Given the much publicised budget speech differences in the GNU, one half-expected the Finance Minister Minister to serve president Ramaphosa with a sick note on Wednesday, D-day for his much-anticipated appearance. But before the surprisingly composed Enoch Godongwana could brace himself for the moment up rose one Mzwanele Jimmy Manyi, a Zumaite long before the MK party was born or had become uBaba’s family trust, demanding an apology for last month’s postponement. He got it. Parliamentary Speaker Thoko Didiza also gave one for allegedly being three minutes late.
This was a petty hassle compared to the albatross that’s been weighing heavy on the Minister in the lead up to the speech, namely the 2% VAT increase versus an increase in the Social Relief of Distress (SRD) grant. Apparently SA can’t have it both ways. A R20 increase on the SRD would come with a 2% hike in VAT – Godongwana’s way or the highway, so the hive was saying.
By the time the minister opened his mouth, it was clear it’d be a long day with little by way of good news. He laid bare what we already know. Ten years and the economy has hardly been growing, with GDP averaging less than 2%, not exactly the situation to be in when you have a growing list of needs to address. Treasury had predicted a 1.6% increase for the 2024/2025 fiscal year which ultimately fell short, amounting to 0.8%. Also, we are up to the eyeballs in debt meaning some R389.6 billion (22cents of every rand) will be going to our creditors.
Eskom, Godongwana assures us is ‘now in a much better financial position than in 2023 when the debt relief was originally announced.’ This means that the parastal is due to receive R40 billion in debt takeover instead of the R70 billion that had previously been committed to. On Operation Vulindlela which was ‘formed as a joint initiative between the Treasury and the Presidency, to fast track the implementation of structural reforms,’ the Minister highlighted several achievements:
- The creation of 22 500 mega-watt pipeline projects, with 10 000 mega-watts already registered with the National Energy Regulator of SA (NERSA).
- The Freight Logistics Roadmap which ‘allows private sector participation and gives third-party access to any operator.’
- Reduced data prices where a 1.5GB data bundle has decreased by 51 percent.
- ‘The water-use licenses backlog has been cleared.’
- ‘The water quality regulatory system was reinstated for the first time since 2014.’ This enables municipalities to provide clean water to citizens.
- e-Visas have been introduced to 34 countries to boost tourism.
Infrastructure spending
The north of R1 trillion rand for infrastructure spending over three years will go towards transport, logistics, energy infrastructure and water and sanitation. ‘In transport,’ said Godongwana, ‘the South African National Roads Agency (SANRAL) will spend R100 billion over the medium term to keep the national road network in good condition.’ Over 16,000 lane-kilometres of roads would be resealed by provincial roads departments, said the minister.
He also assured the country that the Passenger Rail Agency of SA (PRASA) is ‘making steady progress to rebuild infrastructure to provide affordable commuter rail services.’ Although admitting to the parastatal’s wanting procurement system, he was quick to say that the management of the entity were putting in place measures to address their shortcomings.
Citing ‘persistent spending pressures in health, education, transport and security,’ the Minister proposed a half percentage point increase in Value Added Tax (VAT) in 2025/2026 and another next year. He proposed no increases in corporate and personal income tax and more borrowing was simply not an option.
In a bid to cushion the poor, Godongwana suggested ‘social grant increases that are above inflation, expanding the basket of VAT zero-rated food items [and] not increasing the fuel levy for another year.’
Health
The public health sector lost some 9000 health workers. Accruals, ‘which is the money owed by departments to vendors for services already provided, also ballooned to nearly R22 billion. This means that the money allocated to departments ends up paying for previous services and goods rather than for the current needs, setting off a vicious cycle of budget shortfalls, unpaid invoices, and a crisis in cashflow and the planning and predictability of budgets’ said Godongwana. Spending in the sector will go from R277 billion in 2024/2025 to R329 billion in 2027/2028 with another R28.9 billion to retain health care workers, employ 800 post-community service doctors and to ensure the availability of medicine.
Social security
The old age and disability grants will increase by R130 to R2315 in April. The Child Support Grant will go up by R30 to R560. The foster care grant will get a R70 increase. The Covid19 Social Relief of Distress grant will be extended until the end of March 2026.
Now that Godongwana has had his say, it seems not everybody is chuffed about his ‘trade-offs’ not least the DA head, John Steenhuisen. On X shortly before the speech he tweeted that, ‘the DA will not support the budget in its current form’ and in a statement the party said ‘The ANC VAT Budget doesn’t have a majority, and the DA won’t give it one.’ Ouch! Still not happy second time around. Understandably, the press were jolted into a frenzy, pondering what this might mean given that the Democratic Alliance is the ANC’s biggest partner in the GNU.
So the pundits have been out assessing all sorts of wild but not entirely impossible scenarios. Maybe a rekindling of old friendships given the seemingly non-confrontational moment between the MK’s Jimmy Manyi and Godongwana after the former had demanded an apology for the minister failing to table his speech last month. Whether there are legitimate budget disagreements within the DA or if this is just a power move one can’t say for sure but what is clear is that the days of an ANC free to do as it pleases are over. They have gone from the brashness of a majority party to acquainting themselves to the humility of consultation. And as they will no doubt be trying to iron out their kinks at the post-budget gala, at least the Gogo Dlaminis are celebrating the extra R130. It may not sound like much to you but believe me, it’s another two bags of 2kg chicken, something which goes a long way in many of SA’s vulnerable households.