“We spent more time on Eskom than fixing electricity supply.There’s a difference between the two.I don’t care who brings the electricity.”
He said that there will be no blanket support for SOEs, and that they will have to demonstrate that they are meeting specific requirements and serious about cost containment.
Godongwana expressed frustration that more than R308 billion has been directed towards bailing out failing state-owned companies since 2013, while South Africa has reduced spending on frontline services and infrastructure reduced by R257 billion during this time.
“In this budget, we are shifting from this trend, and are restoring our focus on the core functions of government,” Godongwana said.
Government wants to encourage more public-private partnerships (PPPs) – which has declined from R10.7 billion in 2011/12 to R5.6 billion in 2019/20.
“This is partly due to onerous approval processes, especially for small projects, and poor capacity of departments to estimate risk-sharing with the private sector.At the same time, lack of clarity regarding the user-pays principle affects the cost of state guarantees,” Treasury said.
Treasury now wants to create “a PPP centre of excellence”, and set up an expedited approval process be considered for projects below R1 billion in value in the next 24 months.
Tax, spending cuts needed for basic income grant
While the Covid-19 social relief of distress grant has been extended for a year, Treasury warned that “in a context of overstretched public finances and persistently high unemployment, the continuation of such a social transfer must be matched by a combination of permanent spending reductions and tax revenue increases”.
Monthly social grants have been hiked by between 1.9%, for foster care grants, and 5% for old age, care dependency and disability.
Bounce-back scheme for small businesses
A new business bounce-back scheme will be launched, Treasury announced.It will consists of two parts, small business loan guarantees of R15 billion will be provided through participating banks and development finance institutions.Government will underwrite the first 20% of loan losses.The eligibility criteria, including the requirement for collateral, has been “loosened”.This mechanism will be launched next month.
Secondly, by April this year, Treasury wants to introduce a business equity-linked loan guarantee support mechanism..