Star 2025-03-12

Minister Enoch Godongwana’s ambition to stabilise government debt faces considerable headwinds As South Africa grapples with sluggish economic growth and an alarming rise in national debt, Finance Minister Enoch Godongwana is under increasing pressure to make a critical decision regarding the nation’s fiscal future. With a staggering R60 billion budget shortfall looming, discussions around a potential increase to the Value-Added Tax (VAT) have become the focal point of ongoing debates among policymakers and economic experts. Originally set to deliver the budget speech on February 19, Godongwana postponed the announcement, reflecting the nation’s uncertainty about the path ahead. A proposed increase in VAT from 15% to 17% has met with significant opposition, with many stakeholders outright rejecting the plan. Alternative suggestions on the table include a more modest VAT increase of…

The International Monetary Fund (IMF) has thrown its weight behind the South African government, stressing the urgent need for structural reforms and adjustments in the public sector wage bill to stimulate economic growth. This advisory comes as Finance Minister Enoch Godongwana prepares to present the 2025 Budget Review, amid tough measures to bolster the country’s fiscus as growth struggles to exceed 1% and national debt hovers unsustainably around R6 trillion. The concerns surrounding South Africa's economic situation are significant, with the government debt-to-GDP ratio projected to surpass a historic 76% in the medium term. To address this, the government has earmarked R11 billion for the fiscal year 2025/26, aimed at incentivising 30 000 civil servants to accept early retirement voluntarily as part of wider efforts to manage the bloated public…

The South African rand strengthened against the dollar on Tuesday, buoyed by rising precious metal prices and global economic jitters, as markets awaited Finance Minister Enoch Godongwana’s much-anticipated Budget Speech. As Godongwana prepares to take the podium, analysts and investors alike are watching for signals on how South Africa will balance fiscal discipline with its pressing infrastructure and growth needs. By 6 pm local time, the rand traded at R18.19 to the dollar, up 1.46% from the previous session. The local currency’s resilience was underpinned by a surge in gold prices, a key export for South Africa, amid growing unease over the US economic outlook and simmering trade tensions under President Donald Trump’s administration, according to Trading Economics. Locally, however, all eyes were on the delayed Budget presentation, now set…

Balancing South Africa's national budget must prioritise pro-business growth with a shift to tax policies that stimulate economic growth without sacrificing essential public services. South Africa’s government, like many others, can often be inefficient in how it allocates funds. This includes high administrative costs, duplicated programme and inefficiencies in state-owned enterprises (SOEs). These inefficiencies are prime candidates that I would target for budget cuts, with a start being reducing the number of municipalities and even provincial governments. Reduce the financial burden on taxpayers by cutting funding to loss-making state-owned enterprises like Eskom, Transnet and South African Airways - focus on privatisation or public-private partnerships (PPPs) could free up significant funds. It may seem easy to cut investment in infrastructure, but this is the last thing I would do if the…

A national budget is often dismissed as a series of promises and colossal figures recited by a country’s Minister of Finance. Yet, for many South Africans, the annual budget represents a transformative instrument that can be used to redress historical injustices, create job opportunities and secure a more equitable future. A “good budget” tackles healthcare, housing, education and infrastructure, balancing industry-specific incentives with broad-based grants. Although this year’s national budget has been marred by delays and fundamental disagreements over financing methods, its significance remains undiminished. A budget of redress for citizens South Africa’s post-apartheid journey has been defined by a mission to heal a deeply divided society. Early efforts like the Reconstruction and Development Programme invested billions of rands in housing, healthcare and education, resulting in the construction of millions…

Nigerian authorities are warily moving to regulate Africa's largest cryptocurrency market in long-delayed efforts to create legal certainty in a field still fraught with fraud and volatility. For years, regulators and government officials have viewed cryptocurrencies and other digital assets with suspicion despite their popularity in the country. Nigeria ranked second globally after India in 2023 and 2024 on a crypto adoption index compiled by Chainalysis, a global crypto research firm. Over the past year, a more regulated sector has slowly started to take shape, even as fraud remains a concern for police. The director-general of the country's Securities and Exchange Commission (SEC), Emomotimi Agama, confirmed to AFP in August that the regulator was pushing ahead with efforts to create clarity around the use of digital assets. That month, the…