How the business sector reacted to Budget 2025: Stability measures and growth concerns
Image: Phando Jikelo/ Parliament of SA
The country's business community has given a measured response to Finance Minister Enoch Godongwana's 2025 Budget, welcoming spending discipline and the avoidance of new tax hikes, while urging faster reforms to address sluggish economic growth.
Godongwana delivered his third attempt at the national budget on Wednesday after two earlier proposals were rejected, largely due to political disagreements over a controversial 2% increase in Value Added Tax (VAT).
In his speech, Godongwana emphasised the government's commitment to maintaining sustainable public finances, despite challenges.
"Nevertheless, this budget supports sustainable finances, the social wage and investments in economic growth. This is not an austerity budget," Godongwana said.
The budget also included an increase in the fuel levy, with petrol rising by 16 cents per litre and diesel by 15 cents per litre.
The minister said this measure was intended to boost revenue, adding that the government was focused on enhancing revenue collection, particularly by addressing unpaid taxes and combating illicit trade.
Despite some positive reactions, SA Canegrowers welcomed the decision not to increase the sugar tax but called for its complete removal, citing job losses and no proven health benefits.
"The sugar tax has been nothing but destructive for South Africa. While the Nedlac study demonstrated concrete proof of job losses, no evidence has been provided to show that the tax has reduced obesity or improved the health of South Africans in any way," the organisation said
"Ultimately, we believe that Treasury should scrap the tax, to help ensure that the government drives job creation and economic growth, as per its commitments outlined in the Sugarcane Value Chain Master Plan 2030"
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Advertisement
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Next
Stay
Close ✕
Chamber of Commerce flags fiscal risks
Jacques Moolman, President of the Cape Chamber of Commerce and Industry, also welcomed the reversal of the VAT hike but raised concerns about the fuel levy's knock-on effects and long-term fiscal risks.
"It was encouraging to hear Minister Godongwana reiterate the urgent need for public-private partnerships, and we welcome continued efforts to expedite this process in order to facilitate much-needed economic growth".
He warned that South Africa was 'tethering far too long' on the edge of a fiscal cliff, with the national debt-to-GDP ratio posing a serious risk to economic recovery.
"In our view sustainable growth is the only way for South Africa to avoid falling over the edge of the fiscal cliff, where we have been tethering for far too long. Our debt-to-GDP ratio forecast remains a huge concern, with the potential to derail efforts to get our economy back on track.
"Although budget cuts in some areas were inevitable, we believe the R66-billion over three years earmarked for PRASA will help alleviate the economic disruption caused by disintegrating public transport networks. Provision of affordable and efficient public transport is fundamental to future economic growth".
Moolman also noted the timing of the budget, which coincided with a significant diplomatic engagement in Washington between President Cyril Ramaphosa and US President Donald Trump.
"The Cape Chamber is mindful that Wednesday's budget coincides with a crucial diplomatic engagement in Washington involving President Cyril Ramaphosa and President Donald Trump. A positive outcome in Washington would go a long way towards quelling market jitters around economic ties with one of our biggest trading partners".
CEO at SolarAfrica David McDonald said the minister's budget was a breath of fresh air renewable energy sector.
"Today's Budget was a breath of fresh air for the renewable energy sector, with R219.2 billion allocated to strengthening South Africa's electricity supply network - from generation to transmission and distribution.
"The explicit recognition that renewable energy projects are helping to stabilise power supply and reduce loadshedding affirms the role that Independent Power Producers (IPPs) like SolarAfrica play in building energy resilience,"
mthobisi.nozulela@iol.co.za
IOL Business Get your news on the go, click here to join the IOL News WhatsApp channel
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
IOL News
an hour ago
- IOL News
The struggle for affordable, clean reliable power continues behind the scenes
This political dysfunction is a root cause of South Africa's electricity crisis, says the author. Image: Pexels As ordinary South Africans struggle to access clean, reliable, and affordable power, essential for a decent life and a functioning economy, a deeper, more entrenched power struggle continues behind the scenes. Over the coming weeks in this column, I will unpack this struggle and explore why South Africa continues to fail in establishing an efficient, effective electricity industry. We will examine the forces blocking progress and consider what a more functional energy future could look like, for the country and for the region. At its core, the power struggle is internal to the ANC. It is a contest between competing factions: between those committed to honest governance and those who enable patronage, corruption, and capture. It is also a struggle between those who support centralised state control of the economy, and those advocating for a more open, accountable, and decentralised system. The dominance of centralising forces, often corrupt and politically motivated, has led to state-owned entities, regulators, and oversight bodies becoming vehicles for power consolidation rather than service delivery. The result is familiar: institutional decay, private capital sidelined, and the majority of South Africans increasingly marginalised. This political dysfunction is a root cause of South Africa's electricity crisis. Without access to stable power, the economy cannot grow. Without growth, the tax base shrinks, the fiscus remains under pressure, and unemployment rises. The situation is exacerbated by a more isolationist United States and a weakening global economy, but the internal failures are primary. Consider how this unfolded. In 1998, government published its White Paper on energy policy, which included a plan to bring Independent Power Producers (IPPs) into the energy mix. But the policy was never backed with the political will needed to implement it effectively. Infighting among ANC factions undermined leadership at a critical time, creating uncertainty instead of the certainty investors require. With no clear path forward, investment stalled. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad Loading From 1998 to 2005, Eskom was actively blocked from investing in new generation capacity. Then, in 2007 and again in 2008, load shedding emerged as a desperate tool to balance supply and demand. Ironically, some of the economic gains of the early 2000s, fiscal discipline and a push to deliver electricity access, only intensified demand, making the failure to invest in new capacity more damaging. In 2007/2008, government finally instructed Eskom to proceed with two new coal-fired power stations: Medupi and Kusile. Medupi's first unit was expected to be operational by 2010. But political interference soon followed. Chancellor House, the ANC's investment arm, became the BEE partner for Hitachi Power Africa, which was awarded the boiler contracts. The result: substandard workmanship, inadequate project management, missed deadlines, and cost overruns. Billions were lost in the process. Then came the Zuma presidency, May 2009 to February 2018, often referred to as South Africa's 'lost years.' One of Zuma's first moves was to split the Ministry of Minerals and Energy into two departments: Mineral Resources and Energy. Minister Dipuo Peters was appointed to head the Department of Energy, and Karén Breytenbach, an official from National Treasury, was tasked with establishing the Independent Power Producer Office. This marked a temporary turning point. The Renewable Energy IPP Procurement Programme was launched, and by 2011, the first request for proposals was published. Over the next five years, three successful bid windows followed, with the private sector investing approximately R220 billion in generation and grid assets. It remains one of the most successful public-private partnerships in South Africa's democratic history. Yet even as this progress unfolded, the broader machinery of the state was being captured. In 2015, Brian Molefe was appointed CEO of Eskom, and the power struggle intensified once more. The Renewable Energy programme stalled, confidence eroded, and the gains of the early 2010s were slowly reversed. The full story of South Africa's electricity crisis cannot be told without confronting the deeper political dynamics that shape it. It is not simply about capacity or megawatts, it is about institutional integrity, governance, and the political economy of energy. This column will continue to examine how these forces interact, and what it will take to move from a politicised energy system to a truly functional one. The solutions exist. The question is whether we have the political courage to implement them. Thomas Garner holds a Mechanical Engineering degree from the University of Pretoria and an MBA from the University of Stellenbosch Business School. Image: Supplied Thomas Garner holds a Mechanical Engineering degree from the University of Pretoria and an MBA from theUniversity of Stellenbosch Business School. Thomas is self-employed focusing on energy, energy related criticalminerals, water and communities. He is a Fellow of the South African Academy of Engineering and aManagement Committee member of the South African Independent Power Producers Association. *** The views expressed here do not necessarily represent those of Independent Media or IOL. BUSINESS REPORT
Eyewitness News
2 hours ago
- Eyewitness News
NCOP will consider & adopt Appropriation Bill to finally put 2025 budget to rest
CAPE TOWN - The National Council of Provinces (NCOP) will on Wednesday morning consider and adopt the Appropriation Bill to finally put the 2025 budget to rest. The Appropriation Bill was adopted by the National Assembly last week after months of delays due to disagreements in the Government of National Unity (GNU), which included court challenges by the Democratic Alliance (DA) and the Economic Freedom Fighters (EFF). The NCOP will also consider and adopt the Eskom Debt Relief Amendment Bill, which amends the original Eskom Debt Relief Act to introduce interest payments on loans provided to Eskom. As is the case with all money bills accompanying the budget, the NCOP also has to approve them to pave the way for the finalisation of the budget process. The Appropriation Bill provides for the apportioning of funds from the National Revenue Fund for the 2025/26 financial year. This includes transfers to provinces and municipalities through conditional grants, equitable shares and other funding methods. Select Committee on Appropriations chairperson Tidimalo Legwase said on Tuesday that this was one of the longest terms due to the lengthy budget process. 'Colleagues, this also marks the final and official sitting of the committee, which will be one of our last, one of the very longest second term of the 2025 parliamentary programme.' Once the NCOP adopts the Appropriation Bill, departments will receive their full allocations to implement their various programmes.
Daily Maverick
12 hours ago
- Daily Maverick
Financial health of seven of SA's eight metros ‘a grave concern'
They do not have the skills and capability to achieve their plans and objectives, or to deliver and maintain their infrastructure. If metropolitan municipalities were to deliver the quality services expected by citizens, this would have a significant impact on the lives of most South Africans and businesses – and this is a noble (and very necessary) goal worth working towards. Metros are what are described as category-A municipalities, which grants them the exclusive executive and legislative authority within their areas of jurisdiction, as well as assigns them full water, sanitation, refuse and electricity functions. Their mandate is to drive development and economic sustainability. In the 2023-24 reporting period, the eight metros (Cities of Cape Town, Ekurhuleni, Johannesburg and Tshwane; and Buffalo City, eThekwini, Mangaung and Nelson Mandela Bay) delivered services to 8.9 million households – 46% of all households in the country. Together with their entities, they were responsible for 57% (R351.37-billion) of the estimated local government expenditure budget for the year. However, since the sixth local government administration took office in 2021, the metros have not shown real improvement. In fact, three of the eight received an unqualified audit opinion with findings and four a qualified audit opinion with findings in 2023-24, which are not desirable as these metros are not performing optimally and are facing several challenges. Only the City of Cape Town achieved a clean audit, sustained from previous years. It does not have to be like this Metros have the right kind of budgets and prime locations to attract and retain the best talent money can buy. And where talented individuals are given the space to do their work and are held accountable, improvements are more likely. The stability of the administrative municipal management is also crucial in this respect. The financial health of the metros remains a grave concern. Despite implementing financial recovery plans and turnaround strategies, metros continue to struggle to improve their revenue collection. The City of Tshwane and Mangaung have both disclosed significant doubt for four years or more about their ability to continue operating fully as a going concern. This precarious financial position has resulted in the credit rating of some metros being downgraded, limiting their ability to borrow funds for critical infrastructure projects that are at the heart of service delivery. Buffalo City, City of Ekurhuleni and eThekwini were downgraded by ratings agencies who doubted their ability to pay their debts because of declining revenue collection. Downgrades also lead to higher borrowing costs. To illustrate the point, by year-end, metros had written down a combined R118.64-billion in consumer debt, which represents 70% of the total municipal debtors' book of R168.74-billion. Culture of integrity 'not ingrained' in metros Most metros have been slow to respond to unauthorised, irregular, and fruitless and wasteful expenditure, as well as ineffective accountability structures and processes. We have concluded that a culture of performance, accountability, transparency and institutional integrity is not ingrained in the metros. It is not only the metros' inability to collect that is bringing their finances into question. Even when receiving grants, they have been unable to spend to enable them to meet their infrastructure needs. Metros underspent on their public transport network grant by 11%, with Mangaung underspending by more than 50% due to delays in the completion of grant-funded projects caused by community unrest, termination and re-appointment of service providers, delayed approval of time extensions and delayed payments to contractors. Nelson Mandela Bay underspent on the urban settlements' development grant by 9%, while Mangaung did not spend this grant in accordance with the grant framework. Grant underspending results from a lack of institutional capability to plan and execute infrastructure projects, as well as ineffective project management processes. The reverse also holds true: poor planning resulted in overspending at Buffalo City, City of Tshwane, Mangaung and Nelson Mandela Bay, which collectively overspent R121.23-million on six infrastructure projects in 2023-24. Dearth of skills, capability lead to harm In other words, metros do not have the skills and capability to achieve their plans and objectives, or to deliver and maintain their infrastructure. This lack of skill, among other challenges, has resulted in harm to the public and the environment. Buffalo City, eThekwini, Mangaung and Nelson Mandela Bay did not have a valid operating licence for their wastewater treatment works, while Buffalo City, City of Tshwane and Mangaung did not maintain or safeguard their wastewater treatment works. Mangaung also did not have a valid operating licence for its solid waste management facility. As a result of the harm caused by infrastructure neglect and non-compliance with environmental management, we have issued 15 material irregularity notifications at five metros and three of their entities. This included Mangaung because of a lack of proper access controls at a landfill site and Ekurhuleni Water Care Company due to a lack of maintenance at a wastewater treatment site. Lack of financial, performance and risk management controls Metros lacked basic day-to-day financial, performance and risk management controls. A key element of internal control is developing and monitoring the implementation of action plans to address identified internal control deficiencies. The municipal manager and the senior management team should drive this. Audit action plans should address all three areas of audit outcomes, namely financial statements, performance reporting and compliance with legislation. We found that controls relating to action plans were concerning or poor at all metros, except the City of Cape Town and the City of Ekurhuleni. This demonstrates a lack of responsiveness and accountability when it comes to implementing and monitoring the audit action plans that should provide a roadmap for addressing the root causes of audit findings and preventing further regressions. High vacancy rate Another concerning issue is the high vacancy rate at metros, which stood at 22% at the end of 2023-24, slightly higher than the 18% reported in 2020-21. The average senior management vacancy rate has worsened to 25% from the 15% reported in 2020-21. Mangaung had the highest overall vacancy rate at 61%, while Nelson Mandela Bay had the highest senior manager vacancy rate at 67%. Without the necessary human resources, fulfilling the mandate of municipalities will remain a pipe dream. So, in the case of finance units, these were generally well resourced, which has helped metros to rely less on consultants. Metros accounted for only 3% (R43.47-million) of the total consultant spend of R1.47-billion in 2023-24, clearly indicating a direct benefit of institutional capability. There was also a high vacancy rate in the information technology units of five metros. At a time when artificial intelligence should be harnessed to improve the running of business, it is concerning that three metros did not have chief information security and project management officers. A lack of necessary expertise in the technical units of metros is equally concerning. eThekwini's staff deficit of 58% in the water and sanitation department meant that critical infrastructure maintenance was not performed regularly. Delays in filling these vacancies have led to changes to project designs, scope and timelines, as managers become overburdened by the number of projects to oversee. At Buffalo City, there was an overall vacancy rate of 15% across key service delivery units, with key positions having been vacant for multiple years. The district engineer position in the electricity department was vacant for 80 months, while the same position in the sanitation, solid waste and refuse removal department was vacant for 24 months. The shortage of staff with the requisite skills and knowledge significantly hindered the quality and efficiency of essential services such as water, electricity, sanitation, housing and waste management. Performance management Performance management systems are also critical to clarify the roles and responsibilities of each role player in the metro environment and provide for measuring performance at least once a year. Municipalities must develop and adopt appropriate systems and procedures to monitor, measure and evaluate staff performance and establish policies and procedures that define how performance will be assessed, measured and managed. Buffalo City and Mangaung did not have the required policies and procedures in place – we reported this as material non-compliance with legislation. Other key functions did not have sufficient staff either. For example, four metros had vacancy rates of 20% or higher, and two metros (City of Tshwane and Mangaung) had vacancy rates above 50% in their internal audit units. This prevented these units from implementing their internal audit plans. Councils must collaborate with the provincial cooperative governance departments to expedite the processes of appointing skilled municipal managers who have the necessary experience and competency.
