When Finance Minister Enoch Godongwana delivers his inaugural National Budget Speech on February 23, he will need to focus on investment- and business-friendly policies that stimulate sustainable economic growth to save South Africa from economic disaster, according to wealth management experts.
All eyes will be on Godongwana to see if he will be able to implement President Cyril Ramaphosa’s bold policy vision, expressed during the recent State of the Nation Address (Sona), to “unleash the economy”.
Prioritise growth and everything else will fall into place
One can’t really fault Ramaphosa’s economic policies, but what we need to see now is proper implementation to kickstart economic growth of at least 3%. It all boils down to fixing economic growth.
We need to stimulate business growth, grow the fiscus and spend strategically to create jobs.
If we set in motion proper sustainable economic growth, we don’t need to worry about anything else.
SA’s economic growth has been stagnating for almost a decade while we’ve seen greater population growth and an all-time high unemployment rate. The debate should boil down to what our government is going to do within this limited fiscal room to get growth going.
Godongwana must use this opportunity= to show the world that SA is serious about getting its spiralling debt and unemployment under control, and that it is serious about attracting foreign direct investment.
The South African economy can’t rely solely on the reopening of the global economy and SA’s strong commodity and agricultural exports as these are never guaranteed long-term. We need a strong economic foundation.
Government must fix its ‘execution deficit’
I’m hoping for fast-tracked policy reform and implementation. We need to see evidence of better implementation from this administration.
We keep on talking about the budget deficit, but I think the biggest deficit we should talk about is the execution deficit, because government is not executing on great policy.
I think there’s nothing wrong with the policy and what the president is saying is exactly what we need to do. Yes, we need to engage with the private sector and with entrepreneurs, but we still have a lot of red tape.
While the government has little room to manoeuvre between delivering populist policies to address poverty, quell further political unrest as experienced in July 2021, and create economic growth, it needs to focus on creating an environment of returning business confidence and foreign direct investment, as this will also help solve poverty and unemployment in the long term.
Our view is that if National Treasury comes up with 1.6% growth at the end of the framework, it’s just not good enough and will create the impression that they don’t believe in their own policies and ability to deliver.
We need to get into an environment where we can actually get to a sustainable growth rate of 3%.
Maarten Ackerman is chief economist and advisory partner at Citadel.