The minister of finance, Tito Mboweni, faces a tough challenge in presenting the National Budget Speech on 26 February. He will have to show a commitment to fiscal consolidation in the context of a constrained environment plagued by low economic growth, load shedding and a potential credit downgrade by Moody’s. Averting a credit downgrade will likely be high on his agenda.
More details on the implementation of economic revival strategies, for example, National Treasury’s economic strategy and the plans referred to in the SONA, will be necessary to support investor confidence.
The balance between government income (tax revenue) and expenditure is at the heart of the government budget. There will have to be concrete plans to balance the budget while considering the need for economic growth. The budget must also address the risk posed by increasing government debt.
Agri SA hopes to hear the following elements in Minister Mboweni’s speech:
• Drought support: Effective, speedy and direct assistance to drought-affected farmers. Agribusinesses can act as agents to help distribute drought relief. Drought relief should cater to farmers across the sub-sectors of agronomy, horticulture and animal production.
• Electricity: Electricity is a key production input for agriculture. Farmers are price-takers, and rising electricity costs have a direct impact on our international competitiveness, where farmers must absorb rising input costs. Electricity sector reforms, mitigation of Eskom’s supply constraints (load shedding) and financial challenges need to be addressed.
• Land reform and emerging farmer support: Increased funding for land reform and emerging farmer support is crucial. An outcomes-based funding approach tied to technical and mentoring support could be beneficial.
• Biosecurity: Funding to support and enhance South Africa’s biosecurity measures. The challenges posed by foot-and-mouth disease (FMD) are examples that highlight the importance of increased funding to enhance our biosecurity measures. Equally important, we need to ensure enough capacity is available in terms of the number of biosecurity personnel with adequate training.
• Failing municipalities: Plans to modernise municipalities’ business model while enhancing their governance and service delivery are crucial. Failing municipalities pose economy-wide negative impacts for South Africa.
“Agriculture is a key sector to unlock economic growth, tied with policy certainty and a more conducive economic environment,” said Nicol Jansen, Agri SA chairman of the Centre of Excellence: Economics and Trade.
Decisive action required
The budget will have to show decisive action geared towards implementation to revive our economy. Considering the important role of agriculture for the South African economy, we expect the budget to make adequate resources available to boost agriculture’s competitiveness and to support farmers.
This should especially be the case in the drought-affected areas so that the sector can continue to produce quality food for the country and to contribute towards job creation and poverty alleviation as envisaged by chapter six of the National Development Plan (NDP). – Press release, Agri SA