Cape Town – Jobs, infrastructure development and small and medium enterprise (SMEs) promotion are likely to form the key focus of Finance Minister Pravin Gordhan’s Budget Speech today.
When Gordhan delivers his Budget Speech at 2pm, he is likely to be in a buoyant mood, with the economy having grown 4.4% in the fourth quarter, unemployment having shrunk slightly from 25.3 percent to 24 percent in the final quarter and with an I-Net Bridge poll revealing that economists believe the deficit will narrow from 6.7 percent to 5.3 percent.
However, with the country still laying claim to one of the highest unemployment rates in the world, Gordhan is expected to detail measures to help create more jobs.
Among these, he is expected to provide more details on the R9 billion jobs fund, as well as the R10 billion the Industrial Development Corporation (IDC) is to set aside for investment in projects with high job-creation potential – both of which were revealed by President Jacob Zuma in his State of the Nation Address earlier this month.
Gordhan is also expected to provide further details of funding for the New Growth Path, which was approved by Cabinet last year and targets six priority sectors, namely: infrastructure development, agriculture, mining and beneficiation, manufacturing, the green economy and tourism.
Infrastructure spending is also expected to get key coverage in the Budget Speech.
According to a report released this week by Bank of America/Merrill Lynch, Gordhan is expected to detail major spending on roads and rail, following last week’s Cabinet announcement that spending at Sanral and Transnet would be boosted.
“Previously, the government had budgeted for about R125 billion over the next few years. That sum has now been increased to R450 billion. This puts medium-term cumulative spending on road and rail on par with energy at around R450 billion,” said the report.
Gordhan could also spell out details of spending in rural areas, following Zuma’s announcement in his State of the Nation Address that the state would also develop infrastructure to boost the agricultural sector – including the rehabiliation of water reservoirs, windmills and irrigation schemes.
The Budget is also expected to detail further support for informal as well as small businesses, with the announcement by Zuma in his State of the Nation Address that the government’s small business funding agencies (Samaf, Khula and the IDC’s small business funding portfolio) would be amalgamated into one organisation.
Among several tax measures to assist small businesses, Muneer Hassan, the South African Institute of Chartered Accountants project director of tax, called for the R14 million turnover threshold for the taxation of Small Business Corporations to be raised.
Those small enterprises that qualify as Small Business Corporations are taxed at a more favourable rate than other businesses.
“The threshold had last been altered in 2007, so an inflation-related adjustment was clearly necessary,” said Hassan.
The South African Chamber of Commerce and Industry (Sacci) also wants to know more details of the National Health Insurance, the reopening of teaching and nursing colleges to improve skills in these areas and the green economy strategy.
Chose Choeu, the President of Sacci, expects business environment and enterprise support to be a key theme of the Budget.
Choeu said the chamber wanted more certainty on the measures to reduce regulatory bottlenecks and red tape for business generally and small and medium-sized enterprises in particular, as well as what amount the state would set aside to help fund small businesses.
It also wanted details on “tangible” programmes to tackle youth unemployment, funding for the anti-corruption initiatives described by Zuma in the State of the Nation Address, details on the exchange control reforms mentioned and on the progress of the Local Government Turnaround Strategy. – BuaNews
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