply not treating the crisis with the urgency it requires. We urge the government to speed up the adoption of the Electricity Regulation Amendment Bill so that South Africans can be freed from the suffocating grip of Eskom’s incapacity to provide stable electricity.

We welcome the government’s attempts to address South Africa’s fiscal instability and the plan to reduce our national debt.

However, ActionSA remains concerned about the high-level of interest spending, which reduces the ability of government to provide basic services, especially since the expenditure on social development is forecasted to decrease. We are also concerned about the vague nature of the government’s promise to take over a portion of Eskom’s debt and the impact servicing that debt will have on our fiscal position.

Strengthening state capability is critical to supporting the growth of our economy, but today’s statement provides no detail of what government plans to do.

Our public institutions must be reformed and staffed with professional and competent officials that take pride in their work. Our public institutions must serve the needs of our people and our economy, not the ANC-elite.

We welcome the proposed increased expenditure on infrastructure but have little faith that enough will be done, or that it will be done right. South Africa’s incremental capital output ratio, or the relationship between investment made into the economy and consequent increase in economic growth, has decreased and is now among the worst in all emerging markets. Simply increasing the amount, we invest without addressing the inefficiencies in how we invest will not improve anything.

The link between corruption and wasteful expenditure under the watch of the ANC and the diminishing return on investment is clear. As President Ramaphosa has proven in his speech on Sunday evening, the ANC-government is simply not willing to address the rampant corruption in the State.

Without increasing the budget to improve our corruption prevention and prosecution capacity, everything the ANC says is mere lip-service. We find the fact that Minister Godongwana boasts about banning one private sector company from doing with the state an insult to South Africans, when at least six members of Cabinet retain their positions, despite being implicated in the State Capture Inquiry.

Furthermore, ActionSA is concerned about the following:

Insufficient action on climate change mitigation and adaption: as the various natural disasters that cost the lives of hundreds of South Africans and led to billions in economic loses showed this year, we are at increased risk of climate related shocks. The government’s plans are highly insufficient to protect our people against such shocks. The inevitable future environmental disasters will further place strain on our national fiscus.

We do not believe that the government is doing enough to empower local government to fulfil its mandate, and that the allocation to local government is insufficient. Government must take urgent action to streamline national and provincial departments, so that more money reaches local governments that are responsible for frontline service delivery. Additionally, we must address the governance crises in local government.

The ANC must stop its insistence on bailing out dysfunctional SOEs, especially those that do not perform key government functions. We cannot continue to harm the long-term prospects of our country by diverting funds from education, healthcare, and infrastructure to bail out SOEs

We do not believe that the measures announced today will be enough to improve safety and security. Even though the 15,000 additional constables are a welcome addition to our police force, it is insufficient and unlikely to address the management problems within our security cluster.

We are concerned about the statement that rebuilding of Parliament will cost R2 billion, especially in light of continuing discussions about moving the Seat of Parliament to Tshwane.

We welcome the acknowledgement that public procurement reform is required. However, modernisation alone will not solve the inefficiencies and corruption in our public procurement.

Finally, South Africa’s government must be condemned for its handling of the potential FATF Grey Listing. Even if South Africa’s miraculously manages to avoid Grey Listing, our government waited much too late to act, and the illicit financial flows allowed by their inaction has cost our economy dearly

While we welcome the fact that SARS managed to improve revenue collection, we must not lose sight that the revenue collected still falls significantly short of what a country like South Africa should be generating. We must also not forget that our companies are performing well despite the barriers imposed by our government, which shows that we must give our private sector firms the space to grow.

Fixing South Africa’s economy is possible, but it is a complex challenge that requires responsible, ethical, and dedicated leadership that is focused only on the needs of all South Africans. When in government, ActionSA will:

Always implement long-term focused, pro-poor budgets, that places service delivery and the dignity of our residents first. We cut unnecessary and wasteful expenditure and invest more into infrastructure and services that will improve the lives of our people

Stop the consistent bailouts of dysfunctional SOEs and only support SOEs that provide critical government services that cannot be addressed competitively by the private sector

Address the barriers to growth and implement measures to ensure small business can grow and create employment

Root out corruption to ensure that every cent of our taxpayers’ money is reinvested into South Africa, and reform public procurement to ensure public institutions get quality services at fair prices.

Ensure that the rule of law is restored in our country. No country can flourish, and no economy can grow in a state of chaos. We must act as one to build a safe and secure South Africa where criminals cannot act with impunity.

Do away with bureaucratic red tape and draconian labour laws are hurdles to unlocking economic potential. Economic policy must be overhauled to reduce the cost of doing business and incentivise private sector investment, both domestic and international.

Issued by Herman Mashaba, President, ActionSA, 26 October 2022