Finance Minister Tito Mboweni. Photo:GCIS
Finance Minister Tito Mboweni. Photo:GCIS
Newly appointed Finance Minister, Tito Mboweni, has delivered South Africa’s Mid-Term budget speech.
In a tactful and relevant style, Mboweni opened his parliamentary address on Wednesday by quoting Charles Dickens’ A Tale of Two Cities. Mboweni used the literature to explain South Africa’s uneasy posture at the crossroads of socio-economic freedom and collapse.
The Minister of Finance admitted that, for ordinary South Africans, life, specifically within the financial sense, had become increasingly difficult to sustain. Mboweni empathised with the embattled masses, bemoaning rising fuel and electricity prices, along with an “unacceptably” high unemployment rate.
Before diving into the nuts and bolts of his Mid-Term budget speech, Mboweni waxed lyrical about the dire financial prospects South Africa, as a whole, currently finds itself in. Mboweni, who finds himself burdened under the weight of his newfound position, delivered a concise and convincing address which centred on the creation of jobs, investor confidence and tightening of the governmental belt.
During his budget speech, Mboweni addressed key financial issues facing the country, adding that the policy of economic revitalisation in a time of recession is guided by the ethos of President Cyril Ramaphosa’s Thuma Mina (Send me) campaign.
Citing the National Development Plan and Ramaphosa’s economic stimulus package, Mboweni divulged how government would implement practical economic reforms in order to generate growth and pull South Africa out of its current quagmire of recession.
Mboweni reiterated Ramaphosa’s five-point revitalisation policy as the:
The Finance Minister explained that these policies were the fundamental aspects which were to be addressed and expanded upon during his Mid-Term budget speech.
Mboweni explained that in order to facilitate growth in the economic sector, South Africa would need to gain greater investor confidence. He pointed to the following policy changes and developments as catalysts for growth:
Mboweni addressed the issue of government spending, in particular, the state’s hefty public service wage bill. The Finance Minister explained that freeing up state funds by possibly restructuring employment within the public service will allow for greater infrastructure development, saying:
“We are proposing a combination of reprioritisation, changes to grant structures and in-year allocations amounting to more than R50 billion. Of this amount, reprioritisation of R15.9 billion goes towards infrastructure programmes, supporting industrialisation, and the Expanded Public Works Programme.
An additional R16.5 billion of reprioritisation will be allocated to various programmes, including funding to restore capacity at the South African Revenue Service.”
Mboweni added that funds for agriculture, housing subsidies and vital public works projects would be prioritised.
The Finance Minister also bemoaned the failings of the embattled Giyani Water Project, saying:
“The Giyani Water Project is plagued by malfeasance. It is a cesspool of corruption.”
Mboweni explained that government spending could be cut even further by delegating public works projects to the private sector. He mentioned that the Development Bank of Southern Africa, the Government Technical Advisory Centre and the Presidential Infrastructure Coordinating Commission will receive R625 million to strengthen project preparation, saying:
“Over the next three years, public infrastructure expenditure is estimated to be R855.2 billion, of which state-owned companies alone account for R370.2 billion. General government accounts for the remaining R485 billion, mainly in the form of conditional infrastructure grants.
Government will develop a framework to help investors assess potential long-term returns on public infrastructure projects. We want to enable investment in public infrastructure by commercial banks, development finance institutions and pension funds.”
Mboweni pointed to Vaal River System Giyani Water project as testing grounds for private sector intervention.
Mboweni confirmed that the largest allocation of state-funds in the mid-term would be for the improvement of education, health, social development and community development services.
On the topic of education, Mboweni said that learners need to be protected in schools, that latrine toilets need to be eradicated and that female learners in schools have access to free sanitary pads.
On issues facing South Africa’s health care system, Mboweni said:
“Access to health care services is enshrined in our Constitution and in our Bill of Rights. We are immediately reprioritising R350 million to recruit in excess of 2 000 health professionals into public health facilities. We are further reprioritising R150 million to purchase beds and linen for hospitals where the need is most dire.”
Mboweni said that government was committed to rooting out nepotism and corruption within embattled municipalities, thereby fostering a greater sense of dignity and proper governance which would alleviate social ills. The Finance Minister explained:
“This year, 113 municipalities adopted unfunded budgets, up from 83 in the previous year. Municipalities owe more than R23 billion to service providers – mainly to Eskom and water service agencies.
The National Treasury will work closely with the Department of Cooperative Governance and Traditional Affairs to deal with financial misconduct in all spheres of government.
We must repair our towns, and our streets, and fix the pipes under our roads.”
Mboweni addressed the issue of VAT, confirming that sanitary pads, bread flour and cake flour would be zero-rated as of 1 April 2019.
The Finance Minister added that while the zero-rating of these items would cost government R1.2 billion, it would go a long way to restoring the dignity of low-income households.
Mboweni bemoaned the corruption and nepotistic rot that has infested South Africa’s state owned entities (SOE) and governmental departments. He added that most SOEs would need to be urgently reconfigured in order to stave off complete financial collapse.
The Finance Minister outlined a three step approach to dealing with corruption and maladministration: