JOHANNESBURG - Agri SA executive director Christo van der Rheede said AgriSA had expected that the National Treasury would be more robust in its support for the sector given that it was one of the biggest employers in the economy due its labour intensive nature.
“The reprioritising of fund allocations - that is, R5 million deduction from the Ilima/Letsema projects grant and the R980000 reduction from the land care programme grant - does not bode well for this objective alongside market entry for smaller players. Rheede said Agri SA welcomed the government's commitment to cut its wage bill by R310.6 billion over four years, including the R36.5bn cut for 2020, as this shows intent to alleviate pressure on the public purse.
“We also welcome the R7bn further allocation for the Land Bank. However, more could have been done. The further allocation of R10.5bn to SAA is a setback, as these funds could have been channelled to industrial development and localisation per the Reconstruction and Recovery Plan set out by the president.”
The Minerals Council South Africa urged the government to start focusing on the critical institutional and structural reforms necessary to significantly increase the country’s global competitiveness rankings which had slid over the past decade. “In our view, the only way that South Africa can avoid a sovereign debt crisis is through a significant fiscal consolidation process and by a significant improvement in the country’s competitiveness, to enable much higher levels of investment and inclusive growth. Achieving this will require politically contentious reforms. These reforms still need to be discussed in the Nedlac task team established for this purpose. This process needs to be expedited. At the same time, the Minerals Council supports Minister Mboweni’s view that the ease of doing business must be drastically improved.”
Alexander Forbes Investments chief economist Isaah Mhlanga said the positive structural reforms would underpin the economic recovery and long-term economic growth potential; however, this was on condition of a successful implementation. “Apart from the risk of failure in implementing the wage bill reductions, the messaging in the MTBPS is positive on the economic reforms proposed, which are in line with National Treasury, the economic recovery as well as the reconstruction announced by the president. The success, however, is conditional on rapid implementation that requires a capable state, which in turn may be derailed by possible protest strikes by public sector employees contesting wage freezes.”
Tax manager at Mazars in South Africa, Tertius Troost, said that South Africa’s increasing reliance on debt as a means to fill government coffers was unsustainable and may tip us over the edge into a looming debt trap. “We talk a lot about flattening the Covid-19 curve, but government must also focus on flattening the debt curve. Debt is spiralling out of control: it started at a reasonable 30 percent in 2010, and is now expected to breach 80 percent in 2020. We’re heading straight for a debt trap; it’s like paying off your house with a credit card.”
FNB Gauteng south west segment head Palesa Mabasa said the short-term focus was on building infrastructure, expanding electricity generation, allocating digital spectrum and supporting rapid industrialisation. “For small and medium enterprise this could mean, increased opportunities for those who are players in the infrastructure value chain, improved electricity supply leading to less interruptions due to load shedding, and cheaper data costs assisting in e-commerce and running overheads to decrease. In the long term the R12.6bn allocated to fund employment initiatives will lead to increased economic stimulus and gross domestic product growth. SMEs must ensure they are positioned to take advantage of this.”