Supplementary Budget 2020

Entities need Mboweni's tough love, says Business Leadership SA

Business Leadership SA CEO Bonang Mohale has praised Finance Minister Tito Mboweni for tabling a “well-adjusted, sensible and reassuring” maiden budget speech, which included tough talk for lagging state-owned entities.

The budget speech in Parliament on Wednesday was characterised by a commitment to assist Eskom with R69bn over the medium term and R150bn over the next ten years.

However, Mboweni had stern words for parastatals that continually asked for bailouts while failing to show improvement in financial management and governance.

He also said the public service wage bill was unsustainable and had to be managed by encouraging early retirements and containing the wage bill’s escalation through "natural attrition".

Mohale said the speech was balanced and "reflected the tough economic times the country is going through after a decade of weak economic growth".

"We are encouraged that government acknowledges that the private sector is the key engine for job creation, and government ministries are hard at work ending policy uncertainty and aligning their policies to allow business to operate in a conducive environment," said Mohale.

Mohale added that state-owned entities must be self-sustainable and not dependent on government handouts. He praised the announcement that support for Eskom would come with tough conditions.

"This must not just be for Eskom, but all other entities and municipalities because there is simply no room within the fiscus to spend our way out of a growth-constrained environment," Mohale said. 

He agreed with Mboweni’s sentiments that non-strategic entities that did not serve an especially developmental role should eventually be disposed of.

Mohale commended Mboweni’s position on the need to resist "the populist view, which called for an increase in corporate tax".
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