Marion Edmunds
Minister of Finance Trevor Manuel’s copy of the 1998/1999 budget speech was a prize attraction this week at a lavish banquet for South Africa’s top black businesspeople who gathered to toast Manuel and the country’s foremost black entrepreneur, Cyril Ramaphosa.
The document – which included some gentle tax cuts for the richest of the rich – was auctioned to the highest bidder, National Empowerment Corporation chair Mashudu Ramano, for R60 000, while Ramaphosa delivered the keynote address on black empowerment.
The occasion, organised to raise funds for the African National Congress, served to underline yet again the support the ANC-led government enjoys from black business, the so-called “patriotic bourgeoisie”.
While the ANC’s alliance partner, the Congress of South African Trade Unions, poured scorn on the budget, black businesspeople embraced the government’s spending plans, backing Manuel’s hardline stance on fiscal discipline, his strategy to limit social spending and his determination to stick to the principles of the growth, employment and redistribution strategy.
Former Gauteng premier Tokyo Sexwale – now an international diamond businessman – says Manuel’s budget is ” very positive”, particularly as it encourages foreign investment.
“The continued tight fiscal controls are a good thing as the foreign investment community is very careful about how a government handles its own funds. However, at the same time, the budget is seen to be people-sensitive with no increase of value-added tax (VAT).”
Sexwale says the government’s plan to tax the demutualisation of Sanlam and Old Mutual is a “clever move”, because it means it has ammunition for the Presidential Jobs Summit later this year.
Moss Mashishi, CEO of Moribo Leisure Limited, says he believes black business will be comfortable with Manuel’s budget. “I am generally satisfied with the budget. Manuel had a difficult task in that he had to handle competing demands, but he achieved a credible and sustainable budget. It’s a tough budget, but it is far better to go hard on fiscal discipline and I am quite satisfied that this is the route the country needs to go.
“The greater provision for education, policing and health is good, as well as the reduction of taxes for lower income earners. His tax on petrol is a major problem and it may reduce gains of the lower income groups.”
Mashishi says he backs the demutualisation tax. “It is fair, currently given the imperatives of the government, because the root of the matter is that we do not have enough money and South Africa, both corporate and personal, is taxed to the hilt, so how do you get more? We certainly do not need more VAT because the cost on individuals is already high,” he said.
Maurice Radebe, a prominent black businessman in the oil sector, believes Manuel could have done more for black empowerment. “It’s a sad omission that the budget does not highlight the issue of black empowerment and is not promoting empowerment actively.”
However, Mustaq Bray, chair of Brimstone Investment Corporation Limited, says he believes the government is doing enough to promote black business, and it was up to this sector to seize the opportunities the climate for black empowerment created.
“Its not a bad budget considering that the government is serious about expenditure, especially now that they have a three-year plan. I grew up with Manuel in the Western Cape and he is doing a great job, with his whole team. The International Monetary Fund has recognised him as one of the best finance ministers in Africa.”
Bray was supportive of Manuel’s moves to crack down on tax evasion and corruption in government.
Ayanda Bam, executive chair of Kuyasa Mining, was also supportive of the budget, citing Manuel’s determination to clamp down on tax dodgers as particularly admirable. He also praised Manuel for presiding over the drop in the country’s deficit.