Balancing South Africa's Budget: A pro-business, growth-focused approach

Andrew Bahlmann

Balancing South Africa's national budget must prioritise pro-business growth with a shift to tax policies that stimulate economic growth without sacrificing essential public services.

South Africa’s government, like many others, can often be inefficient in how it allocates funds. This includes high administrative costs, duplicated programme and inefficiencies in state-owned enterprises (SOEs). These inefficiencies are prime candidates that I would target for budget cuts, with a start being reducing the number of municipalities and even provincial governments.

Reduce the financial burden on taxpayers by cutting funding to loss-making state-owned enterprises like Eskom, Transnet and South African Airways - focus on privatisation or public-private partnerships (PPPs) could free up significant funds.

It may seem easy to cut investment in infrastructure, but this is the last thing I would do if the objective is to create jobs and get people off state grants. I would direct more government spending toward critical infrastructure projects, such as roads, ports and digital infrastructure. These investments create jobs and enhance the business environment by improving logistics and communication.

I would increase social wages by just inflation instead of above inflation as it ensures that the real value of social assistance remains intact while avoiding additional pressure on the budget.

Regarding the proposal to give South African Revenue Service (Sars) an additional R3.5 billion to improve collection rates, I firmly support this investment. While it may seem like a sizable amount, it is a smart, long-term strategy. Improving the efficiency of tax collection without raising tax rates can significantly boost revenue.

South Africa has a large informal economy, and many taxpayers underreport or evade taxes. By strengthening Sars’ capacity to track down evasion and improve collection systems, this investment will likely result in a higher tax base and better compliance, ultimately generating more revenue for the government.

I would also focus on skills development. Investing in education and vocational training would better equip the workforce with the skills needed in a rapidly changing global economy.

I would thereafter prioritise fiscal discipline through expenditure control while ensuring that tax increases are minimised, with a focus on ensuring that government policies remain conducive to business growth and attracting investment. Finding the right balance between fiscal discipline and investment in growth sectors is critical to avoiding more borrowing.

These policies would not only attract foreign capital but also support local businesses by creating a level playing field and reducing the risk of tax hikes or unnecessary regulation. With these measures in place, South Africa can position itself as a competitive and stable destination for foreign direct investment, which will ultimately drive economic growth and job creation across sectors.

Andrew Bahlmann is the CEO of Corporate and Advisory, Deal Leaders International

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