Finance Minister Enoch Godongwana presented a budget that supports and reinforces the programme of action announced in the State of the Nation Address (SoNA) to grow the economy and create jobs, says President Cyril Ramaphosa in a February 28 newsletter.
The budget provides details on how government plans to raise money and where it is going to spend that money to improve the lives of South Africans.
“Recognising the importance of basic services for quality of life and for investment and business activity, the budget significantly increases the allocation for service delivery. For example, it adds an extra R30.7-billion to local government allocations for basic municipal services,” says Ramaphosa.
The pandemic battered the economy and further worsened the country’s financial position. At its height, less revenue was collected and more money spent on strengthening health response and providing social support. As a result, the country had to borrow more and at a greater cost, he notes.
Despite the substantial economic and social support packages introduced in 2020, businesses have gone under and as many as two-million people have lost their jobs. Many households have been spared from hunger only owing to the increases in social grants.
“The only way out of this dire situation is to grow the economy. And the most effective way to reduce poverty and hunger in a sustainable way is to create employment,” Ramaphosa says.
“This programme includes far-reaching economic reforms that promote investment and growth. These reforms will ensure that our country has enough affordable electricity to meet growing demand, that our ports and rail lines are more efficient, that we improve access to faster, cheaper broadband, that homes and businesses have the water they need, and that we can attract the skills and investment we need to create a productive and dynamic economy.”
At a time when public resources are constrained, these reforms will enable greater private investment in the vital infrastructure that the economy needs to grow. This takes place alongside a revised framework for public-private partnerships and innovative new ways to blend public and private resources for infrastructure investment, says Ramaphosa.
“We will do this in a way that improves the performance and financial position of key State-owned enterprises. This will place these enterprises in a far better position to fulfil their developmental mandates, while ensuring that critical national infrastructure remains firmly in State hands.”
To support this work, R17.5-billion was allocated in the budget for catalytic infrastructure projects over the next three years. This will, besides others, support the upgrading of roads, bridges, water and sewer infrastructure, transport, schools, hospitals and clinics, he illustrates.
The budget supports the efforts announced in SoNA to unleash the potential of small, micro and informal businesses.
For example, R15-billion has been set aside for a redesigned loan guarantee scheme that will make it easier for small businesses to access funding to bounce back from the effects of the pandemic.
Further, the Employment Tax Incentive, which has been so successful in giving many young people their first jobs, is being expanded to encourage small businesses to hire more people, he adds.
All of these measures encourage the growth and expansion of firms and support the establishment of new firms to create new jobs. These efforts will, however, take time to absorb the millions of South Africans looking for work, he says.
“We have, therefore, extended the Presidential Employment Stimulus, which has provided work and livelihood opportunities to more than 800 000 people in its first 16 months. An additional R18.4-billion has been allocated over the next two years so that the stimulus can continue to provide vital income, skills development and work experience to hundreds of thousands of unemployed, mostly young, people.”
Meanwhile, the budget also supp...