Pieter Bensch | The 2024/25 budget highlights need for bold, business-friendly economic reforms

Finance minister, Enoch Godongwana faced a crucial task: crafting a budget that balances electoral considerations with the imperative of addressing economic challenges. In navigating this delicate balance, the public expectations were high as the budget speech yielded significant importance in shaping the nation's path toward sustainable long-term economic recovery.

The 2024/5 budget speech highlighted the ongoing challenges South Africa's economy faces, including infrastructure-related issues like power supply and transportation efficiency. Unlike previous years, marked by windfall taxes from robust commodity prices, the current fiscal environment presents different dynamics.

The government acknowledges that increased investments in embedded generation and more expensive road infrastructure have led to higher VAT refund payments, impacting revenue collections. Additionally, corporate tax collections dropped by 14% in the first 10 months of the last financial year, resulting in a greater reliance on personal income taxpayers to finance government spending. 

This budget speech highlights the urgency of strengthening road, rail and power infrastructure and implementing reforms that make it easier to do business. These measures are seen as crucial for driving economic growth, generating the necessary revenue for social spending, and fostering job creation.

While the finance minister touched on various sectors in his budget speech, we believe there's potential for further emphasis on the role of small and medium businesses (SMBs) in driving South Africa's economic growth.

Furthermore, while we celebrate our status as a mining nation, it is also apparent that we need to grow other sectors and modernise the economy to grow GDP. We believe that burgeoning sectors like ICT could benefit from more focused attention in future budget speeches.

Given that the government has promised to reform the energy sector and accelerate the just transition, it is unfortunate that the rooftop solar rebate for individuals seems to be ending in the current tax year. Announced during the 2023 budget, this incentive offered up to R15,000 rebates for individuals looking to install new solar panels.

However, we note that a similar incentive for business will run until at least February 2025 and urge SMBs to take advantage of this incentive as part of their contribution to reducing carbon emissions and as part of their strategy to become more independent of the national power grid.

As South Africa navigates economic realities, it's essential to assess and address challenges while identifying opportunities for sustainable growth. By fostering an environment conducive to business development and innovation, the country can strive towards economic stability and prosperity for all.