In my early career I worked with poor communities in townships and villages all around the country, supporting motivated residents to build small businesses that could help meet their community’s need for food, water, sanitation and energy. Much of the work focused on local government engagement, because no matter the level of success these enterprising people could reach, they should never be required to allow the state to abdicate its responsibilities.
During these engagements we would discuss the integrated development plans (IDPs) associated with each community, and the community mostly would point me towards the section that addressed the needs of their community, to demonstrate how they were “part of the plan”. Then I would pull out the service delivery & budget implementation plan (the budget for their area) and we would assess whether any of the stated items in the IDP had received budget allocations for the foreseeable future. About 95% of the time they had not.
Writing a column in between the state of the nation address and the national budget speech taking place on February 22 feels a lot like that, waiting to see how the rhetoric stacks up against the money.
I certainly do not envy finance minister Enoch Godongwana at all. He had much to be upbeat about in his medium-term budget policy statement in October, including the stabilisation of the national debt, reduction in the budget deficit and a 9% increase in tax collection.
However, coming into this budget speech I have a strong sense of foreboding despite a generally improved outlook for the global economy. With the positives in Godongwana’s medium-term budget resting almost entirely on mining tax revenue from the windfall commodity price boom in 2022, and alternative measures to inject liquidity into our ailing fiscus already strained to the utmost, it seems SA’s chickens are finally coming home to roost.
Default rate
We cannot rely on sustained revenues from material exports given the projected 6% decline in total mining production this year, thanks to load-shedding and a near total freeze on net investments in new mining projects, according to the Minerals Council SA.
Taxpayers are in an even worse situation, thanks to record high inflation coupled with an almost doubling of the repo rate from 3.5% to 6.75% in 2022. The vehicle asset finance default rate and the bond instalment default rate of middle-class workers earning R8,000-R30,000 per month increased 21% and 19%, respectively, at the end of last year.
Municipalities, already straining from years of corruption and deployed cadre ineptitude, are watching with hands tied as their single biggest source of income, outside national grants and subsidies, has the taps turned off. Electricity sales account for a quarter of total municipal income.
To top it off, we now have a state of disaster for the power crisis that smells suspiciously like an attempt to push through a pro-coal, gas, nukes and Eskom bailout agenda, while our just energy transition plan languishes in directionless confusion, thanks to inaction on the presidential climate finance task team.
Little wonder then my lack of surprise at the Social Research Foundation survey that found four out of five South Africans want their children to emigrate. SA Revenue Service commissioner Edward Kieswetter can downplay the seriousness of this threat all he likes (last week he said the narrative around emigration is “overstated”, as only about 6,000 people left the country’s tax base in 2022), but he is entirely missing the point.
The president, Kieswetter and Godongwana had better be listening. The people of SA are not just strained and frustrated. They have given up hope in their “better life for all”, and unless they pull finger and produce a bloody great rabbit out of the hat, the “overstated” trickle of SA emigrants is going to turn into a flood.
• Maguire is carbon project manager at Climate Neutral Group SA. He writes in his personal capacity.
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