Pretoria – Business Unity South Africa, which represents South African business on macro-economic and high-level issues, says the Budget Speech by Finance Minister Pravin Gordhan was realistic and sensible.
South Africa Business
“Busa shares the realistic assessment of South Africa’s economic prospects offered by the Minister of Finance in his budget speech today. The budget speech charted a continued course of sound fiscal management,” it said in a statement.
The several business friendly components in the budget speech were encouraging, as well as the emphasis on the importance of competitiveness to the economy in order to achieve higher levels of inclusive growth.
“Business concurs that the degree to which the creation of decent jobs will be possible will depend on the competitiveness of our enterprises. We further share sentiments implied in his speech that our rates of investment and exports must be promoted in order to support an environment in which such higher job-rich growth is possible,” said Busa.
In view of the essential role which infrastructural spending must play in supporting South Africa’s economic performance, Busa endorses the emphasis that the budget speech placed on infrastructural spending.
Gordhan announced that government and state-owned enterprises would spend more than R800 billion over the next three years on new power stations, road networks, dams and water supply pipelines, rail and ports facilities, schools, hospitals and government buildings.
“If the impact of planned infrastructural spending on the economy is to be maximised, it will be essential to expand the use of public private sector partnerships in order to build capacity to implement programmes and projects,” said Busa.
It welcomed the clarification on the involvement of the Development Bank of South Africa (DBSA) in the operationalisation of the R9 billion jobs fund and the distinction made between the jobs fund and the R5 billion youth employment subsidy.
Busa warned that while it was positive about the R20 billion in tax incentives for new investments, every effort should be made to ensure that small business can share equitably in these allocations.
“It is important that these incentives should prioritise employment creation in the private sector, as this will be more productive in promoting employment throughout the economy over the medium and long term. This being said, Busa welcomes targeted financial and enterprise development programmes, as well as the tax relief measures for micro and small businesses,” Busa said.
It welcomed in particular the new Khula Funding idea model. “We would wish to engage more [on this] in the coming months. We believe that the additional R24 billion allocation for skills development and education is a very positive development.”
It added that it would like further action on legislative reforms to ease the cost of doing business for small business in particular, which has been placed on the agenda in previous budgets as well.
Regarding Gordhan’s announcement that the wage bill in government departments doubled to more than R300 billion in the past five years, Busa said significant debate should centre on the moderation of the wage bill.
“Research has shown that the differential between public service and private sector salaries based on formal, non-agricultural employment has in 2010 reached almost 45 percent in favour of the former. These trends are relevant to the challenges of poor delivery and inadequate capacity in the public sector,’ it said. – BuaNews
