Minister of Fianance Tito Mboweni. Photograph : Phando Jikelo/African News Agency(ANA)
Minister of Fianance Tito Mboweni. Photograph : Phando Jikelo/African News Agency(ANA)

Minister Mboweni treads a fine line between give and take

By Martin Hesse Time of article published Mar 2, 2021

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Most middle-class South African consumers will view Wednesday’s Budget speech positively: the Finance Minister did not announce any new taxes and, if their income increased by less than 5%, they will enjoy a decrease in their annual income tax bill. However, spare a thought for people surviving on social grants, and for employees in the public sector, who may not be quite as enamoured by what the Minister had to say.

André Wentzel, solutions manager at Sanlam Retail, says the above-inflation personal tax relief of R2.2 billion is particularly positive.

“Many were expecting the worst when it came to tax increases, given that we currently have the largest tax shortfall on record. We applaud the government’s considered approach, which should help to reduce the tax burden on lower and middle-income households.”

Wentzel says the tax relief gives South Africans a chance to take a deep breath and reprioritise their finances.

“Now is the time to re-examine money matters and cut expenditure where possible.”

Ernest Zamisa, financial adviser at Momentum Financial Planning, says the Budget should brighten the mood of consumers so that they become more confident in investing and in participating in the economy.

“It’s a ‘people-conscious’ budget, with a long-term positive outlook towards public and private development sector opportunities.

“The speech is consistent with previous Budget speeches that have been focused on development and embrace technology, transformation and environmental consciousness,” Zamisa says.

Another adviser at Momentum Financial Planning, Janine Horn, says: “It’s a tough period for South Africa, due to the pandemic, which has taken its toll on consumers and business owners.

“The economic downturn certainly means consumers are fragile and frustrated; however, the minister’s budget is optimistic and positive.

“Regarding personal tax, with a decrease one would expect household finances to improve.

“I would encourage households to reassess their budgets, decide on a strategy and stick to it.”

More good news is that National Treasury has committed to reviewing the rules around travel and working from home. Sage’s tax expert, Yolandi Esterhuizen, says: “I’m excited about the fact that Treasury plans to review the current travel and home office allowances, starting with consultations during this year and next.

“With more people working from home, and the remote working trend likely to outlast the pandemic, it is time to start aligning tax deductions for employees with the realities of a new world of work.”


Chantal Marx, investment research head at FNB Wealth and Investments, says it was a good Budget from a market perspective.

“The minister has perfected the art of striking a delicate balance of being both bond and equity friendly. The rand strengthened, bond yields fell and the equity market held up well. A decline in bond issuances will be positive, as it indicates that government expects its lending requirements to come down,” she says.

Regarding retirement fund investments, National Treasury will publish draft amendments to Regulation 28 of the Pension Funds Act to make it easier for retirement funds to increase investment in infrastructure.

“This suggests that investment in infrastructure projects will be optional and not prescribed, as feared by some,” Marx says.

Prabashini Moodley, managing director of Old Mutual Corporate, says that while the financial services industry waits to see the proposed amendments, “increased investment exposure to infrastructure projects could lead to better outcomes for all South Africans saving for retirement.

“Infrastructure assets offer members decent diversification, particularly in the context of the comparatively small local equity market.

“They deliver inflation-beating returns over the long run if properly structured and properly managed,” Moodley says.

She says increased private sector investment in infrastructure could unlock long-term benefits for the country and investors alike, and will be a catalyst to stimulate the economy.


Several aspects of the Budget will have come as bad news to government workers, people who depend on social grants, and the millions who commute via taxi: social grants rising by a paltry 1.6%, the increases in the fuel levies, and Treasury’s intention to virtually freeze public sector wages for the next three years.

Aisha Pandor, chief executive of domestic worker services agency Sweepsouth, says: “The increase in the fuel levy will profoundly impact South Africa’s poorest workers (many of whom have to travel long distances to work), who will be subject to likely heavy increases in public transport costs as a result.”

John Manyike, head of financial education at Old Mutual, sees the rationale behind cutting the public sector wage bill, but says it will come with “a lot of casualties”.

“In the last few years we have seen labour being able to negotiate wages above inflation, to a point where we saw public servant salaries outpacing those of the private sector. But those years are gone; we are now in a position where it is simply not sustainable.

“The challenge is that we’re going to see a showdown between government and the public sector unions, who are saying, okay we hear you, but what about the rising costs of living?

“Can you imagine when teachers, nurses, and policemen and women are under pressure. What’s going to happen to the quality of service?

“I think there will be knock-on effects: we might see a series of strikes and damage to property.

“It’s really a case of having consultations in good faith with the unions. It would be dangerous to discuss this in the public domain without prior consultation.”


Given the focus on health in the midst of the pandemic, there was no mention of the controversial National Health Insurance (NHI) initiative.

Damian Mchugh, head of marketing and sales at Momentum Health, says: “It’s a long time since we have not heard NHI mentioned in a Budget speech, and that’s probably because there are other pressing matters.

“The minister did mention quite a few times about public and private working together (in other contexts). So maybe there is an opportunity for the private healthcare sector to partner with the public sector and work towards a health system that works for all South Africans.

“The pandemic has seen a focus on health, and what has been demonstrated is that when we work together, the results are quick and we can achieve very good things, and it shows that NHI doesn’t have to be at the expense of the private sector.

“We can use what we have learned in the pandemic for the long-term health of South Africa, and that includes the NHI model.”


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