Cape Town - Ahead of Finance Minister Enoch Godongwana’s Budget speech on Wednesday, economists, trade unions and small businesses are jittery about some of the trade-offs that will have to be made on the bumpy road to recovery.
A team of FNB economists led by Mamello Matikinca-Ngwenya said the Budget came at a time when the severe real-time impact of the pandemic on economic activity had largely diminished, but poverty and unemployment have deepened.
“The government faces the tough trade-off between providing permanent social support to unemployed adults and risking a deviation from fiscal consolidation or crowding out private investment, which would be better suited to create sustainable employment.”
Uasa spokesperson Abigail Moyo said they expect the Budget to come with practical measures to hasten economic recovery.
“Our wish list for Godongwana’s Budget includes a practical financial plan and investment in job creation that stretch further than the short-term infrastructure building solution.”
She said more support for small and medium-sized enterprises was needed, including getting start-ups off the ground and for the government to put into action the tough love promised in the interim Budget last year.
“They must stop bailing out crumbling, bankrupt state-owned businesses with taxpayers’ money and replace the management teams with experienced and committed professionals who will turn investments into results.”
Small and medium enterprises (SME) expert Garth Rossiter listed the challenges facing South Africa’s SME market as including the pandemic, a weak economy, load shedding, record fuel price increases, the unrest in KZN and generally lower profitability.
“These small businesses are the life blood of our economy. The sector is a massive driver of growth and employment in the country. Without this sector thriving, tax revenue will continue to dry up.”
The government needed to create an enabling business environment to allow small businesses to flourish, he said.
The Automobile Association (AA) said the government must act quickly to find ways to mitigate rising fuel costs which were negatively impacting all consumers in the country. One way to do this was through a review of the current fuel pricing model, it said.
“We have noted before that a review of the current structure of the fuel price, as well as an audit of all the elements which comprise the fuel price, should be done sooner rather than later.”
Vinpro managing director Rico Basson said: “While the industry is slowly but surely recovering from the significant impact that domestic alcohol and travel bans had on our revenue streams, producers are also confronted with an exponential increase in input costs.”
He said Vinpro and industry partners had emphasised the plight of the South African wine industry in discussions with the Treasury since last year and they believed that a specific dispensation was justified for the wine sector that was disproportionately affected by the Covid-19 lockdowns.