DURBAN - Finance Minister Tito Mboweni tabled the Medium-Term Budget Policy Statement (MTBPS) on Wednesday.
Economic Overview
With the South African economy expected to contract by 7,8 percent in 2020 and job losses projected to be severe, it’s clear that the country is struggling badly and there remains an urgent need for economic reforms which will ensure our economic recovery.
The loss of income over the lockdown period has left many individuals and businesses unable to service their debts. Now more than before, policies and decisions by government need to be in the best interests of the business community and beneficial to inclusive and sustainable economic growth.
As the Durban Chamber, Minister Mboweni’s presentation offered some hope but still left us with some concerns, being rather short on detail when it came to specifics of support for business recovery from the ravages of Covid-19 and the impact of the hard lockdown.
Supply of Electricity
The Durban Chamber of Commerce and Industry welcomes government’s efforts to address the supply of electricity.
There is an urgent need from the business community, particularly the manufacturing sector, for greater certainty and detail on this issue and we urge government to fast track a transparent workplan which can be shared with the private sector detailing government’s proposal for how the country will resolve the energy challenge, achieve sustainable solutions and encourage inbound investment.
Infrastructure Investment
The Durban Chamber of Commerce and Industry notes the new proposals for the development of more than 12 harbours. We are pleased about this as infrastructure development is key to catalysing growth, given its positive economic spin-offs.
However, while these proposals are being considered, we urge for follow through on planned spending on existing port infrastructure to ensure enhanced delivery.
This will assist with dealing with challenges in the immediate to medium term horizon. For this to yield positive results, there needs to be strong public-private partnerships. R7,9bn into social housing will afford much needed housing for low income earners.
Loan Guarantee Scheme
The Durban Chamber of Commerce and Industry is pleased to hear of the efforts to review the Loan Guarantee Scheme to improve take-up. We believe this will provide much needed relief to the business community and stimulate economic activity.
We cannot emphasise enough how essential speed of implementation is to this component.
Fight Against Corruption
The Durban Chamber acknowledges Minister Tito Mboweni’s measures to tackle the issue of mismanagement and corruption. The zero budgeting process as a pre-requisite for departmental project spending is very welcome and requires a clear monitoring mechanism to be put in place.
Corruption is a serious economic crime in South Africa that significantly exacerbates our socio-economic challenges. Until the criminals involved in corruption suffer severe consequences for their acts of economic sabotage, there will be no real change in the status quo.
The fight against corruption is in line with the Durban Chamber’s Code of Ethics and as the Durban Chamber we remain committed to raising the flag of ethical leadership at a collective level and to supporting government in this regard.
The Durban Chamber of Commerce and Industry urges government to continue to enact its pre-defined austerity measures in order to contain costs and we appeal to the National Treasury and elected representatives to exercise fiscal discipline, ensure resources are prioritised effectively and be mindful to follow through on these proposals made.
Whilst providing support to meet social needs is critical, it is equally important for support to be directed to businesses especially SMME’s in order stimulate economic activity. We look forward to inventive tax proposals in the National Budget 2021/22.
Nigel Ward is the CEO of the Durban Chamber of Commerce and Industry
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