TO: ALL MEDIA HOUSES FOR IMMEDIATE RELEASE
FROM: AZAPO SECRETARY FOR PUBLICITY & INFORMATION
DATE: February 22, 2024
SUBJECT: AZAPO RESPONSE TO THE BUDGET SPEECH
The Budget Speech – The Aftermath
Again, AZAPO would like to ask these pertinent questions: South Affrica as a country that has a lot to offer to the African Continent and to the world:
Why is economic growth so poor? Why so many people are locked out of economic activity? What explains the almost indifferent deterioration of infrastructure in roads, rail and ports? How come the people of the country are now forced to make dire changes to their household budgets?
The budget by the Minister of Finance yesterday was a demonstration that the government is at the end of its wits. It did not respond to the cry of the people for a “better life, nor to ease their pain. The budget has made no attempt to “restore our people’s human dignity” as AZAPO continuously fight for.
There is toughtalk but these are not realistic given the current constraints. The previous budgets as tabled since 1994 only depict a worsening economic, social and political conditions of the people of the country.
If the reality has not set in about how desperate the situation is for our citizens, one has to listen to some of the comments from mainstream media. Our people are crying out loud for help to be able to live with dignity and security. There is no doubt it is the worst of the worst when our people must buy bread in bulk and deep freeze it. For them to cut down on medical aid and live on faith. When they discontinue tracker and armed response services to build some reserve to be able to afford basic necessities.
The success of the government will be measured by several factors, and these simply are:
- Promote widespread land use for the people to be able to live off this natural resource instead of creating a massive dependency through the social grants.
- Invest in human development through education and technical and vocational skills, thus empowering our people to do things for themselves; this is DEVELOPMENT DIGNIFIED.
- Prioritize and be bold in expanding the industrial sector so that the more than 25 million unemployed and without meaningful existence can begin to build a future for themselves.
- Fight crime with all the state’s might; there is no development where fear, theft, rape and murder are the norm especially by advocating for a “Gun-Free South Africa”.
- Corruption and theft from the public purse should be eliminated not reduced.
AZAPO there is no attempt to deal with the crisis we are in. SA’s growth prospects are driven by external factors such as the recovery in the US, and the uncertainty in China. Nothing is improving: (i) fiscal deficit is chronic and worsening to around 6 percent of GDP, (ii) economic growth anaemic, (iii) debt repayment is now more than 20 percent of revenue amounting to R356 billion, and (iv) debt stabilization failing as debt to GDP now at more than 75 per cent.
Why Minister should talk of lower inflation to support household consumption when this is not true. Inflation is high and has been coupled by persistent biting levels of interest rates.
In the view of AZAPO, the Minister should have responded to a number of key challenges, for example:
- we believe that credit risk because of high borrowing should be addressed because it will pose serious challenges by increasing the cost of borrowing. With such challenges, South Africa will now have to rely on countries such as China and other non-traditional sources of financing, and the terms of such lending are not transparent.
- The budget should have responded decisively towards reducing electricity blackouts. The focus now is to reduce Eskom’s debt to continue to fund the independent power producers that are failing to contribute significantly into the national grid. The impact on loss of business is weighing down the country’s economic growth’s trajectory.
- The pie is not growing fast enough according to the Minister at 0,6 per cent; but the reality it is not growing at all in real terms as inflation is near the top of the inflation target range. The 1,6 per cent projected over the medium term is too optimistic.
Whilst gross borrowing is declining, however, this is in the context of declining revenue. AZAPO also believes that this benefit will be eroded by increasing debt costs repayments.
AZAPO welcomes support granted to nurses, doctors, teachers and other critical services. However, AZAPO is concerned that this is about the payment of salaries and not operational and development expenditure. A number of schools especially in rural areas need proper classes, elimination of the pit toilets and safety of schools.
AZAPO believes that tapping into GFECRA is not a permanent solution and may create the impression that the SARB is now financing the fiscus in the context of declining tax revenues. Also, what the drawdown of R150 billion will be spend on remains unclear, and this is worrisome for AZAPO. The focus is putting a band aid on deep cuts.
Another worrying factor about the GFECRA is that this “windfall” from the reserves held by the country’s central bank is generated when the Rand falls. The steeper the decline the higher the benefit; which means our own government is now betting against the Rand and vicious cycle if there is one. While the Rand surged after the speech this is because the budget favours the lenders who no longer fear for their money. However, we also await the reviews of the credit ratings agencies when reality begins to dawn beyond the initial euphoria.
Also increasing minimum tax may sound laudable; but the timing may be the challenge. There are better prospects elsewhere of comparable economies performing at much higher levels of economic growth and safe. There is the possibility of capital flight at first, and boycott later. As a country we need to build the case so that this increase does not become a biding constraint and an increase in the cost of doing business in the country.
Excluding interest repayments to lenders, the bulk of spending is said to focus on the social wage. This means we have squandered our fiscal space through amongst other not being too strict about acts of corruption, and thus creating long-term leakages in our fiscal system.
We need the government to act with a sense of urgency and address the perennial and multiple crises the country faces. Through the SONA and the budget speech, it always come up as if these issues are new and that, for the last decade, we have been on right development path. There is no urgency to tackle loadshedding, to reduce unemployment that is breaking new high record levels every year. There are about 25 million who are outside formal economy, and close to 4 million have no faith in being ever employed and have thrown the towel. This economy continues “as if of yesterday” to paraphrase the great martyr Bantu Biko.
Whatever the government believes it is doing to take us the mountain top, we as AZAPO and other progressive minded liberation forces believe their policies have put us on a downhill. And it is not up to them that we must look for the salvaging of the economy. Transnet is one case in point: logistics bottlenecks and crisis are now being passed over from CEO to another as if by inheritance and yet no immediate and impactful solution. According to SA Association of Freight Forwarders, Transnet’s failures cost the economy close to R30 billion annually of direct impact.
As AZAPO, our main concern is that the budget’s main concern is to facilitate for the privatization of some of the functions of Transnet at the port terminals. State-owned enterprises such as Eskom, Telkom and Transnet and others are to AZAPO the “commanding heights” of the economy and policy instruments for the development of the Black people.
Overall, this is budget that lacks the faith that it can achieve what it purports it can achieve, nor has confidence that these measures are implementable. But more importantly, it is a bowing-out due to the feeling that the government might not return after 29th May 2024. This is not a budget about ordinary people, not by increasing the grant system, but real development where people are able to fend for themselves within an inclusive and humane economic society.
As indicated in our expectation, it is clear that when the numbers have been read and crunched, the living standards of our people will remain as they were: debilitatingly tough and eroding.
END
Issued by AZAPO Department of Publicity and Information (DPI).
Name: Jabu Rakwena
Email: jaburakwena@gmail.com
Enquiries:
Jabu Rakwena 060 677 4257 or Nosipiwo Manona 065 899 4566
Office: Publicity Secretary
Unit 04 – Ground Floor,
396 Cork Avenue, Ferndale, Johannesburg 2194
P.O. Box 4230, JOHANNESBURG 2000.
