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Reaction to Medium-Term Budget Policy Speech

Nhlanhla Nene Xxx 

Comment by Nelson Mandela Bay Business Chamber CEO Kevin Hustler

AGAINST the backdrop of students protesting outside of Parliament and disruptions inside of Parliament, Finance Minister Nhlanhla Nene delivered a balanced Medium-Term Budget Policy Statement (MTBPS) yesterday (21 October).

The Nelson Mandela Bay Business Chamber is disturbed by the scenes of violence from yesterday and we trust that government will come to an amicable solution to make fees for higher education more accessible.

Turning to the details of the MTBPS, we are concerned about the continued low economic growth levels in the country and its resultant impact upon unemployment.Nene’s revision of the growth path to 1.5% this year and 1.7% next year is indicative of the tough economic conditions we are currently facing.

The low growth forecast was partly blamed on electricity supply constraints, which has also heavily impacted on commerce and industry this year.We urge government to get the basics right by addressing the various issues which are necessary to ensure that an enabling environment is in place – one in which business can prosper and grow.

Main issues of concern highlighted in the MTBPS include:

• We urge government to be mindful of the infrastructure investment needs of our cities, which are essential for business to operate in. In particular this would include the completion of the Nooitgedacht water scheme to secure the water supply of Nelson Mandela Bay.
• We would like more clarity on Nene’s promise of substantial additional allocation for roads and public transport (R130-billion), and we hope that this would include funding for a total upgrade of the Addo Road – for which the Business Chamber has been lobbying for some time.
• Business awaits the further debate on the proposed design of a Carbon Tax and look forward to giving input on this once the draft bill is published.

Points mentioned in the MTBPS we welcome:

• We welcome the R229 billion that will be transferred to municipalities for infrastructure projects. We need government to focus on the better management of the fiscal distribution at municipal level to eradicate the infrastructure backlog and strengthen institutional capacity-building in the municipalities.
• We welcome the support for Enterprise Development which includes R24 billion in tax incentives and R16 billion in direct funding to support industrialisation, in particular the Automotive Production and Development Programme as well as the continued funding of the Special Economic Zones – which includes Coega and the East London Industrial Development Zones.
• We welcome the minister’s announcement of further cost reduction steps on non-essential goods and services like advertising, travel and consultants. We urge government to persist on this cost containment path.
• We also welcome his rail capacity expansion announcement (alongside road, water and telecommunications networks). In particular the Northern Cape manganese rail corridor project would be hugely beneficial for the Nelson Mandela Bay region.

In order to build the confidence and trust between business and government needed to restore the momentum of economic growth, we need improved efficienciesin these priority areas to create a stable and enabling environment.