Godongwana vows to clamp down on errant SOEs, govt debt amid SA's economic woes

Godongwana tabled the maiden Medium-Term Budget Policy Statement in the National Assembly on Thursday afternoon.

His maiden address comes amid growing concern of an economy in tatters following months of the onslaught of the Covid-19 pandemic and a week of unrest in July.

The country's economic woes were recently compounded by Eskom's rolling bouts of load shedding, further throttling recovery.

Godongwana told MPs that it's not all doom and gloom with the economy expected to grow by 5.1% in 2021, from a 6.4% contraction in 2020.

Over the next three years the growth of the local economy is expected to average 1.7%

Despite some green shoots, he believes the 3-year projections reflect some structural weaknesses - including an inadequate electricity supply.

"Considering the economic outlook and the risks associated with it, it is critical that we accelerate economic reforms for long-run growth. These reforms should focus on improving competitiveness, productivity, investment and employment.

"Our first and immediate task, in this regard, must be to ensure stable energy supply, reduce the risk of load-shedding and accelerate the transition to renewable energy sources," Godongwana said

He added no additional bailouts would be provided for state-owned enterprises, including the embattled Eskom.

"The exception to this is where guarantees have been called by creditors and conditions have been met by the SOC in question, within the context of their strategic importance.

"Since 2013, government directed more than R290 billion to bailout state-owned companies, at the expense of important social expenditure. Going forward, the restructuring of state-owned companies, informed by an assessment of their strategic relevance, is a priority."

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He further vowed to show "irrelevant" SOEs the door.

"We must be prepared to consolidate some of our state-owned entities and let go of those that are no longer considered strategically relevant."

Godongwana lamented the extent of rot at SOEs and other government structures, adding corruption continues to bankrupt the public purse.

"For our growth and recovery agenda to succeed we need a state that is capable, well governed and a society that is free of crime and corruption. Within government, there continues to be inefficiencies in government expenditure due to corruption, wastage, and various other forms of maladministration.

"One critical part of our reform agenda is in the procurement system. I am therefore delighted to announce that we are reaching the final stage of the finalisation of the Public Procurement Bill," he said.

Godongwana also hailed the budget policy framework as pro-poor amid calls to extend social relief grants.

But he admitted the total spending on the social wage remains high.

"Today, 27.8 million South Africans are social grant recipients. This accounts for about 46 percent of our population. At the same time, the number of people working has declined, further underlining the critical flaws in our economy. Our total spending on the social wage is also very high. This amount has grown from R860 billion in 2018/19 to R1.1 trillion in 2021/22.

"Around 60 per cent of total non-interest spending annually goes towards housing development, free basic services, employment programmes, health, education and social grants, among other things. Overall, the South African government is acknowledged as having one of the most comprehensive and expansive social security systems in the world, and there are ongoing discussions about the social safety net."

The R350 Covid-19 social relief of distress grants is expected to draw to a close in March next year.

Read full budget statement below: