The budget of May 21 2025 will be South Africa’s crossroads.
When finance minister Enoch Godongwana takes to the podium to deliver his budget, a record third in just over three months, many will be chortling at his humiliation. A man as astute as Godongwana must know that his credibility is in tatters. He cannot afford to fail again.
To do so would destroy Godongwana himself, ruin South Africa’s reputation as a country of solid economic institutions and traditions, and render the GNU unworkable. We would probably need a new election immediately (or within a few months) and a new set of hands at the tiller.
To succeed on May 21, Godongwana needs a new mindset, a new way of interacting with partners, a new way of reflecting the electorate’s wishes. With humility, here are a few simple suggestions for the embattled minister:
Be honest about what went wrong: Godongwana, President Cyril Ramaphosa and some in the ANC national executive committee were part of the push against the financially ruinous actions of the Jacob Zuma administration. Some were complicit. When Thabo Mbeki was ousted in September 2008 our finances were healthy. The debt-to-GDP ratio was about 25%. Unemployment was 21%. Public sector trade unions wouldn’t dare blackmail the ruling party with threats of breaking the tripartite alliance because Mbeki had already told them to take a hike if they could not stomach the growth, employment & redistribution policy. All that was destroyed by Zuma. Debt is now hellish. Unemployment is a nightmare. Spending on civil servants is out of control. Godongwana has been tjoepstil about putting the axe to government spending. He must acknowledge that we have a bloated, overpaid, unaccountable and largely inept civil service that needs to be trimmed and professionalised. Again, what are we doing with our executive of more than 75 people?
A recognition that the world has changed fundamentally: US President Donald Trump’s return to the White House has accelerated a huge shift in world politics. The retreat of the US from a leadership position in global diplomacy to a new insularity means that South Africa has to rejig many of its old assumptions. Where once US money helped us defeat HIV infections, we now have to look to our own resources for that. Where once our farmers could rely on the African Growth & Opportunity Act to access the US market, we now have to look elsewhere for our products. That will have an impact, most likely a negative one. The old ways of doing things just won’t cut it. Godongwana’s budget must show he can embrace change.
A truly inclusive budget: Between 1994 and 2014 the ANC won majorities of more than 60%, with a high of more than 66% in 2004. In 2019 it declined to 57%. With these majorities it could do as it wished. The ANC leadership suffers from a hangover from this period. If the minister wants to make this budget a success, he must realise that he cannot continue to treat his coalition partners as the enemy. He must play open cards with them. He must be open to different ways of solving the urgent problems he has so eloquently spoken about: high expenditure, low revenues, huge debt costs, a stagnant economy. Trying to dribble past the coalition partners by hiding the real VAT increase until the last minute (as happened on February 19) and going out of the coalition to flirt with players like ActionSA are sordid and dishonest ploys to avoid doing the right thing. Collaborate, minister!
Ignite business, create jobs: The business sector in South Africa has played a pivotal supportive role to the Ramaphosa administration since 2018. It has been key in encouraging foreigners to invest here even when the business climate took strain with ANC-inspired events like the July 2021 riots. When Eskom was collapsing, business helped. When Transnet was collapsing, business stepped in. But this is a poor way to be using business. We should be doing everything in our power to get business to invest in South Africa. This is the only way we can make a significant dent in unemployment. It would be great to see policies that encourage international businesses to consider South Africa as a place to come and build. The minister is key to this.
We are at the crossroads. It’s time to act like people who are faced with a crisis. Godongwana has a chance to lead.
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