The Regent Business School, pre-budget speech discussion was sponsored by Standard Bank, Deloitte, and the Mail & Guardian, and was held at Killarney Country Club
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When it comes to Finance Minister Tito Mboweni’s budget speech on February 26, South Africans are looking beyond pretty promises. They want detailed plans and they mean business. This was the message of the pre-budget discussion held by REGENT BUSINESS SCHOOL a member of the Honoris United Universities in anticipation of the budget.
RBS held a panel discussion which was chaired by media personality and Champion South Africa founder Ashraf Garda. On the panel was prominent political and social commentator Dr Somadoda Fikeni, managing director of emerging markets and Africa at Deloitte; dean of Deloitte’s Alchemy School of Management Dr Martyn Davies; personal finance and wealth guru Samke Mhlongo; and senior economist Emile du Plessis.
The discussion, sponsored by Standard Bank, Deloitte, and the Mail & Guardian was held at Killarney Country Club on February 19, and was dynamic and robust. It was also a necessary prelude to the speech, considering the current state of the South African economy.
The national mood, as managing director of the REGENT BUSINESS SCHOOL a member of the Honoris United Universities, Dr Ahmed Shaikh describes, is “sombre”. South Africa is facing softer labour markets, with high levels of unemployment — particularly graduate unemployment — with low growth forecasts. The country is also desperately trying to dodge a downgrade. All the while, South Africa is facing rolling blackouts from it’s over-capacitated electric public utility.
It’s a dire situation to find ourselves in and the budget is an important tool to allow both the public and other stakeholders to understand how we’re going to pull ourselves out.
But within the darkness there’s a sense of hope, Garda noted. And it is with this spark of light that the discussion was held.
What makes a good budget speech
The budget speech can be esoteric, the speakers agreed. While the finance minister should be speaking to everyone who is affected by the budget, there are few people who will listen to the nitty-gritties and understand what they mean. As Mhlongo noted, when Mboweni delivers the budget he is speaking to politicians, academics, global leaders and investors in the international community.
Noting this, Garda asked the speakers what makes a good budget speech. For Davies, South Africa needs “the opposite of radical economic transformation”. Davies said the budget needs to be fiscally tight. “It’s not about how much we spend, but about the quality of spend,” he said.
“The budget speech is partly vision, partly strategy. What’s important is the strategy,” said Du Plessis, adding, “a good budget includes adequate detail.” The details allow stakeholders to understand how policy will be executed and the timeframes for that execution. The other component that Du Plessis looks for is whether or not the budget is balanced. “When we commit to spend, do we have a matching revenue?”
Fikeni said: “The budget must sort out the problems of the moment, while balancing all the risks.” He added that the speech must also not be wrapped up in political rhetoric.
For Mhlongo, the test of whether or not the minister will deliver a good budget speech is simple. “We need to just avoid a Moody’s downgrade,” she said. Adding on to Du Plessis’ comment about details, Mhlongo said the budget needs adequate details about the spend and revenue that “might not be popular”.
While these are the expectations for a good budget speech, the speakers agreed that there is a bankruptcy of leadership within the country itself. As Fikeni noted, the ruling party is plagued by factions and fissures, and the opposition is not presenting viable alternatives. However, Fikeni said the private sector cannot escape the scrutiny either, as its leadership is not filling in the necessary gaps in the economy.
All parties agreed that it is important for the leaders to create an enabling environment for citizens to effectively participate in and benefit from the economy.
What the speakers anticipate in the budget
As for her expectations for the 2020 budget, Mhlongo is not confident. “I don’t know what rabbits will be pulled out of hats, but I’ve got no confidence in the 2020 budget speech,” she said. Mhlongo echoed earlier comments that she wants to see details in the government that reveal what the government is going to do to put more money in people’s pockets. “It’s crunch time now,” she noted.
Employment is a key component of what Fikeni wants to see in the budget. “I want to see employment, especially youth employment and the capacity to deliver it,” he said. He is also looking at the spending on education and whether there is a priority to build human capacity. According to Fikeni, South Africa needs a complete overhaul of its education system. This way it can better prepare the youth to make the necessary contributions to the economy.
Du Plessis will be looking at projections on debt-to-GDP ratio, how budget will provide the necessary support to Eskom as well as the tax structure. Du Plessis said he’s interested in what the finance minister will say about income tax, corporate income tax and other taxes.
Building on to what the previous speakers said, Davies said he is looking at how the budget will be structured to avoid a Moody’s downgrade and regain investment status from the other two ratings agencies. Davies ended with a warning: “If we can’t manage our finance, someone else will. If the IMF comes, we will all dramatically feel the pain.”
An end to corruption – and of rhetoric
The panel discussion was followed by an engaging question-and-answer session, where speakers handled questions from attendees as well as social media.
Some of the concerns raised from the floor had to do with taxes and whether decreasing personal income tax would increase public spending and therefore boost the economy. The speakers agreed that was too simplistic of an assumption. As Mhlongo noted, we do not have the intel to predict what taxpayers would do if they had more money in their pockets. Besides, as Davies noted, it’s personal saving and not personal spending that will help the economy.
Questions from the floor also raised concerns about corruption and how South Africa can eradicate it. Answering this question, Fikeni said: “We must have fixed law enforcement and crime intelligence to punish corruption. The political elite will not do it; we need a citizenry that demands it.”
What’s important for all the speakers is for the government to fill in the gap between policy promises and implementation. Mhlongo echoed the public frustration of the cycle of bold promises and plans which are severely lacking in necessary details. “We need structural reform and facilitative growth,” she said.
The message is loud and clear: South Africans are tired of political rhetoric and are looking to the government to do the necessary work to haul us out of the darkness.
For more information visit www.regent.ac.za