Budget Address by Honourable Mr Ravigasen Ranganathan Pillay, MPL MEC for Finance on tabling the adjustments estimate – 2019/20
Heads of Departments
Chief Financial Officers
Head of Provincial Treasury and Officials Present
Business, Academic, Religious and Community Leaders
Members of the Media
Ladies and Gentlemen
Comrades and Friends
A. Economic outlook and the fiscal implications
We present this first adjustments budget of the 6th administration at a time when our country is experiencing a variety of emotions. On the one side, there is renewed confidence in the country as reflected in new investments receiving a fresh momentum. At the latest investment conference, we received investment pledges totalling R363 billion, about R63 billion more than those received at the 2018 conference.
On the other hand, the Honourable Finance Minister, Tito Mboweni delivered his Medium Term
Budget Policy Statement (MTBPS) last month and this painted a difficult picture. There is no doubt that we are in tough economic times. Minister Mboweni indicated in his speech that trade tensions and the uncertainty around Brexit will likely cause growth in advanced economies to slow, with the International Monetary Fund expecting these tensions to lower global growth by 0.8%.
He went on to say that economic growth for South Africa has been fairly flat thus far this year and that our economy’s growth has been revised downward to 0.5%, compared to the 1.5% that was previously expected.
There is an expected shortfall in the national revenue collection with the shortfall estimated at R53 billion and the fiscal framework has weakened significantly since the main budget was tabled, mainly due to weaker economic growth and lower revenue.
This has an impact on our consolidated budget deficit. All these factors impact on the allocation of resources to the three spheres of government. Minister Mboweni alluded to difficult decisions needing to be made and that these will be announced in the 2020 Budget, while indicating that spending reductions are on the cards.
Government has proposed measures to grow our economy, and we are committed to narrowing our deficit and to improve how we spend our money. If we stand together now, we can be #StrongerTogether.
Economic performance – the KwaZulu-Natal context
It is key that we focus on ways to improve our economic performance across all sectors to reduce unemployment, poverty and inequality. This province has established a number of ways to contribute to this drive.
Measures undertaken by the provincial government include a focused drive spearheaded by the Honourable Premier, Mr Sihle Zikalala to attract investment to KwaZulu-Natal. The drive is already bearing fruit, as we recently launched a new smartphone manufacturing plant, namely the Mara Phone factory, at Dube TradePort. This launch was held last month and the facility has a manufacturing capacity of 1.2 million handsets per annum.
This venture will generate hundreds of direct jobs and thousands of indirect jobs. Of this, 60% of the workforce are women, while 90% are youth.
We are also getting closer to the establishment of the Aerotropolis in King Shaka International Airport. The Durban Aerotropolis Masterplan was recently unveiled, while the Aerotropolis Institute of Africa has also been launched.
These investment-driven developments are not confined to eThekwini, as there have also been positive developments in other parts of the province. A case in point is the R6.5 billion investment for the expansion of the Richards Bay Minerals (RBM) mining operations in Richards Bay. Recently, Rio Tinto, the holding company of RBM concluded an agreement with four host communities, thus paving way for the multi-billion Rand expansion.
On the South Coast, paper and packaging producer Sappi is injecting over R7.7 billion to expand capacity at its Sappi Saiccor mill in Umkomaas, a worthy investment which has also created a number of jobs.
Other initiatives spearheaded by the government include, among others, the establishment of the KZN Youth Empowerment Fund, Operation Vula and our drive to ensure full expenditure of departments’ infrastructure budgets (especially by our large infrastructure departments). Full speech [PDF]