“Don’t tell me what you value, show me your budget, and I’ll tell you what you value.” While former US president Joe Biden has his detractors, this quote from him feels apt for SA in 2025 as we navigate one of the most tumultuous budgeting processes in democratic history.
Not only has the aborted budget and the reversal of the VAT hike been highly disruptive and for many businesses an expensive exercise, it has also been a weight on the collective psyche of South Africans who must feel as if they have lived a lifetime in the first four months of 2025.
As court cases and “budgeting frameworks” dominate media headlines over the past few weeks, one question that doesn’t feel like it is getting enough attention is: “Was this budget actually fit for purpose to start with?”
Or framed differently: “How does this budget fit into our national strategy?”
There were five mentions of the word “strategy” in the budget speech delivered on March 12 2025. Of those, two were about “fiscal strategy” and one about “financial strategy”, which relates to the finance cluster.
The closest to aligning with a national strategy is when finance minister Enoch Godongwana says that the following four pillars are part of the national growth strategy:
- Maintaining macroeconomic stability;
- Implementing structural reforms;
- Improving state capability; and
- Accelerating infrastructure investment.
Macroeconomic stability
According to the March speech: “Maintaining macroeconomic stability, inclusive of prudent fiscal policy, promotes stable prices, lowers interest rates and enhances the country’s resilience to external shocks.”
Stability is not a strategy. Without question, prudent fiscal policy is important, but at the same time, the only thing that will truly enhance the country’s resilience to economic shocks is economic growth and building a strong national balance sheet. Core inflation has traded at about 5.1% over the past three years — which includes 7.2% in 2022, when global supply chains were severely disrupted by the war in Ukraine.
If this logic is correct, then how could the prime lending rate have been 7.5% in January 2022, hit 11.75% in 2023 and 2024 and then start at 11% in 2025?
Without alignment between the Treasury and the Reserve Bank, interest rates simply remain too high to stimulate domestic economic activity. Companies are rewarded for sitting on cash and not taking risks.
Implementing structural reforms
The finance minister touched on a couple of interesting things about Operation Vulindlela and the key win is probably the consistent supply of electricity. While the energy challenges SA has faced have been material, the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), has been a long-term success.
The issue is that we are focusing on “operation/s”, rather than talking to a national strategy.
Building state capability
According to the March speech: “Delivering reliable and sustainable core services is a priority for this government. Our focus must remain on more effective and efficient service delivery, and a proper combination between personnel expenditure, operating costs and the maintenance of physical facilities and assets, supported by professional and efficient administration.”
What does a capable state look like? The SA tax base would argue that a budget that recognises the effect of inflation on grant recipients, but doesn’t adjust the tax tables to accommodate for inflation to taxpayers, doesn’t align.
Accelerating infrastructure investment
Anecdotally, it does feel like we are starting to see some focus on infrastructure but the finance minister identifies “communities such as Mamelodi, KwaMashu, Motherwell and Khayelitsha to catch a train every 10 minutes, to get to and from work”.
This is a socially admirable goal, but unless there are jobs for people to go, the point is moot.
Gauteng is the economic hub of SA and the Gautrain has been a key investment point. At the same time, its ridership numbers have collapsed and it is costing taxpayers R3bn a year.
Is rail part of a long-term strategy and to what end?
No strategy alignment
In the same way that the Treasury and the Bank cannot co-ordinate policy about interest rates, how do provinces develop their strategy about things such as the transport ecosystem if we cannot agree on what success looks like?
China has a state-led, socialist strategy with the clearly defined “Belt and Road initiative” — which has clearly defined goals. India is pursuing its “Viksit Bharat 2047”, which provides you with a road map for the next 20-plus years, while Nigeria has “Agenda 2050”.
In SA, we have the National Development Plan 2030 (NDP) driven by the National Planning Commission — but it says a lot that the NDP has not been referenced in any of the last four state of the nation addresses, medium-term budget policy statements or national budget speeches.
If SA were a business and its budget did not align with an overarching strategy, your board wouldn’t tell you that your budget is wrong. This is exactly the situation that is playing out at the moment.
Robust debates about the budget are important, but we are letting the budget discussion drive the country while ignoring the fact that there is no coherent plan that it should be aligning to. To reach our economic potential, we need to do better.
• The authors are executives at Ariston Global.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.