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The CEO Initiative believes that tomorrow's Budget Speech is a crucial opportunity to present credible and tangible measures – with a particular focus on delivery and execution – that South Africa needs to be substantially more investor-friendly, growth-orientated and fiscally resilient in the face of serious economic and social challenges.
 
We have been very supportive of the visible commitment during President Ramaphosa’s tenure to galvanise government, labour and business to try and unlock growth. We are also encouraged by the efforts to transparently unpack and stem the systemic capture and incapacitation of key national institutions and state-owned enterprises (SOEs). The positive tone of, as well as the focus points that the President outlined in his State of the Nation Address (SONA), contribute towards rebuilding our special country as a place in which all South Africans can thrive.
 
It is vital that government now moves from talking and starts to take firm and practical action to address these issues: the national fiscal position, as well as the stubborn and dangerously low economic growth rates do not allow room for any other course of action.
 
The CEO Initiative believes the Budget should clearly demonstrate government’s commitment to fiscal discipline, in addition to addressing the key structural issues and major risks preventing the economy from performing optimally. The country particularly needs clarity on the plans to incentivise and fund accelerated growth and employment, especially in light of growing social pressures.
 
With this in mind, the CEO Initiative looks to the Budget to provide firm detail on:
The true state of the national fiscal position, including the capacity of the South African Revenue Service (SARS) to collect tax in a fair and transparent manner;
Measures for increasing fiscal discipline and accelerating reductions in the unsustainable level of the fiscal deficit, including plans for reducing the public sector wage bill and halting the escalating contingent liabilities of SOEs;
Tangible plans for holding public sector officials accountable for the delivery of their mandates;
Details of exactly how and when government will deliver on its promise to improve the investment environment by addressing policy, legal, regulatory and administrative barriers;
Growth-enhancing reforms and details of which investments to promote growth will be prioritised by the government, and how exactly this is envisaged;
Educational improvements – and specifically early childhood development – and how these will be funded, as the country needs a properly educated citizenry in order to build a competitive and growing economy; and
How key institutions such as the National Prosecuting Authority (NPA) will be capacitated, to ensure that those accused of wrongdoing are swiftly held accountable, since this is a foundational element of rebuilding public trust.
 
That said, there are no easy paths ahead, as the difficult period we have been through means we are simply not generating enough resources to meet our needs.
 
Sustainable SOEs fulfil a meaningful role in growing the economy and providing increased levels of employment.  While we welcome the improvements to the governance of many SOEs, we hope to get sufficient direction in this budget to allow for progress to be made on the implementation of strategic and operational turnaround plans of the various SOEs. It is a tragedy that Eskom is the biggest risk to the national fiscal position, and indeed to our ability to attract investment and achieve the economic growth we need to tackle our fiscal and socio-economic challenges.
 
Achieving a future in which we have both a viable and affordable energy mix for the country and a structure of SOEs which contribute positively to the growth and prosperity of our nation, will require government to make unpopular choices.  We believe government knows what these are, and we urge them to be resolute in executing those choices.
 
The only way to maintain and grow investor confidence as a foundation for higher levels of inclusive growth is by demonstrating tangible execution of strategies and urgent action on the country’s most pressing challenges.  
 
These challenges present significant risks to the country’s ratings outlook and need to be addressed urgently. Moody’s is the only of the three major ratings agencies that have the country’s debt dominated in local currency ranked as investment grade. A downgrade below investment grade will significantly increase the cost of living for all South Africans.
 
Aside from the need for increased fiscal discipline, we have long maintained that tackling corruption and maintaining a commitment to the rule of law are crucial building blocks to ensuring that the country works for all who live in it. While some may have been discouraged by the seemingly slow progress regarding prosecutorial action, we acknowledge that the various Commissions of Inquiry into state capture, SARS and the Public Investment Corporation are an important start to publicly unpack the extent to which our execution capacity and ethical compass have been hollowed out. We urge the NPA apply the law equally to all and to speedily hold to account those implicated in wrongdoing.
 
While we do not discount the significant progress that South Africa has seen over the past year, we reiterate that a great deal more work lies ahead as we aim to strengthen our fiscal framework and recapacitate our key institutions.
 
Business remains committed to working with government and labour to urgently address the hurdles that stand in the way of South Africa achieving sustainable and inclusive growth that benefits all who live in this country.

Issued by The CEO Initiative