The Nelson Mandela Bay Business Chamber welcomes the Medium Term Budget Policy Speech delivered by Finance Minister Pravin Gordhan today [26 October].
While Gordhan said during his Medium Term Budget Policy Speech that “as a nation we are at a crossroad, politically and economically”, he also found himself at a crossroad today: in the unusual position of facing charges in court next week, while having the immense pressure of presenting the Medium Term Budget.
We reiterate the earlier position of the Nelson Mandela Bay Business Chamber in support of Gordhan, as the charges appear to be politically orchestrated to cause the maximum reputational damage to Gordhan. The charges also invoke reputational damage to the country at large – directly impacting the South African economy and the credibility of the institutions involved.
“Given the current uncertainty, global and local investor sentiment is rapidly declining. This situation cannot be allowed to continue as it directly affects South Africa’s credit rating prospects and threatens the reputation of National Treasury,” said Nelson Mandela Bay Business Chamber President Ian Nicholls.
Looking now at the contents of the Medium Term Budget Policy Speech, tabled today, Nicholls said the Business Chamber’s view was as follows:
• Crisis in Higher Education: Firstly we welcome that “financing education is the highest priority in the country” and that this includes the entire education system. We welcome the allocation (in addition to the R16-billion added to higher education funding in the February budget) of a further R9-billion for the National Student Financial Aid Scheme over the period ahead, as well as the R8-billion to meet the costs of fee increases for students from households with incomes up to R600 000.
• Violence on campuses and within communities: As a business community we remain concerned at the ongoing crisis at Universities and the negative consequences this has on the economy, business, and international investor sentiment. We welcome and agree with Gordhan’s comments that “we do not want to lose the 2016 academic year” and that “we want the violence to stop”.
• Security of energy supply: We welcome the R240-billion allocation towards the energy sector, announced by Gordhan, including Eskom taking the lead in the nuclear power initiative. We would encourage, however, complete transparency with the procurement arrangements of Nuclear 1 (earmarked for Thyspunt) as well as compliance with international best practice to ensure protection in the areas of health, safety and the environment. The nuclear deal must be negotiated with transparency and accountability. Coordinated partnerships must also be established in the area of supply chain development and skills development strategies. We strongly advocate for a high localisation component (Eastern Cape specific businesses) in the project.
• Renewable Energy support: The Business Chamber has already welcomed the commitment by government of the gas infrastructure investment at Coega, reported to be a R25-billion investment. We look forward to the job creation and downstream opportunities this programme will afford the local economy.
• Oceans economy: We welcome the R17-billion worth of investment and 5 000 jobs that have been unlocked in the oceans economy, and would have liked more detail on these figures and its impact on business and the local economy.
• Funding for the N2 Wild Coast road: We welcome this development, which is expected to transform the economy of the Eastern Cape, and we are encouraged as a business community by the opportunities this massive infrastructure investment will create.
• On the issue of good governance, we remain of the view that we need fiscal prudency, stability, and zero tolerance on corruption to be implemented and monitored on all levels of government.
• Reform of State-owned entities: We call on government to consider public/private partnerships for those entities that for a period of time have proven that they cannot remain financially sound.
• Small Business Development: We welcome Gordhan’s support for enterprise development and his call for collaboration between corporate South Africa and entrepreneurs, as we have been doing for some time at the Business Chamber through our SME Task Team as well as our Enterprise Development Programme.