MEDIA STATEMENT
Johannesburg, Wednesday, 30 October 2024 — Public Interest SA (PISA) expresses profound concerns with Minister Godongwana’s recently delivered Medium Term Budget Policy Statement (MTBPS), which regrettably falls short of addressing several critical areas in South Africa’s economic landscape, particularly those fundamental to sustainable development, efficient governance, and public accountability.
While the speech outlined the priorities of the government of national unity, including economic growth, poverty reduction, and state capability, we find that the allocation of resources within this policy statement contradicts these objectives. There is an evident lack of commitment to robust infrastructure investment, which is crucial for stimulating economic growth, creating jobs, and improving service delivery.
Despite commitments to “growth-enhancing infrastructure,” the budget fails to back this rhetoric with sufficient funding. Effective and substantial infrastructure spending is essential for tackling service delivery bottlenecks and improving critical sectors, such as water, energy, and transport, that continue to impact the daily lives of South Africans. This half-hearted commitment to infrastructure is inadequate for a nation facing stagnant growth, unemployment, and widespread poverty.
It is disappointing, moreover, that the small business sector and entrepreneurs — critical drivers of economic recovery, job creation, and innovation — continue to be sidelined. Small businesses are pivotal in advancing local economies and fostering economic resilience, yet the MTBPS offers little in terms of targeted support or funding mechanisms for these sectors, which are key to sustaining any meaningful economic recovery.
Public Interest SA is also concerned with the inadequate emphasis on enforcing municipal financial discipline. Given the growing rate of unpaid municipal debt, insufficient measures were announced to ensure municipalities implement sound debt-servicing mechanisms, which are vital for local governments’ sustainability. Without rigorous controls, municipalities are likely to continue down a path of poor fiscal management, which compromises essential services to local communities.
Furthermore, the policy overlooks crucial enhancements in revenue collection. While the economy struggles with sluggish growth, spiraling public debt, and increasing debt servicing costs, there is no clear plan to bolster the government’s revenue collection efforts. A more proactive approach to revenue collection, coupled with prudent debt management strategies, is imperative to avoid a fiscal crisis and free up resources for social and developmental needs.
It is extremely concerning that South Africa’s greylisting by the Financial Action Task Force received minimal attention in the MTBPS. This oversight not only fails to acknowledge the ongoing reputational and economic risks associated with the greylisting but also neglects to provide a clear, actionable roadmap to restore the nation’s standing in global financial circles. Addressing the greylisting with seriousness is vital to restoring investor confidence and safeguarding South Africa’s financial sector from further reputational damage.
The lack of increased allocation to anti-crime and anti-corruption initiatives is yet another concern. These issues persist as major threats to South Africa’s social and economic stability, affecting investor confidence, deterring growth, and ultimately endangering citizen safety. By neglecting to provide additional resources to fight corruption, the MTBPS fails to align with the government’s objective to build a “capable, ethical, and developmental state.” This oversight is particularly troubling in light of recent instances of corruption that have eroded public trust in the government.
Lastly, the unchecked growth of the public wage bill presents a serious risk to fiscal sustainability. Without urgent reforms, the ballooning wage bill will continue to divert resources away from critical social and developmental programs. This trend highlights a deeper, systemic issue within the public sector and must be addressed with pragmatic, effective solutions to ensure public funds are used in ways that benefit the wider South African population.
In light of these shortcomings, Public Interest SA calls on the government to:
Prioritise Infrastructure Investment by significantly increasing budget allocations for essential infrastructure projects, with particular focus on sectors like water, electricity, health, rail, ports, information technology, and transport.
Support Small Businesses and Entrepreneurs through targeted funding and strategic assistance programs that empower these sectors as catalysts for economic recovery and sustainable growth.
Enforce Debt Controls for Municipalities to ensure that local governments are financially responsible and can continue to provide crucial services without placing additional strain on the national fiscus.
Strengthen Revenue Collection by implementing rigorous tax administration reforms aimed at improving efficiency and capturing previously untapped sources of revenue.
Address the Greylisting Crisis with a clear, actionable strategy to enhance regulatory frameworks, combat financial crimes, and swiftly restore South Africa’s standing with international financial bodies.
Bolster Anti-Corruption and Anti-Crime Efforts with adequate budget allocations to ensure state capability in addressing corruption and enhancing public safety.
Manage the Public Wage Bill through reforms that align public sector remuneration with performance and sustainable fiscal practices.
South Africa’s economic recovery and social stability hinge on a budget that is not only visionary but supported by concrete actions and adequate resources. Public Interest SA remains committed to advocating for a fiscally responsible, transparent, and accountable government that prioritizes the wellbeing of all South Africans.
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Public Interest SA
Johannesburg