Godongwana’s Lackluster Maiden Budget Speech

On the 10th of February 2022, President Cyril Ramaphosa delivered the State of the Nation Address (SONA) tabling Government’s social and economic investment programmes for South Africa. Predictably, SONA 2022 was consistent with what was raised in the African National Congress’s (ANC) ‘January 8th Statement’, delivered in Polokwane. So the new finance Minister of South Africa, Enoch Godongwana’s maiden budget speech 2022, tabulated this week on the 23rd of February 2022, must be read as merely allocating funds, to implement programs announced at SONA. For the majority of South Africans compelled to adjust, since March 2020 when the COVID-19 Pandemic had an adverse economic impact on their pockets, much was expected from Godongwana’s 2022 budget speech. The respective circumstances of South Africa’s residents, may justify their anxiety, on what may have been prioritised in the 2022 budget. Uppermost on this year’s budget speech was keen interest, on how much money was going to be allocated to job creation, capacitating the healthcare system, economic growth, measures to curb Gender Based Violence (GBV), infrastructure development and social protection. Furthermore curiosity about how much would be allocated to besieged State-owned Enterprises (SOEs), such as Eskom was very high. South Africans have after all been experiencing a ridiculous amount of load shedding, which has negatively impacted the economy especially the Small Medium and Micro-Enterprises (SMME’s). 

During the tabling of the budget speech, Minister Godongwana announced that R6.62 trillion will be spent by government over the next three years and 59.4% of the non-interest spending will be allocated for social wages. The largest allocation announced in ‘budget 2022’ was R441.5 billion, given to the National Departments of Basic Education and Sport, Arts and Culture. The lion’s share of that allocation was R282.8 billion, allocated to the Ministry of Basic Education. Perhaps deservedly the National Department of Social Development, was allocated R364.4 billion. Other well deserved allocation was the R236,3 billion allocated to the National Department of Health. Given the overwhelming evidence of conniving, that flouts procurement procedures exposed in the two volumes of the ‘Zondo Commission Reports’, hesitancy is justified to ponder what justifies the R227.1 billion allocated, to the Ministry of Economic Development. The R69.2bn allocated to the Ministry of Public Services and Administration, is fair however office bearers in that department need to lead by example, when raising matters of service delivery. R220.7 billion was allocated for the maintenance of peace and security, to enhance the budget allocated to the Ministry of Justice and Correctional Services. The latter is interesting given what has been witnessed, in the wake of the July 2021 unrest and the unforgivingly high statistics on crime. This budget must be used accordingly.

Since 2008/09 South Africa has been experiencing a stagnating economic growth, after the country suffered an economic recession, for the first time in 19 years. The repercussions led to an estimated million jobs being lost in 2009, which caused the unemployment rate to skyrocket to a record high of 25%. In March 2020, COVID-19 was detected in South Africa and effectively had a negative impact, on the economy forcing some businesses to close and a large number of job losses. As earlier highlighted, within this COVID-19 period South Africa suffered the setback of the July 2021 unrest, which among others resulted in the closure of companies and malls. This impacted negatively on the recovery of the economy and job creation. Most of the SMME’s affected, have yet to recover. The anticipated Growth Domestic Product (GDP) of 2.1% in 2022 and an average of 1.8% over the medium term, is concerning. South Africa needs a higher GDP rate, to help in realising economic growth and creation of sustainable jobs. According to the budget speech, about 46% of the South African population depends on social grants, placing a high dependency on government. 

From an experienced perspective, the allocation of R441.5 billion towards the National Departments of Education and Sports, Arts and Culture is lukewarm. The dilemma of a lack of direction of respective plenipotentiaries, which lead to wasteful expenditure in these ministries is appalling. Our education policies are still not alive to overdue demands, of a decolonial curriculum and South African artists are reduced to pariahs in the entertainment industry in their own country. The latter stance also applies to the R24.8 billion, allocated for job creation and labour affairs.  The agency for job creation in a country faced with a peak of 34.9% unemployment rate, demands fresh thinking and honest plenipotentiaries. Minister Godongwana announced a R15 billion loan guarantee for SMME’s with relaxed requirements. If utilised accordingly this may assist the affected SMME’s by Covid-19 and the ‘July 2021 unrest’. The increased allocation for health care spending, is intended to continue the support to victims of the Covid-19 pandemic. The R350 social relief grant, will be extended up to 2023. It is worrisome that the thinking behind the latter allocation, is that it will assist in providing basic income for the unemployed. Fresh thinking is needed, to prioritise permanent jobs.

The Minister announced the tax bracket relief, as the personal income tax brackets and rebates will be adjusted higher, to be in line with inflation. For persons below the age of 65, the annual tax-free threshold will increase. There will be no levy increase on fuel thus a tax relief of R3.5 billion is projected. Additionally there will be no increase on the Value Added Tax (VAT), personal income tax and the road accident fund. This is a much welcome decision, as it will have a positive impact, on the prices of goods and services in the country. The promise to cut tax for companies, was fulfilled in this budget speech. The announced reduction will be from 28% to 27%, in the period of 2022/23. During this period the latter tax reduction, will cost government R2.6 billion in revenue. The introduction of this relief was justified, along the lines of boosting companies to create jobs for the youth. The youth, are not the only ones unemployed. Plenipotentiaries were also let down, as their annual average growth of compensation will be a miserly 1.8%, for the next three years. Overall Minister Enoch Godongwana’s budget speech was lacklustre, given South Africa’s economic woes. Fresh ideas, which would transcend the usual reactionary approach of short-sighted ANC deployees is what is highly required.  

By Dr. Tshepo Mvulane Moloi and Ms. Aphiwe Socishe. Dr. Moloi is a Postdoctoral Research Fellow Ali Mazrui Centre for Higher Education Studies (AMCHES) and Research Associate at African Centre for Epistemology and Philosophy of Science (ACEPS) – University of Johannesburg. Ms. Socishe is a Public Policy Development and Research Officer at the South African Department of Higher Education and Training (DHET).