This month we’ve been reminded by President Ramaphosa in the State of the Nation address and Finance Minister Tito Mboweni during the Budget Speech that we’re a tough nation. That even when we’ve suffered defeat and lost 57-nil to the All Blacks, we manage to propel ourselves forward to win the Rugby World Cup less than two years later. We hold our ground and our fighting spirit. He likened our nation and economy to the Aloe Ferox which “survives and thrives when times are tough and wins, even when it seems the odds are against it”. But also that “winning requires hard work, focus, time, patience and resilience”. Most importantly though; that to win we need a plan.
And that’s precisely what the Budget Speech 2020 outlined last week; a plan. One that has found favour with investors and resulted in a strengthening of the rand from R15.33/$ before Finance Minister Tito Mboweni’s speech to R15.16/$ at 4pm on the 26th of February.
While a number of “jump starts” to the economy have been identified; lower inflation, the interest rate reduction earlier this year, and the impending change to the electricity regulatory framework amongst others, economic growth is forecast at an average of only slightly over 1 per cent for the next three years. This is significantly lower than the global average and largely hampered by the challenges that we continue to face with electricity supply.
The good news is that a stable supply of electricity has been identified as the number one task for the coming fiscal. And it’s not the only good news. Despite predictions of a hike in VAT to 16 per cent, the rate remains unchanged; there are no major tax increases, some personal tax relief, a number of tax support mechanisms for start-ups and small businesses and increases to social grants for 18 million South Africans dependent on this support.
Youth employment remains a strong focus for the government with plans to raise spending in this area, and learning and culture, healthcare and social development are the areas that will receive the most funding from the budget.There are concrete plans to reduce wasteful government spending, eradicate corruption and restore our state owned enterprises to operational and financial health.
Of course there are aspects of the budget that South Africans will find challenging. The increase in the fuel levy, although in line with inflation, impacts motorists and commuters, and we’re likely to see resultant increases in goods and services that are impacted by the rise in fuel prices. Similarly, ‘sin taxes’ have been increased, but only to keep pace with inflation. This means an extra 8c on a 340ml can of beer or cider and 74c on a pack of cigarettes. On a positive note there is no increase in the price of sorghum beer and there are no changes to the list of staples that are VAT exempt. We can therefore expect prices on milk, brown bread, maize meal, tinned pilchards, fruit, vegetables, eggs and cultured milk, amongst others, to remain fairly stable.
As an organisation committed to environmentally sustainable practices, it’s encouraging to see the steps that are being taken to address climate change; most notably carbon tax and other measures which are expected to generate R1.75 billion in revenue, more focussed spending on climate change mitigation and an increase in the plastic bag levy to 25c.
We are also an organisation invested in the future of South Africa and her people and we will continue to provide products and services of the highest quality at the most affordable prices possible, in convenient and safe locations.