News in South Africa 22nd February:

1. 2024 Budget speech in a nutshell:

Finance Minister Enoch Godongwana delivered the 2024 National Budget Speech on Wednesday, 21 February.

2024 Budget speech in a nutshell
Photo by Skitterphoto

The budget touched on many points and topics, including the country’s current economic standing, growth estimates, the massive debt servicing costs, heightened sin tax proposals and the extension of the social relief grant, among others.

South Africa’s economy faces a tipping point, with growth estimates from analysts and researchers pointing downwards.

Continual rolling blackouts are showing little sign of stopping, while port and rail inefficiencies and a high sovereign credit risk remain threats to economic growth in the country, the minister said.

The fiscus

Compared to a year ago, the budget deficit for 2023/24 is estimated to worsen from 4% to 4.9% of GDP.

The higher budget deficit means that debt-service costs in 2023/24 have been revised higher by an additional R15.7 billion to R356 billion.

Debt-service costs will absorb more than 20% of revenue, said Godongwana.

“To put this into perspective, spending on debt-service costs is greater than the respective budgets for social protection, health, or peace and security,” he said.

Debt will now peak at 75.3% of GDP in 2025/26.

For this year’s budget, Godongwana said that the government is staying the course on the fiscal strategy outlined in the 2023 Medium Term Budget Policy Statement (MTBPS) and will achieve a primary budget surplus in 2023/24, with debt stabilising by 2025/26.

“We estimate real GDP growth of 0.6% in 2023. This is down from 0.8% growth estimated during the 2023 MTBPS,” said the minister.

He said the revision is due to weaker-than-expected outcomes in the third quarter of 2023, particularly in household consumption and fixed investment.

He added that growth is projected to average 1.6% between 2024 and 2026.

“The growth outlook is supported by the expected easing of power cuts as new energy projects begin production and as lower inflation supports household consumption and credit extension,” said Godongwana.

Overall, a net reduction of R80.6 billion in non-interest expenditure is being implemented over the medium term.

At the same time, revenue has been revised up by R45.6 billion over the medium-term, relative to 2023 MTBPS.

Here are the biggest winners and losers from the mid-term budget:


Bond investors

Although South Africa is facing a challenging fiscal situation, the Finance Minister has attempted to stabilise the country’s debt at lower levels than previously estimated.

Godongwana said this would help reduce debt-service costs and the amount the government needs to borrow from investors to fund its spending plans.

Godongwana aims to pull this off by tapping massive paper profits on the country’s gold and foreign exchange reserve account to the tune of R150 billion.

Public sector workers

President Cyril Ramaphosa’s government will boost spending by R251.3 billion to make sure the salaries of teachers, doctors, nurses and police are fully funded.

It also set aside R7.4 billion in 2024/25 for the presidential employment initiative as the country continues to fight unemployment running above 32%.

Electric-Vehicle manufacturers

From 1 March 2026, producers of electric vehicles in South Africa will be able to claim 150% of qualifying investment spending to boost the country’s transition to new energy transportation.

Grant recipients

The government has provisionally allocated funding for the social relief grant it started paying the unemployed during the COVID-19 pandemic until March 2027.

Updated increases in social grants are as follows:

  • The old age grant will go up from R2,085 to R2,185;
  • The old age grants for those over the age of 75 will increase to R2,205;
  • Grants for war veterans increase from R2,105 to R2,205;
  • Disability grants go up to R2,185;
  • The Foster care grant increases to R1,175;
  • Care dependency grants rise from R2,085 to R2,185; and
  • Child support grants go up to R525.



Godongwana will boost tax revenue by R15 billion, though much of this will be done quietly.

Rather than raising income tax rates, he won’t adjust personal tax brackets for inflation, which the government expects to run at 4.9% this year.

Bracket creep means that as salaries increase to keep up with the rising cost of living, workers get pushed into higher tax brackets and end up handing more over to the government.

Rebates and medical tax credits also won’t be adjusted for inflation.

Rooftop solar

The 2024 Budget passed by without mentioning extending the rooftop solar rebate for individuals, marking the end of the line for the tax break announced last year.

During the 2023 budget, Godongwana announced the solar tax rebate for individuals, offering up to R15,000 rebates for individuals looking to install new solar panels in the country.

As per Treasury’s initial announcement, the rebate for individuals will end on 29 February 2024.

Smokers and drinkers

The finance minister plans to lift excise duties on alcoholic drinks by between 6.7% to 7.2% for 2024-25.

  • A can of beer increases by 14 cents;
  • A can of a cider and alcoholic fruit beverage goes up by 14 cents;
  • A bottle of wine will cost an extra 28 cents;
  • A bottle of fortified wine will cost an additional 47 cents;
  • A bottle of sparkling wine will cost an extra 89 cents; and
  • A bottle of spirits, including whisky, gin or vodka, increases by R5.53.

He’ll also raise duties on cigarettes by 4.7% and by 8.2% for pipe tobacco and cigars.

  • A R9.51 increase for cigars;
  • A 97 cent increase to a pack of cigarettes and
  • An extra 57 cents for a pipe of tobacco.

Additionally, Godongwana noted an increase in the excise duty on electronic nicotine and non-nicotine delivery systems, known as vapes, to R3.04 per millilitre.

Multinational corporate tax dodgers

The government will implement a global minimum corporate tax, with multinational corporations subject to an effective rate of 15% regardless of where the profits are located.


The struggling state-owned operator of the nation’s ports and freight rail gets no new money beyond debt guarantees of R47 billion that were already granted.

Like Eskom, the guarantee comes with conditions.

These conditions require Transnet to focus on its core activities and for the entity to introduce private-sector partnerships, said Godongwana.

He added that this will improve Transnet’s sustainability and support the implementation of the roadmap.


The embattled electricity utility, whose shortcomings cause daily power cuts handicapping the entire economy, will have its government aid cut by R4 billion over two years for failing to sell the Eskom Finance Co. by March 2024 as agreed.

However, Godongwana added that the government would be introducing a new R2 billion conditional grant over the medium term to fund the rollout of smart prepaid meters.

“This will begin with municipalities that have been approved for debt relief,” he said.

2. R300 billion tax deficit:

Despite the South African Revenue Services’ (SARS) efforts to increase tax compliance, the country’s tax gap is still an estimated R300 billion.

This is according to PwC in its 2024 Budget Preview, which said SARS is finding some success towards its goal to increase voluntary compliance and regain taxpayer trust.

In his 2024 Budget Speech on Wednesday, the Finance Minister said visible progress has been made in rebuilding and modernising SARS.

“The tax authority has expanded the tax register, improved debt collections and reduced fraudulent refunds and trade valuations. This has led to improvements in revenue collection.”

“These and other efforts have assisted with the improvement in revenue.”

Many concerns surrounded this year’s Budget as the government faces a R347 billion deficit for 2023/24 due to overspending and lower-than-expected tax revenue.

While some expected the government to implement major tax hikes or austerity measures to narrow this deficit, both options were unlikely in an election year where the ruling party seeks to be re-elected.

Therefore, many believed the government may rely on SARS to focus on tax compliance to increase revenue.

In November 2023, the Finance Minister said that, alongside measures to stabilise public finances and reform the economy, South Africa’s most effective way of funding the government is through an efficient tax administration. 

He said SARS would continue its focus on enforcing compliance in areas such as debt collection, fraud prevention, curbing illicit trade, voluntary disclosures, and encouraging honest taxpayers to comply voluntarily. 

However, despite these efforts, South Africa’s tax gap – the difference between taxes legally owed and taxes collected – is still an estimated R300 billion. 

Collecting this difference would almost erase the 2023/24 fiscal deficit of R347 billion.

PwC’s 2023 Taxing Times Survey assessed corporate taxpayers’ perceptions of the tax system, their experiences with SARS, and topics like compliance. 

“Given SARS’ drive to improve voluntary compliance and regain taxpayer trust, PwC is of the view there has never been a more critical time for us to assess how organisations and their tax functions are operating,” the firm said.

“In The Wealth of Nations (1776), Adam Smith argued that taxation should follow four principles, namely fairness, certainty, convenience and efficiency.”

“Convenience relates to the ease of compliance for taxpayers: the simplicity of the process for collecting or paying taxes.”

PwC’s survey found that 8% of survey participants ‘strongly agree’ and 43% agree’ that it has become easier to comply with their tax obligations – a marginal majority of 51%. 

This is, however, a 6 percentage point improvement from the 2022 results and indicates that a small majority of corporate responders have a favourable view on the topic. 

The positive trend in compliance feedback is not surprising, the firm said. “Since the publication of our first survey in 2018, the local tax environment has changed significantly.” 

“In the case of compliance matters, for example, SARS’ Strategic Plan 2020-2024 lists ‘make it easy for taxpayers and traders to comply with their obligations’ as one of its strategic goals.” 

“It also aims to ‘detect taxpayers and traders who do not comply, and make non-compliance hard and costly’.”

3. Inflation uptick:

South Africa’s headline consumer inflation quickened to 5.3% year on year in January from 5.1% in December data showed on Wednesday.

Key contributors to the annual inflation rate included food, housing, utilities and transport, according to a Statistics South Africa report.

At its last monetary policy meeting in January, the central bank said it wanted to see a clearer disinflation trend before cutting interest rates.

The South African Reserve Bank likes to see inflation around the mid-point of its 3% to 6% target range.

Core inflation, which excludes food and fuel prices, accelerated in January to 4.7% in annual terms from 4.5% in December.

4. Social grants increase:

The Old Age Grant is to go up by R100, Finance Minister Enoch Godongwana announced in his budget speech on Wednesday.

For pensioners younger than 75, grants will rise by R90 from R2,090 to R2,180 in April and by a further R10 to R2,190 from October 2024.

Here is how grants will look this year:

Grant typeValueIncrease (2024)Beneficiaries (as of Dec 2023)
Foster CareCurrent: R1,130April 2024: R1,180R50 (4.4%)222,317
Child SupportCurrent: R510April 2024: R530R20 (3.9%)13,067,314
Old Age (>75 years)Current: R2,110April 2024: R2,200October 2024: R2,210R100 (4.7%)3,999,326
Old Age (<75 years)Current: R2,090April 2024: R2,180October 2024: R2,190R100 (4.8%)
Care Dependency161,826
War VeteransCurrent: R2,110April 2024: R2,200October 2024: R2,210R100 (4.7%)10
Sourced from Moneyweb

The minister said that the increases are to keep pace with inflation.

However, the increases are lower than the current inflation rate of 5.3% between January 2023 and January 2024. The latest food inflation report for December 2023 by the Bureau for Food and Agricultural Policy shows a year-on-year increase of 8.5% in the prices of food and non-alcoholic beverages.

“We are sensitive to the increase in the cost of living for the nearly 19 million South Africans who rely on these grants to make ends meet,” the minister said.

The government aims to complete an extensive review of social security policy, according to the Estimates of National Expenditure tabled with the budget speech, to make sure that reforms can be implemented with the government’s “constrained resources”.

The Covid Social Relief of Distress grant, which pays R350 to about 8 million people monthly, will continue until the end of 2024-5. After that, the Budget Review says the social assistance budget will drop to R248 billion.

“This termination is expected to see a reduction in the total number of grant beneficiaries, from an estimated 27.8 million in 2023/24 to 19.7 million in 2026/27.”

“In addition, after the decision to extend the Covid social relief of distress grant until the end of 2024/25, the department will finalise policy options on the replacement of the grant, taking into consideration the need to strengthen employment pathways and means for sustainable livelihoods,” the Budget Review stated.

In the meantime, the minister said, provision has been made to prioritise job creation initiatives, with R61 billion allocated for employment programmes over the medium term and R7 billion identified for the Presidential Employment Initiative.

5. Food price reality check:

The latest food basket data from the Pietermaritzburg Economic Justice and Dignity group (PMBEJD) shows that food prices in South Africa have come down since January 2024 – but it warns that it’s still too soon to celebrate.

The group’s monthly Household Food Basket dropped by R47.56 between January and February 2024, amounting to R5,277.30.

This represents a 0.9% decline in the total price – although it remains 7.1% higher (or R348.96 more) than in February 2023.

The PMBEJD said that the drop in pricing is in line with historical trends, where prices tend to decrease in February before picking up again in March.

“From October 2023, we had started to see a slight downward trend in food prices, with January 2024 presenting a blip – albeit consistent with past trends.

“Food price fluctuations are unpredictable and we do not yet know whether the downward trajectory we saw from October 2023 will continue into the new year, or if prices are set to rise in the coming months, consistently with previous years,” it said.

“It is our assessment, however, that food inflation may be more subdued this year compared to the past two years, whilst still remaining high.”

The PMBEJD noted that it’s not necessarily the fluctuations in food pricing that is the main problem for households in South Africa, but rather that the overall pricing relative to income levels is still too high.

“This presents families with a household affordability crisis because the household purse has to cover a myriad of different expenses, food being just one of these expenses,” it said.

All information sourced from articles posted by: BusinessTech, DailyInvestor, Reuters, and Moneyweb.

Leave a comment

Your email address will not be published. Required fields are marked *