Mboweni urged to support exporters, entrepreneurs in budget review
JOHANNESBURG - South African finance minister Tito Mboweni's annual budget review on Wednesday should offer concrete measures to boost exports and support small and medium enterprises while also cracking down on corruption in state departments and entities, business executives and economic analysts urged.
The lengthy list of advice and wishes, on the eve of Mboweni's budget speech to Parliament, includes a plea to offer some relief to consumers struggling to withstand an economic downturn that has persisted for over a decade now.
"Whilst we welcome the recent announcement of the 3.8 percent increase in the national minimum wage, which should have a positive impact on household income for a large majority of our population earning in that bracket, it remains a concern that the current economic climate continues to put consumers under severe pressure," said Saul Gur, financial manager at online retailer Teljoy.
"A rand buys far less today than it did five years ago. It would therefore be welcomed if the minister’s budget for the upcoming year addresses the needs of our economy as a whole while focusing on offering some sort of relief to the consumer.”
The chairman of the South African Berry Producers Association, Justin Mudge, called for concrete steps to increase agricultural exports.
In an economic strategy document released last August, Mboweni set a target to raise farm exports by R6 billion over the next ten years.
"The time has come for Minister Mboweni to say how his budget will enable the sector to realise the targeted growth," Mudge said.
He said the 3.8 percent of the agriculture department budget earmarked for trade promotion and market access last year was insufficient.
David Morobe, executive general manager for impact investment at Business Partners, one of Africa’s leading business loan and equity providers, said the small and medium enterprise (SME) sector hoped for more clarity from the budget speech on pledges of support made by President Cyril Ramaphosa in his state of the nation address earlier this month.
“Given the well-known fact that SMEs contribute significantly to job creation, it would bode well if government could offer tax incentives to SMEs who create new jobs, as that would help alleviate the high unemployment levels that our country is facing," Morobe said.
He said while South Africa’s ranking in the Global Competitiveness Report had improved, rising seven places to 60th in 2019, there was still a long way to go particularly in improving the ease of doing business.
State-owned power utility Eskom’s failure to meet the country’s energy needs, leading to intermittent rolling blackouts -- or load shedding -- was the biggest issue currently facing local businesses, Morobe added.
"We are hoping to see ... significant rebates or tax reductions for generators or inverters that could help small-and-medium-owner-managed businesses to better manage their energy challenge," he said.
Restaurant group Mozambik's chief executive Manny Nichas said the barrier to entry in terms of funding startups or working capital for growth remained high.
“I really hope that the upcoming budget turns its attention to driving the economy from the bottom up," Nichas said.
"While the attraction of foreign direct investment remains critical ... small to medium enterprises are the absolute key to re-igniting growth in South Africa.”
Farmers support group TLU SA urged Mboweni against bowing to undue political pressure, but rather to provide "cold, clinically correct economic action and words to convince credit regulators of one more chance for the country".
Moody's, the last of the big three ratings agencies which still maintains South Africa's credit standing above "junk" status, is likely to announce its latest review after the budget, paying attention to how Mboweni proposes to rein in spending and contain the country's soaring debt.
"You only have one chance Mr Mboweni. Moody’s is waiting at the door ... We hope the country’s prosperity will weigh more than political favour," TLU SA president Louis Meintjes warned.
He adviced the finance minister against providing more financial support to "sinking" state entities like South African Airways and passenger rail agency PRASA, adding that Eskom should only get limited financial on condition of establishing effectiveness.
"The minister only needs to be guided by sound economic principles. Test every suggestion and decision concerning the budget by its effect on economic growth," he said.
- African News Agency (ANA)