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Details are required from the government on its plans to drive growth, fund social grants and create jobs
Trade unionists and bankers are urging Finance Minister Enoch Godongwana to use his budget on 23 February to spell out the trade-offs he plans to make on social spending, cutting the budget deficit and paying down more of the ballooning public debt.
Godongwana's fiscal measures will also be keenly watched by the ratings agencies, Moody's and Standard & Poors, who are due to deliver reports soon after the statement.
Three key issues stand out: will Godongwana cut corporation tax as an incentive for companies to create more jobs? What steer will he give on the coming public sector pay negotiations? What is the plan on state-owned enterprises, above all the power utility Eskom?
Both trade unions and company bosses voiced frustration with President Cyril Ramaphosa's State of the Nation address earlier this month. To them, Ramaphosa had missed an opportunity to chart a clear exit route out of the economic crisis.
Instead, the speech seemed to them to be more about winning another term as leader of the governing African National Congress at its elective conference in December (AC Vo 63 No 3, Balance of forces in ANC favours Cyril).
Commentators and politicians from business and the opposition Democratic Alliance said he was moving in the right direction but had not gone far enough with structural reforms – such as cutting government spending, streamlining the civil service, cutting taxes and privatising state-owned enterprises.
But they backed his line that it was business and not government that created jobs. They also welcomed his move to take charge of the 100 billion rand (US$5.8bn) infrastructure programme over ten years as a driver to create jobs.
Business also welcomed his loosening of some regulatory constraints and hailed greater involvement of the private sector in modernising ports, the accelerated breaking up of the Eskom electricity utility into three units and streamlining of the criminal justice system.
Some companies liked the recruitment to the president's office of former mining executive Sipho Nkosi to cut red tape and accelerate business processes. But others dismissed it as a Ramaphosa gimmick which would fizzle out because the main bottlenecks were located in local – not national – government.
Trade unions cautiously welcomed the extension by a year of the R350 a month disaster payment to some 10m unemployed South Africans. But they were disappointed that there had been no progress towards a universal basic income grant of nearly twice that, R640. Many believe this grant will be a long-term feature given the slow progress on job creation (AC Vol 63 No 4, Basic Income Grants move up agenda as ANC policy fights intensify).
Civic activists argue the basic income grant should be four times the disaster payment, or R1335, to get everyone above the poverty line. They said Ramaphosa's speech was too skewed towards business.
Yet business representatives said the tone and substance of the speech fell far short of what was needed. 'The President did not chart a particularly new course,' said Busisiwe Mavuso, CEO of Business Leadership South Africa representing over 100 of the biggest companies.
'Business was hoping for a stronger sense of urgency and a stronger commitment to the reform agenda,' added Mavuso.
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