Budget: Don’t think government is going to change

Henry

Dawie Roodt, well-known economist and head of Efficient Group, does not have much hope that the ANC will give up after the upcoming national election. That is why, he and other economists say, South Africans themselves must work hard to bring about change.

“I can’t see that the ANC will simply be lifted from the cushions. They will still be involved in the government of the country in one way or another for the next five years. Unfortunately, the damage to the economy is already of such a nature that we cannot afford another five years of the ANC government.”

Roodt responded to Finance Minister Enoch Godongwana’s budget speech on Wednesday.

“The finance minister actually did the best he could and tried hard to put lipstick on this pig, but that doesn’t change what the budget is actually about, namely politics,” says Roodt.

“What is needed is a growing economy, which can only be achieved through business-friendly policy decisions, especially in key sectors such as transport, energy and infrastructure.

“The economy is stagnating, with a tax base already pushed to capacity. For every taxpayer with a job, there are two unemployed South Africans who depend on a social grant. Many top taxpayers have emigrated and the rest are struggling to bear the tax burden.”

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According to Roodt, South Africa’s debt levels are also unsustainable, as the government is already borrowing more money and hopelessly spending too much. Roodt also refers to figures that show how important socio-economic indicators have consistently declined over the past three decades. These include that the gross domestic product (GDP) per capita has fallen and that poverty and unemployment have increased. Roodt says unequivocally that this is due to the ANC’s “mismanagement” of the country. Now “the South African gravy train has derailed”.

Regarding the national treasury’s plan to use the Reserve Bank’s gold and dollar reserves for the state treasury, he says that this could indeed be a short-term solution to South Africa’s high debt levels, “provided the money is spent correctly”.

The fund is built up from all the losses and gains on all exchange rate transactions, in order to hedge the central bank against volatility in the exchange rate. The account currently sits at R500 billion due to the significant weakening of the rand.

Find solutions yourself

Roodt and the economist Dricus Combrinck agree that South Africans cannot wait for the state to solve the problem.

“Where the state fails, it actually creates the perfect opportunity for the private sector to get involved, such as with the building of schools,” says Combrinck. “We live in a country where the state at least does not prevent you from providing services that it cannot provide itself.”

Roodt agrees. “We see it all around us. The private sector and citizens always come up with a solution themselves.”

Combrinck says that although policies such as black economic empowerment sometimes make it difficult for large businesses to thrive, small-scale entrepreneurs have more room to maneuver. “These entrepreneurs have acquired certain skills that they can sell abroad and thus use the weak rand to their advantage.”

Roodt also says changing technology makes it possible for South Africans to work anywhere in the world.

Combrinck advises South Africans to invest in particular – time and money – in the local community and in civic organizations that bring about change.

  • Additional information by Elisma van der Watt.