Johannesburg - Business bodies on Wednesday largely welcomed Finance Minister Pravin Gordhan’s balancing act, describing his call for closer collaboration between labour, business and government in rejuvenating the ailing economy as encouraging.
Business Leadership SA deputy chairperson Bonang Mohale said Gordhan had done well in walking a fiscal tightrope.
“We welcome the balancing act performed by the minister. He managed to even out competing priorities, and we particularly welcome his call for social partners to work together for inclusive growth,” Mohale said.
Business Unity South Africa (Busa) chief executive Tanya Cohen said Gordhan managed to increase taxes in a responsible manner.
“We are most encouraged by the emphasis on education and the need for business, labour and business to work together. Business does recognise the need to accelerate transformation and we welcome the minister’s emphasis on public procurement to propel transformation,” Cohen said.
Gordhan said public procurement was a strategic vehicle for developing local industries, broadening economic participation and creating work opportunities and that the Treasury gazetted new preferential procurement regulations.
He said there would be further reforms aimed at creating a single procurement authority this year with a draft Public Procurement Bill set to be published soon.
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Gordhan said public procurement would amount to R1.5 trillion in the next three years. “We will pay about R500 billion a year for the delivery of goods and services. Not transfers, or hand-outs, or cash distributions. The purpose is to acquire the infrastructure and operational inputs required for effective service delivery,” he said.
Sacci chief executive Alan Mukoki said that while Gordhan delivered a measured and balanced Budget, concerns remained with regard to the ballooning debt and increase in fuel levies.
“We remain concerned that South Africa’s total borrowing remains high at 50.7 percent of GDP, as this has a negative impact on the country’s sovereign rating and restricts South Africa’s capacity to fund the needed infrastructure programmes and many other social and developmental needs,” Mukoki said. He added that the increase in fuel prices would have unintended consequences.
“We believe this significant increase in the fuel costs will lead to inflationary pressure all round as the increase in fuel will have a negative impact on the entire ecosystem of cost of living,” added Mukoki.
The Black Business Council (BBC) called for a close co-ordination of monetary, fiscal and industrial policies and said the Budget did little to advance radical economic transformation. BBC president Danisa Baloyi said the fixation on inflation targeting was outdated.
“The BBC calls on government to use a wider range of macro-economic policy tools than Keynes and this must include exchange rates, state control and influence over finance capital, reserve requirements, capital controls, prescribed assets, credit quotas, differential interest rates,” Baloyi said.