EDITOR – The Durban Chamber of Commerce and Industry makes the following commentary following the statements released by the National Treasury on the 2016 Medium Term Budget Policy Statement (MTBPS).
We are pleased with the fact that government has significantly expanded funding of education over the past 20 years. Over the past five years, expenditure on post-school education and training has grown much faster than other budgets. The 2016 MTBPS proposes to accelerate the growth of spending on post-school education by subsidies to universities grow at 10.9 per cent each year and transfers to NSFAS grow at 18.5 per cent. This is in line with the funding of R17 billion and will go a long way into assisting the country’s youth in tertiary institutions.
The Durban Chamber would also like to support the statement by the Minister that government is closely monitoring South African Airways (SAA), the South African Post Office (SAPO), SANRAL and Eskom, with the aim of stabilising these entities and mitigating any risks that may materialise. These institutions represents critical state infrastructure cannot be left to operate in disarray and fall to mismanagement under our watch. These need to be centres that create added value to the nation, and not be a drain on its finances.
It is commendable that The Office of the Chief Procurement Officer (OCPO) is working to improve spending efficiency and eliminate opportunities for corruption. The Durban Chamber of looking forward to seeing the Draft Public Procurement Bill to be complete by March 2017 and make comment to it. Also the draft Preferential Procurement Regulations being revised to ensure that at least 30 per cent of public procurement is reserved for designated groups. Most importantly is the modernisation of public procurement systems and making these easily accessible by all business people.
Government debt now exceeds R2 trillion, and rising debt-service costs are crowding out expenditure on priorities like infrastructure and education. Low economic growth has limited government’s ability to finance its existing commitments and sustain higher levels of debt. The focus of government expenditure needs to focus on economic growth priorities along with Education and Economic Infrastructure. Too much public spending is regarded as wasteful, too much is ineffectively targeted and too little represents value for money.
Maximising the benefits of infrastructure developments for the economy depends on decisive actions to restore confidence. Government should be creating conditions for higher confidence and investment by implementing a regulatory framework for private-sector participation in infrastructure projects, including initiatives in partnership with state-owned companies. Government should also aggressively address legislative and regulatory uncertainties that hold back investment in mining, agriculture and key technology sectors.
The 2016 growth forecast for the region has been revised down from 3 per cent to 1.4 per cent, with large economies like Nigeria and Angola hit by low oil prices and disruptions in production. Having said this, South Africa is still lagging in growth behind Sub Saharan Africa which is of great concern to the business community. Greater regional integration is required to take advantage of the pockets of strong growth.
Zeph Ndlovu
President – Durban Chamber of Commerce and Industry
