Supplementary Budget 2020

Business, agriculture chambers raise mini budget concerns

Cape Town - Although the South African Chamber of Commerce and Industry (Sacci) welcomed Finance Minister Pravin Gordhan's mini budget, it is concerned about the revised growth target of 0.5% for the fiscal year of 2016.

It regards the 0.7% growth predicted for the 2017 fiscal year as encouraging, although it sees it as still significantly low given the economic, political and social challenges the country faces.

Sacci would like to see Gordhan continue with austerity measures to bring in line non-investment related expenditure - including wasteful government spending.

READ: Budget in a nutshell: Gordhan consolidates in difficult period

"We, however, caution the minister not to adopt austerity measures which may appear good on the face of it, yet have a negative impact on the SMME sector, which relies mainly on supplying goods and services to government departments and related entities. This could have a devastating effect on job creation and can cause job losses especially amongst the low skilled workforce," Sacci said in a statement.

On the other hand, it said Gordhan’s announcement of R900bn plus in proposed infrastructure expenditure should ignite significant economic activity to drive job creation and establish the necessary infrastructure platforms in energy, logistics and telecoms.

"These investments are key in consolidation and improving South Africa’s global competitiveness as an investment destination," said Sacci.   

"We wish to encourage the government and its relevant departments to scale-up their execution capabilities in implementing the projects announced in the mini budget."


While the agricultural business chamber Agbiz lauds Gordhan and his team for the mini budget, it said questions remain as to his political future, given the spurious charges of fraud brought by the NPA, and whether he has done enough to stave off downgrades by the rating agencies.

"With continued sluggish and deteriorating economic growth and increased demands on the fiscus for ‘free’ higher education, drought and other support for the agricultural sector, social welfare, a nuclear power programme and many more, Minister Gordhan and National Treasury have had a tough job to balance expenditure with lagging tax revenue," said Dr John Purchase, CEO of Agbiz.

"But it is against the backdrop of major political intrigue and the pending threat of downgrades to sub-investment grade by rating agencies that make the mini budget of far more significance."

In the view of Purchase, Gordhan and his team have provided a credible mini budget, given the enormous and complex challenges faced by the country.

"The minister emphasised the need for inclusive growth many times - with which Agbiz fully concurs - as well as the need to work together to achieve our goals as a country. To this end Agbiz is involved in a number of initiatives with government and National Treasury, in particular in order to achieve the goals of the National Development Plan through sound and sensible implementation,” said Purchase.

“The Minister indicated that government intended to raise an additional R43bn through tax revenue measures. This amount is considerable and of major concern as it implies a considerable increase in taxation of an already over-taxed private sector and citizenry."

In his view, this could dampen the very economic growth needed to increase tax revenue.

Social instability

The AHI business chamber said it is deeply concerned about how power struggles exacerbate economic uncertainty and social instability. It also impacts negatively on how South Africa is viewed by the outside world.

"More importantly though is that South Africans have started to doubt ourselves and our ability to grow together and make South Africa a truly prosperous country. We as a country need the highest form of stability, certainty and peace in order to help the economy grow and create prosperity," the AHI said.

It welcomed Finance Minister Pravin Gordhan's statement on corruption.

"Corruption needs to be systematically address and rooted out by leaders and followers alike. This year the AHI signed an MOU with the Ethics Institute and we encourage all our members to act and do business in an ethical way.  We cannot criticise if we live in glass houses," it said.

Furthermore the AHI is deeply concerned about the state of municipalities.

"We will study the Municipality Money initiative and comment once more detail is available," the chamber said.

Promised increases

The Cape Chamber of Commerce and Industry said it hopes that the promised increases in subsidies for students and universities will help to restore order and put tertiary educational institutions to work again.

"Unfortunately the students are impatient and the knowledge that university subsidies are to increase by 10.9% a year and student subsidies by 18.5% a year may not be enough," said Janine Myburgh, president of the chamber.

"A better approach might have been a 'raid' on the accumulated funds in the Sector Education and Training Authorities (Setas) which are performing well below par."

Myburgh said it was clear that we would have to brace ourselves for tax increases next year.

"The ideal method would be an increase in VAT but there would be strong objections from unions," she said.

The chamber was pleased to see that Mr Gordhan recognised low confidence as an issue that was constraining private sector investment but he was still keen for private sector partnerships in infrastructure developments.

* Visit our Budget Special for all the budget news and in-depth analysis.

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