Finance Minister Enoch Godongwana told business yesterday that a decision on giving incentives to help business was imminent and likely to be made before the end of the current fiscal year.
Speaking to business at the South Africa Chamber of Commerce and Industry (Sacci) luncheon to unpack the Medium-Term Budget Policy Statement (MTBPS) at the Hilton Hotel in Sandton, Godongwana said there were intense discussions at Cabinet level on the best form of incentives to offer the corporate sector and small and medium enterprises.
‘We are looking at if it should be allowances and so on. We will make the decision on that before the end of this fiscal year; we are discussing that,“ he said.
On the current impasse with labour after the state offered a 3% wage hike that was rejected, he said the government’s wage bill, at R690 billion, was its highest expenditure. But the government still wanted to add at least 10 000 more police in the current fiscal year and possibly 15 000 more boots on the ground in the next one in a bid to combat crime, which was sapping investor confidence.
He said the current fiscal year was a good one despite the challenges because the South African Revenue Service (Sars) was projecting R85 billion in revenue collection – more than had been budgeted for.
Challenges in the last fiscal year included the July 2021 unrest and devastating floods in KwaZulu-Natal for which the government had forked out R6.3bn and granted Transnet R5.8bn to deal with these issues.
“There is a general fear that particularly if the war (in Ukraine) continues much longer, we face a darker future.
“We have tried fixing Eskom for the past 14 years, but we have not been fixing power to the grid. If you cannot have stable electricity the economy will not move. We have been, since 2010, working on the regulatory framework for renewable energy. The truth is we should be using all forms of technology which should provide reliable electricity,“ Godongwana said.
Eskom has this year implemented the worst bout of power cuts in the 15- year history of load shedding in South Africa as its ageing coal-fired plants experience frequent unplanned breakdowns and emergency reserves run out.
Eskom has so far spent more than R7bn on diesel to run its open-cycle gas turbines.
“We need to fix electricity to the grid and we are between a rock and a hard place on Eskom debt. We have got to take the debt but ensure efficiency gains,” he said.
Godongwana said the renewables lobby had launched attacks on Mining and Energy Minister Gwede Mantashe as they had the resources to do so, but that South Africa had to use all resources to stabilise the electricity supply and that included the country’s massive resources of coal.
“At the last G20 summit, someone from Germany said they would rather burn coal than freeze in the dark. In South Africa we are freezing in the dark and yet we have a lot of coal resources just sitting there,” he said in support of Mantashe’s regular refrain on the country having to use coal as part of the energy mix and not be pressured into the just transition programme requiring South Africa to have phased out coal by 2035.
He said the government taking on part of Eskom’s more than R400bn debt would bump up government’s debt-to-GDP ratio and the state had to be prudent about helping Eskom out and still maintaining its fiscal balance.
“We have to decide if we take on the debt in a lump sum or if we do it in more than (one) fiscal year. That is the discussion now. Nersa (the National Energy Regulator of SA) still has to make a determination on Eskom tariffs and that may impact the future of Eskom,” he said.
BUSINESS REPORT