It’s been nearly a decade since SA adopted the National Development Plan (NDP), or what is commonly called Vision 2030. “In it is possibly the secret to SA’s success”, announced one commentator as the NDP was handed over to the president. She further warned, “What [former president Jacob] Zuma does with it between now and when his term of office ends is where the challenge lies, and everyone, knows it”.
As we look back, she was correct. Plans are always about what we do with them. For a while, the national budgets were closely linked to achieving the targets of the NDP. Successive finance ministers, who plan our income and expenditure, matched this to the NDP, from skills to infrastructure and health. Now, less than eight years before the 2030 deadline, we are starting to take stock, and wondering if we will make the goals. By all accounts that plan has not delivered on the outcomes we had hoped for. In parts we have overspent, and in others underspent. More money is being used up on current expenditure, and less on infrastructure. We are not investing for growth.
According to the office of the auditor-general: “Overspending of the budget increased from R1,65bn to R18,12bn — of which R15,13bn was as a result of the early payment of the April 2020 social grants in response to the Covid-19 lockdown measures.” While this can be justified, it also shows that we went into the crisis with no savings or “funds for a rainy day”. As a result, “over 60% of the departments had insufficient funds to settle all liabilities that existed at year-end if the unpaid expenses (totalling R22,78bn) were also taken into account”, the auditor-general stated.
In addition, the national income has declined while debt is rising — as much as double what it was in 2012, when the NDP was adopted. This rising debt has been met with the emptying of national savings. Regrettably, SA’s woes as a country match those of her citizens. For most South Africans debt has been rising while incomes and savings have been falling. While the Covid-19 crisis is to be blamed for much of our troubles as a country and individuals, we were already on this path before the pandemic struck, leading to a record unemployment rate of 34,9%.
Further, according to the BankservAfrica Take-home Pay Index (BTPI) salary data for December 2021, SA workers are poorer in 2021 than a year before, with take-home pay declining 5.2%. According to data from the SA Reserve Bank, South Africans have a serious debt problem — two thirds of disposable income (67.8%) is attached to debt. Households would do well to get their debt under control, if they can, to better cope with expected higher inflation and increased prices.
Far too often small and medium-sized businesses (SMEs) are punted as the solution to our economic problems. If you don’t have a job, start a small business and create employment for others. If you don’t earn enough, start a small business to supplement your income. But businesses operate in the same environment as the rest of us. Their customers are the same heavily indebted consumers whose incomes are so stretched. So even SMEs have to adjust their plans to the national condition. They too will be watching this budget.
While we all know that to succeed is to plan, no-one can argue with the fact that we’ve messed up along the way. Costs continue to climb, with inflation expected to go above 6% — the upper bound of the Reserve Bank’s inflation target. We expect the finance minister to increase taxes on our vices, affecting our disposable incomes and ability to save. There will be no further breathing space for anyone. The question is, how do we readjust to cope with a tough future? How do we adjust our plans, matching our current resources with the risks ahead, but still targeting prosperity?
The national budget will mirror our personal plans. While analysts are correct to say this will be a tough budget for the minister of finance, it will be a tough budget for individuals and small businesses too. We have to take action in our own spaces and environments, plan, adjust and reconfigure.
Importantly, we have to align our plans with the conditions we face, and be intentional in correcting past mistakes. Finance minister Enoch Godongwana has hard choices to make. But so does each South African who will be listening to him.
• Payi, an economist, is founding director at Nascence Advisory and Research.
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