Budget 2025: What business wants from the minister of finance

The business sector wants Budget 2025 to stay the course on fiscal consolidation, prioritising debt reduction and prudent spending.

With Minister of Finance Enoch Gondongwana delivering Budget 2025 on Wednesday, Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso says in her weekly newsletter it will be a major milestone to achieve 3% growth by the end of this year.

“Government must ensure it lives within its means, focusing spending on growth-enhancing activities and investment. This is the first budget from the government of national unity (GNU) and will be a test of its ability to set coherent spending priorities that put the country ahead of party politics.

“It must prioritise the creation of sustainable jobs and support an environment that will drive private sector investment.”

She says South Africa has learned an expensive lesson that if investors are worried about government’s ability to meet its financial obligations over the long term, they do not put their own money at risk.

“That is why the finance minister must demonstrate that government can fund its spending plans and do so without dragging down the economy through tax increases.”

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Treasury’s PPP regulations set direction for Budget 2025

She points out that setting a positive direction for the budget, National Treasury issued new regulations governing public-private partnerships (PPPs) last week to allow government to partner with private investors to jointly fund, build, operate and maintain public infrastructure.

“The new regulations are positive for our efforts to turn South Africa into a building site, enabling private investment to flow into new projects.

“The regulations have been long in the making and will make it easier for the private sector to take the initiative on new PPPs and smooth the regulatory path, especially for smaller PPPs. The new regulations set down a mechanism for unsolicited PPPs, which enables the private sector to innovate and develop new concepts to help the public sector achieve its objectives.”

Mavuso says Budget 2025 has the potential to further this theme with more detail on infrastructure plans, particularly through state-owned enterprises, where the private sector can also partner to improve delivery.

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Budget 2025 at a time of critical front in foreign policy

She also points out that Budget 2025 comes at a time when foreign policy has become a critical front for the outlook for our economy and jobs. “The world is coming to terms with the new Trump administration and its wide-ranging changes to how America engages with the world.

“The administration singled out South Africa, and we must ensure we respond with cool heads. On the whole, we benefitted this year from very good relations with international counterparts, stimulated by our chairing of the G20.

“Many global leaders will visit our shores, giving us ample opportunity to demonstrate how we are a country open for business where the rule of law is completely reliable.”

Mavuso says trade plays a vital role in our ambitions to grow the economy and create jobs. The United States is an important trading partner, importing platinum and other minerals, as well as manufactured goods like vehicles and machinery, from South Africa.

She says the trade balance favours South Africa and supports many jobs, especially through high-value-added manufactured goods. “Our respective private sectors have close relationships with over 600 American companies active here.

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Tariffs will strain international business relationships

“Our businesses work under the rule of law within constitutional democracies, and there is much we can achieve by working together, which is why trade flows have been on an upward trend for several years.”

Mavuso emphasises that tariffs will put those relationships under strain, as we will see with the steel and aluminium tariffs that have already been imposed. Steel and aluminium account for about 8.5% of what we export to the United States and therefore the 25% tariff will put pressure on those volumes, although they account for only 0.3% of all South Africa’s exports.

“As organised business, the relationship with the US is top of mind, with jobs and the economy at the centre of our concerns. We are working toward an approach that aims to protect the interests of companies in both countries. But we must also keep our wider international relations in perspective, including many fast-growing markets that provide opportunities for our businesses.”

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Budget 2025 must focus on domestic ambitions

She says for Budget 2025, the focus must remain on South Africa’s domestic ambitions. “It must set a clear path for debt levels, credibly showing how they can be reduced. That is key to continuing the improving confidence of ratings agencies. Ratings upgrades are positive for the whole economy, reducing the cost of debt not just for government but all businesses.

“Spending must be efficient and directed toward priority areas that can support the economy. Infrastructure and education are examples where government enables economic activity and I hope we see a clear approach to improving both.

“Treasury will need to set out how it plans to deal with the financial challenges facing Transnet and Eskom. Eskom still needs to fix its debt-burdened balance sheet, which is substantially compromised by municipalities that continue to grow their arrears.

“Transnet must invest in infrastructure, although much can be done with accelerated deals with the private sector, especially through concessions, saving the public purse. Other perennially failing SOEs such as the Post Office and Denel are not worth more public bailouts.”

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Optimistic that Budget 2025 will support business growth efforts

Mavuso says she is optimistic that Budget 2025 will support the efforts of businesses to prioritise growth and advance the ability of businesses to invest. “We have had a very strong start to the year, with much-improved electricity reliability and a generally warm global environment.

“We must proactively manage our relationship with the US under the new administration, but our wider mission remains clear. We must build our economy, stimulate investment and create jobs. We are on that path, and Budget 2025 this week can accelerate the journey.”