Rather a synopsis of the budget speech, here are the questions a forward-thinking citizen should be asking this government.

Over the next day or so there will be many summaries of the budget, what remains are the most urgent questions on the state of our country, our economy and our fiscus.

On the question of SAA:

  1. Our think-tank and management consultancy has had long since made the point that SAA has an accounting problem. if you adjust tourism earnings into the contribution of SAA to the fiscus, the losses aren’t as pronounced.
  2. Many other airlines have received bail-outs including Austrian Airlines. This should be part of the strategy for a developing nation to facilitate investment, “job creation” & economic growth;
  3. much of the financial losses accumulated by SAA come from their international routes. These routes facilitate the growth of the economy (pari passu the spending of the passengers in-country). So looking at the financial loss of SAA without this not entirely correct. We often make the blind assumption when you hear SAA that the airline simply transports passengers. Between 2008–2017, over 35% of the cargo in South Africa that is transported is air cargo. Cargo is directly linked to economic activity.

The real question is not whether or to keep and continue to fund SAA.

The question is, “is the SA economy more efficient and cost-effective with an SAA or without SAA?” Note: corruption must be dealt with. I would want us to stop conflating corruption with the question of optimal strategy for SAA.

On land:

  1. The government hasn’t proved itself as an efficient distributor of resources. This is a problem when you consider that it is this government that wants to redistribute land. It’s a question of sentiment. Do you trust this government?
  2. the date of compensation must be addressed. As Khaya says, the date of compensation is determined at the resolution of a claim is a part of the reason why respondents dispute land claims (hoping for price escalations during the period of the dispute).
  3. commercial bank claiming that the system of lending will be compromised must be tested on that claim. Banks lend against the assets not cash flows and certainly not the farmer. Banks are not venture capitalists of private equity firms. It is, afterall, asset-backed finance. If the loan enjoys favourable terms because of the capability of the farmer, then that risk model must be stress tested.
  4. the “free market” pricing mechanism is itself re-enforcing misallocation of land assets and deepening unequal redistribution of wealth. In a 27% unemployment economy that stalled at 0% growth in nominal terms, with amongst the highest genie coefficient in the world, you can’t expect ALL citizens to “pay to play”.

On education:

  1. our tertiary education has a drop-out rate of 50% for first-year students. You can’t deal with the matter of access to the economy without dealing with the matter of access to higher education & dismantling systems of exclusion in universities specifically;
  2. it is clear that NSFAS wasn’t prepared for the provision of free education after the erratic announcement by former president Zuma. Consider that this announcement was 4years after the brave #FeesMustFall protests and you get a sense of just how disconnected the government from the lives 0f their citizenry. That remaining, the questions is what is the plan to deal with this now?
  3. we talk and buzz about the 4IR. Here is a simple question, “what processes are in place to ensure that teachers have the correct material to teach learners in this new paradigm?” Are the teachers themselves au fait with what 4IR means?
  4. There is clearly a disconnect between the demand for skills in industry and the supply for labour. What conversation is government facilitating between business & labour to ensure that there isn’t a mismatch in skills supply & demand?

On the role of the Reserve Bank:

  1. The minister must seriously rethink & lobby within his party for the re-examination of the mandate of the reserve bank.
  2. From a developmental perspective, SA today is where USA was in 1934 & UK/France in 1945. They linked their central bank mandate to national building imperative. They subsidised credits to industry and kept interest rates low in order to promote industrialisation.
  3. France nationalised its central bank after the second world war & placed it under the control of the National Credit Council. (Hodgman, 1972: 147). This contributed to the modernisation of the French economy.
  4. This drive-in industrialisation saw the creation of manufacturing capacity, an increase in exports & the flow of productive investments (Epstein, 2006:11). A more competitive economy. More demand. More jobs.

On the state of small businesses:

  1. The ANC government is not serious or deliberate about developing small businesses. Proof points: The economy remains locked. Funding remains expensive. Banks treat entrepreneurs like criminals. Government treat them like financiers. CCMA treats them like large businesses.
  2. Why we need to stop this obsession with small business and keeping people busy rather than thinking about how do we diversify economic participation. The big lie of small business → https://youtu.be/hhBDfJY-xZw #Budget2019

https://www.youtube.com/watch?v=hhBDfJY-xZw

  1. This government: small businesses are the key to economic growth & job creation. Also this government: R481 million for Small Business Agency but R567 Billion for social grants & R23 Billion to support Eskom reconfiguration.

These are some of the thoughts & questions that I would ask the minister of finance. What would you ask him? Leave your question in the comments.

Vusi Thembekwayo
Speaker | Investor | Leader