On 24 February 2021 the Minister of Finance, Tito Mboweni delivered his 2021/22 budget speech in Parliament. Unlike his previous speeches in the House of Assembly, Mboweni broke rank with the analogy of the Aloe vera plant as a symbol of the South African economy. Perhaps the minister did this to emphasise the dire economic reality faced by millions of South Africans due to the covid-19 pandemic. The minister was frank about the road ahead and the fact that the government had limited fiscal space to move without thrusting the country's public finances into a sovereign debt default. 

South Africa’s economic woes were highlighted by the debt to GDP stabilisation plan of 88% of Gross Domestic Product (GDP) in 2024/25 before a reduction in this ratio due to stronger tax revenues and economic growth. However, if history is anything to go by, this is unlikely to be the case, with economic growth projected to average at 1% between the 2022/23 financial year and the 2024/25 financial year. This projecting comes from the rebound of the economy this year of 3% growth but this must be contextualised in terms of the extreme reduction of the economy in 2020 of -8% (depending on which data you look at). 

Moreover, the very fact that the primary budget is only expected to register a surplus in 2024/25 highlights that weak economic output, will continue to place pressure on the state’s ability to collect revenue, spend on social goods, and meets debt servicing costs. Some argue that given the economic challenges faced by the country and the fact new domestic and foreign direct investment continues to remain low, the government must ignore growing debt in the name of aggressive increasing public sector-led- investment spending in the economy. The rationale is that stimulated growth will drive other actors in the economy to increase productive investment. 

Now, this route may look attractive but what it does is kick the bucket down the road for future generations to pay the debt. Not to mention the risk South Africa faces in defaulting on its debt commitments and how that will impact the cost of future borrowing. We have seen how HIGH sovereign risk has impacted emerging economies such as Argentina and Brazil and South Africa would be wise to heed the warning on that path. 

On the flip side, the adjustment of the brackets would see R1.2bn in the hands of lower and middle-income taxpayers is welcomed. This disposable income will increase expenditure into the economy and hopefully, the multiplier effect of this expenditure will drive some growth in the economy.  It would have been great to hear more from the minister about how the government would support industries with a strong multiplier effect in the economy. The key is not only to drive economic growth but to drive the reformation agenda of the economy to ensure inclusivity and the creation of wealth for future generations. 

Furthermore, the covid-19 pandemic has highlighted the fact that investing in a strong healthcare system is not just a social imperative but an economic one too. South Africa like many other countries in the world has been hit hard by the pandemic that has seen almost 50 000 people die from covid-19 related illness and has forced the economy to its knees, with small and informal business being the most hit economically. The commitment of R10bn to the vaccination process is good and must be supported. Unless we all get behind this programme, we risk prolonging South Africa’s economic woes and more importantly the loss of lives. 

What we need to see from the state is not just rhetoric on fighting corruption, but anti-corruption mechanisms are needed to ensure we do not repeat the PPE-related corruption that rocked the government into President's own office. In addition to this, we need to see long-term investment in South Africa’s ability to detect and deal with new viruses as and when they emerge. 

All in all, as the minister quoted Thabo Mbeki's “I am an African” speech, the glory that South Africa must seek after must put the needs of the most vulnerable first. It is a glory that must restore the dignity of our people and it is a glory that must shine on us all regardless of our race, gender, sexual orientation, or creed. So yes, honourable minister I concur with you and Africa’s philosopher-king, Gloria est consequenda - Glory must be sought after!