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Business advocacy groups may have mixed reactions to Minister of Finance Tito Mboweni’s maiden medium term budget policy statement on Wednesday, but were in agreement that his brutal honesty about South Africa’s dire economic outlook was commendable.
Business Unity SA praised Mboweni’s policy statement, calling it “an honest and comprehensive reality check for SA to address its macro-economic and fiscal fundamentals”.
Busa welcomed the new finance minister's commitment to re-assessing regulatory obstacles to investment and doing business in the country.
“The Minister’s acknowledgement that the country needs to live within its budgetary constraints is an essential principle that has been underscored by the business community,” the group said.
The statement said the posture of the medium-term budget was supportive of more collaboration between government, organised labour and business to sustain the momentum generated from the jobs summit process. The jobs summit took place in Johannesburg earlier this month.
“But greater recognition could have been given to freeing up the constraints on small business to create a more enabling environment for [them] to participate in the economy,” the statement said.
Busa president Sipho Pityana said Mboweni had a tough balancing act ahead of him with a deteriorating operating environment and a technical recession.
“This is pronounced in the state of misgovernance and maladministration in state-owned entities and SARS. It is, therefore, imperative that the government make good on its commitment to restore lost trust and confidence with the body politic,” Pityana added.
Independent business formation Sakeliga said Mboweni’s first mini budget failed to give South Africans a clear path to reducing the country’s deficit.
According to its website, Sakeliga has more than 12 000 members and lobbies for "constitutional order, free markets, prosperity and a favourable business climate in the interests of its members as well as in the common interest wherever its members do business".
Sakeliga CEO Piet le Roux said in a statement from the business body that the fiscus was slipping further into the red at an alarming pace. For the past decade, spending has annually exceeded income by between R100bn and R250bn.
"To start consolidating the fiscal position, the deficit will have to be reduced to less than R100 billion per year. Mboweni has given no indication that he is willing to make the difficult decisions necessary to achieve this reduction," said Le Roux.
Le Roux said that because Mboweni has only been finance minister for no more than two weeks, he would not have been able to do much with the numbers outlined in the medium-term budget policy statement.
"That said, it is unfortunate to note that further bailouts for SAA, SA Express and the Post Office have been promised and Mboweni has, in this instance, done the exact same thing as his predecessors," Le Roux said.
Le Roux expressed his relief at Mboweni’s apparent decision to soften some of his more controversial policy preferences.
"It is encouraging to see that Mboweni refrained from mentioning plans dealing with, for instance, a state bank, sovereign wealth fund and 40% state ownership of mines," he said.
* Visit Fin24's 2018 mini budget hub for all the news, views and analysis.
