Duma Gqubule weighs in on canned VAT increase
JOHANNESBURG - South Africans won't be paying more for VAT as previously proposed.
That's because Finance Minister Enoch Godongwana has backtracked on the tax increase.
The decision follows consultations and recommendations from Parliamentary committees.
Godongwana will now table a Rates Bill to ensure that VAT remains at 15%.
According to economist Duma Gqubule, the basic goal of budget fiscal and monetary policy is to stimulate economic growth and employment creation.
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Daily Maverick
18 minutes ago
- Daily Maverick
State's interdepartmental strategy to tackle hunger hampers South Africans' right to food — report
South Africans cannot hold a specific individual or department to account for the right to food not being realised because most of the national frameworks on food security are interdepartmental, says the author of the report released by the Socio-Economic Rights Institute. The report calls for the drafting of national framework legislation in relation to the right to food in the country. The government of national unity (GNU) in South Africa has highlighted food security as part of its broader social and economic policies. According to its Statement of Intent, the GNU aims to tackle poverty, spatial inequalities and food security by providing a social safety net and improving access to basic services. South Africa's National Policy on Food and Nutrition Security outlines strategies to ensure food availability, accessibility, utilisation and stability. The government has committed to promoting the right to adequate food, addressing hunger and improving food security through coordinated efforts across various departments. Despite South Africa being food secure at a national level, household food security remains a challenge, with increasing food insecurity rates in recent years. The GNU's approach includes social support initiatives such as household grants and school feeding schemes to mitigate these issues. In a report released by the Socio-Economic Rights Institute (Seri) on Tuesday researchers recommended legislative and policy shifts that will help South Africans to have better access to food and potentially eradicate hunger. This is part of multiple recommendations that address other socioeconomic factors that create food poverty. The report recommends continued advocacy for the South African government to ratify the Optional Protocol to the International Covenant on Economic, Social and Cultural Rights, which serves as a complaints and investigative mechanism for rights violations, including the right to adequate food. The report recommends 'the drafting of national framework legislation in relation to the right to food in South Africa (e.g. a Food and Nutrition Security Act) in line with the recommendations under General Comment 12, as well as South Africa's National Policy on Food and Nutrition Security. This would set out the roles and responsibilities of the different actors in relation to food security in South Africa, including an interdepartmental body with oversight responsibility.' It also recommends that the updated National Food and Nutrition Security Plan be amended to address and monitor affordability and food pricing and enable people's economic access to nutritious food (the ability to purchase food as opposed to direct access, which refers to growing one's own food). The report, titled ' Food for Thought: Reflections on Food (In)Security. Laws, Experiences, Interventions ', aims to better understand how some of Seri's partners and client groups have been affected by, and responded to, food insecurity and hunger issues. Seri's research focused on the experiences of the leadership and of members as conveyed by leaders of the following partners: the Inner City Federation, the South African Informal Traders Forum, the African Reclaimers Organisation, the Commercial, Stevedoring, Agriculture and Allied Workers Union, the Izwi Domestic Workers Alliance and the Slovo Park Community Development Forum. Other recommendations call for an awareness of vulnerability of certain groups in society when creating, amending and updating policies that foster food security: 'Acknowledge food system workers, for example farm workers and informal traders, and ensure and monitor that they have fair and safe working conditions, and receive living wages. Acknowledge how women might be differently affected throughout the food system, for example as producers, workers and consumers, and incorporate specific interventions to attain greater gender equality. This could take the form of monitoring and increasing the number of women who have access to land for productive purposes, addressing unsafe working conditions due to pesticide use on farms and low wages/seasonal work of female farm workers.' The report further explains that sufficient funds have to be in place to implement these processes, which often need human and other resources to come to fruition. This is in line with the recommendations by the Department of Planning, Monitoring and Evaluation in its evaluation of the National Plan. The report took two years to compile, according to senior researcher at Seri Yvonne Erasmus. 'What is often missed is the issue of economic access, because food security has different dimensions, so national availability of food, whether food is nutritious, whether people have stable access over time, and a lot of the policy focus at government level is on the availability dimension. We do have more than enough food available nationally, we export a lot of our food and we waste a third of the food we produce.' Erasmus pointed out that economic access to food seems to be what the government is struggling to create a sound and sustainable plan for. Also, one of the challenges was that South Africans couldn't hold a specific individual or department to account for the right to food not being realised, because most of the national frameworks on food security were interdepartmental. Erasmus wrote the report and led the research, and legal researcher Michael Clark conducted the interviews and produced an earlier version of the report. The national organising secretary of the Commercial, Stevedoring, Agricultural and Allied Workers Union, Karel Swart, said he is not sure whether new laws and policy will change anything. He said the past 30 years were a 'complete failure'. Black economic empowerment had failed dismally under the ANC government. 'Farmworkers believe there was more food under apartheid. The current agriculture system does not work for the majority [only] for a tiny minority. I believe in reforms, but the current system must be replaced by a people-driven system… that caters for farmworkers and farm dwellers as well as for South Africa and the world.' Swart was a panellist at the launch of the report in Johannesburg on Tuesday and the union was involved in the data collection and providing experiences for the report. Swart echoed the sentiment that people need money to access food. 'The farms are lobbying the government to change the minimum wage and change the sectorial determination for farm and domestic workers. They want to hire and fire,' he said. 'They don't understand their actions on human behaviour. Children drop out from school in large numbers. Teenage pregnancies and sexual abuse are on the rise… violence and murder are also on the rise. All these things emanate in a country where hunger and starvation is on the order of the day.' DM
TimesLIVE
an hour ago
- TimesLIVE
UAT proposes solutions to reduce high youth unemployment
The United Africans Transformation (UAT) party has demanded immediate and concrete action to address the crisis facing South Africa's youth. The political party called for a youth jobs guarantee to ensure no young person remains unemployed for more than six months without work, training or public service opportunities. The party also proposed investment in youth-owned businesses, particularly in marginalised areas, alongside the rollout of free, community-based skills centres offering practical training in high-demand fields. It expressed sorrow and anger about the rising tide of youth unemployment. It said this was a national shame that exposed the growing disconnect between government promises and the realities of ordinary people. 'According to the latest figures released by Stats SA, the country's unemployment rate has risen to 32.9%, with more than 8.2-million South Africans now out of work. 'Most disturbingly, youth unemployment has climbed to a staggering 46.1%, up from 44.6% in the previous quarter,' the party said. In real numbers, that meant more than 151,000 more young people were jobless, while 153,000 youth jobs were lost in just three months. It said while Youth Month was meant to honour the fearless spirit of the 1976 generation, young people today were being left behind, forced to watch their dreams crumble under the weight of unemployment, poverty and political neglect. 'A new generation is trapped in a cycle of waiting: waiting for callbacks, waiting for internships, waiting for jobs that never come.' It said while the government of national unity (GNU) preached inclusivity and dialogue, it continued to preserve the same exclusionary systems that have failed the youth for decades. 'Instead of urgent, people-driven transformation, the GNU offers only elite pacts and bureaucratic inertia. Their solutions are theoretical; our people's hunger is real.'
Daily Maverick
an hour ago
- Daily Maverick
The strategic reforms that could transform South Africa's economy
The key is to break the strangleholds that Eskom and Transnet have on our electricity, ports and railways. Introducing real competition into electricity generation and the operation of ports and railways is the key to unlocking real growth in South Africa's stagnant economy. So said Deputy Finance Minister Ashor Sarupen at a seminar organised by the In Transformation Initiative last week, where Jakkie Cilliers, head of the African Futures unit at the Institute for Security Studies (ISS), presented the unit's latest report, co-written with Alize le Roux, which forecasts SA's growth trajectory to 2043. The seminar pondered why, despite the creation of a government of national unity (GNU) last June and the virtual end of load shedding, the South African economy only grew by a miserly 0.1% in the first quarter of 2025. Cilliers said South Africa was caught in a 'classic upper middle income growth trap'. From 1990 until 2025, South Africa's economy had grown by an average of 2.3% a year, and on its current path, without significant reforms, he forecast it would grow at an average 2.4% annually from now until 2043. That would expand GDP from about $402-billion in 2025 to about $628-billion in 2043, in constant 2017 US dollars. This 'slow but steady growth' would not be enough to dent poverty. It would barely keep pace with the population, which the unit forecast would expand from about 65.5 million in 2025 to about 77 million in 2043. Cilliers said annual GDP per capita would therefore rise from $12,600 in 2025 to about $14,700 in 2043 — with South Africa falling behind the rest of the world (except Africa) where he forecast average annual GDP per capita would climb from $20,300 in 2025 to $28,500 in 2043. He noted that on its current development trajectory it would take South Africa until 2037 to return to the peak GDP per capita of $13,800 that it reached in 2013. South Africa had been stagnating for years, with steady deindustrialisation, weak investment, and a growing dependence on social grants undermining growth, particularly during the Jacob Zuma presidency, Cilliers said. Cilliers noted that 740,000 South Africans entered the labour market every year, and because of slow growth and a very capital-intensive economy the number of unemployed people increased annually. In 2023, the International Labor Organization (ILO) found that South Africa had the highest unemployment rate globally after only Eswatini. Because being part of the informal sector is considered 'work' by the organisation, South Africa's relatively small informal sector contributed to this high percentage. In South Africa, only about 18% of the labour force is employed in the informal sector. Cilliers noted that about 62% of South Africans were now living below the World Bank's poverty datum line for upper middle income countries, of $6.85 per person a day. On South Africa's current economic path, that percentage would decline 'modestly' to 58% in 2043, though the absolute number of people living below that poverty datum line would increase, from some 40.9 million in 2025 to 44.4 million in 2043 (because the overall population would rise). Cilliers said South Africa should now be reaping a 'demographic dividend' because its ratio of working age population – aged 15 to 64 — to its dependent population (children and elderly) had now reached 2.1. In the African Futures calculations, the demographic dividend should kick in when the ratio of working people to dependents reached 1.7. he said, Economic growth stunted by poor human capital But South Africa was not earning this dividend largely because economic growth was being stunted by poor human capital, mainly an unhealthy population, many of whom were still afflicted by HIV/Aids and tuberculosis and low-quality education. The question, he said, was why South Africa did so poorly on social capital, education and health, given the very high levels of expenditure on those services. 'And the only answer that you can come up with is government inefficiency, the poor use of existing funds. And the question is, how do we escape the middle-income trap?' Cilliers asked. He said the African Futures team had modelled the effects of reforms in eight different sectors on South Africa's economic development. These were demographics and health; agriculture; education; manufacturing; infrastructure and 'leapfrogging' (i.e. bypassing older technologies); free trade; financial flows; and governance. They found that the largest return was from increased manufacturing, followed by freer trade and then better governance. So, for instance, all eight sectors combined would increase GDP per capita in 2043 by about 33%, from the $ 14,750 on the current path to $19,650. Of this, increased manufacturing would contribute about $930; freer trade (with the full implementation of the African Continental Free Trade Agreement) would contribute about $900; and better governance about $800. The combined impact of those eight reforms would decrease the percentage of South Africans living below the $6.85 a day poverty rate to 50% by 2043, down from 62% in 2023. This would represent 6.1 million fewer poor people than if the economy remained on its current path, though still leaving South Africa with a large poverty burden, Cilliers said. The African Futures team had compiled a laundry list of recommendations, starting with the need to strengthen governance and accountability through evidence-based policies, curtailing corruption and increasing accountability and inclusivity. Deputy Finance Minister Sarupen, of the DA, said much of Cilliers' analysis resonated with assessments by the Treasury's own economic policy team and the work being done by the government's Operation Vulindlela and by various parties in the GNU. He agreed that merely 60% growth in the size of the economy over the next two decades 'will not get us out of the trap that we're in' and that South Africa was in danger of falling from upper middle to lower middle income status. Structural constraints The low growth was driven by structural constraints, weak productivity, low investment in capital, higher inequality and an underperforming formal labour market. The Treasury was 'acutely aware of this'. But he said the government had to prioritise its reforms to tackle the problem because of the many competing demands of a massive amount of social ills and a very strong active civil society. He noted that South Africa had a system of fairly autonomous government ministries that made it harder to pursue coherent policies. Cilliers had identified manufacturing and freer trade as South Africa's best paths forward. Sarupen noted that cheap reliable energy with stability of pricing and supply underpinned manufacturing and industrialisation . 'And one of the drivers of our de-industrialisation has been excessive pricing and inefficiency of supply that really hurts manufacturing in South Africa,' he said. He noted that while prices in the rest of the economy had risen 196% since 2009, Eskom's prices had increased by 403%. So Eskom was driving inflation and deterring investment. Sarupen added that part of the reason GDP growth had been so low over the past year, despite an end to load shedding, was because companies had sunk so much money into load-shedding-proof themselves over the past few years that they had not spent enough on actual business expansion and employment. Sarupen also noted that free trade — another key reform advocated by Cilliers — 'requires you to be able to actually move goods and services cheaply and easily around, so the logistics reforms need a lot of depth and need to maximise competition. 'And so in the reform process that we're undergoing we need to be careful to not just bring the private sector into Transnet's monopoly structure. But rather how do we create competition, across multiple ports for example.' Likewise, South Africa had to maximise competition in railway freight lines. He agreed with Cilliers that crime had to be tackled much better as it was discouraging investment as well as acting as a deterrent to economic activity inside South Africa because, for example, citizens were fearful of using public transport to go to work. Rule of law He said the rule of law was the foundation of all other economic reforms, followed by macroeconomic stability, and then better education and health, and only after that global competitiveness and industrial masterplans. Sarupen did note though that South Africa's foundation of macroeconomic stability was 'probably one of our saving graces'. He also said that the government had to reduce debt. He noted that about 90% of South Africa's debt was denominated in rands, and about 75% of that was purchased by domestic markets. Rand debt was generally better than debt in foreign currency but the scale of government borrowing, about R300 to R400-billion a year, was crowding out the amount of capital that could be invested in business ventures and therefore growth. He added that the relatively high premium of about 11% on a 10-year South African Government Bond was discouraging businesses from investing in riskier ventures. He noted that many of the investments in this year's controversial national Budget were important — such as in public transport. He said, for example, that while a lower income worker in Vietnam earned a similar wage to a lower income worker in South Africa, the Vietnamese worker spent about 10% of his or her income on transport, the South African workers spent around 50%. 'People are going to work to earn money to be able to go to work,' he said. And this was diverting money away from workers buying goods and services, which was essential for economic growth. DM
