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Ramaphosa: “A budget for inclusive growth and development”

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Picture: RSA president, Cyril Ramaphosa

By OBAKENG MAJE

7 April 2025- The Republic of South Africa (RSA) president, Cyril Ramaphosa said, last week, Parliament adopted the 2025 Fiscal Framework and Revenue Proposals as tabled in the Budget Speech by the Minister of Finance. Ramaphosa said the 2025 Budget is directed at growing the economy and supporting the livelihoods of our people.

He further said it is a critical instrument to drive development, eradicate poverty and narrow inequality. Ramaphosa added that, at a time of constrained economic growth and narrow fiscal space, the budget must direct sufficient resources to activities that encourage inclusive growth and lay the groundwork for sustained economic recovery.

“It reflects the strategic priorities of the Government of National Unity (GNU): inclusive growth and job creation, reducing poverty and tackling the high cost of living and building a capable, ethical and developmental state.

“The Budget advances the Government’s commitment to uplift the material conditions of South Africans. Once our debt repayments have been taken out, 61% of spending over the next three years has been allocated to the social wage,” he said.

Ramaphosa said this includes the provision of free primary healthcare, basic and tertiary education and housing. He said over the past 24 years, they have implemented an indigent policy under which free water, electricity and sanitation services are provided to qualifying households.

“Social grants, like the child care, old age and disability grants, are another tool for alleviating poverty. This year, the value of these grants will increase at above inflation. The Social Relief of Distress grant, which has played an important role in poverty alleviation, will also be extended for another year.

“As part of improving access to healthcare, there will be a higher allocation of funding to clinics and community health centres. We are investing in the recruitment and retention of health personnel, particularly doctors and nurses, and to employ newly qualified doctors after their community service ends,” said Ramaphosa.

He said the budget allocates substantial funds to other frontline services such as teachers, police, emergency personnel and the Border Management Authority. Ramaphosa said improving educational outcomes is key to community upliftment, development and producing the skills needed by the economy. Ramaphosa said budgetary allocations have been made to support teacher training, for expanded mother-tongue bilingual education and for early reading programmes.

“This year sees a substantial investment in early childhood development, reflecting our commitment to establishing a solid foundation for the development of every child.

Additional funds have been allocated to public employment programmes, which play an important role in providing work opportunities at a time when economic growth is constrained.

“To encourage entrepreneurship, funds have been made available to support small businesses. Adjustments are being made to the Employee Tax Incentive to further incentivise businesses to hire more young people,” he said.

Ramaphosa said South Africa’s expenditure on the social wage can only be sustained if there are higher levels of economic growth. He said the budget allocates considerable resources to encourage infrastructure development, which drives growth and job creation.

“Taken together, up to R1 trillion will be spent on infrastructure over the medium term. This includes the allocation in this Budget of an additional R62 billion over the next three years for road maintenance, electricity transmission lines, water and sanitation projects, school infrastructure and to support the ongoing recovery of our rail networks.

“Support is also provided to other growth-enhancing measures in the medium term, including incentive programmes in automotive, business process outsourcing, special economic zones, electric vehicle production, clothing and textiles and other sectors,” said Ramaphosa.

He said the 2025 Budget makes adjustments to allocations to municipalities to enable them to address their infrastructure needs, improve service delivery and improve their revenue collection systems. Ramaphosa said in a challenging economic environment – both locally and globally – this year’s budget supports measures to drive growth and relieve the effects of poverty.

“At the same time, it aims to stabilise public finances and continue to reduce our national debt. The budget reflects the priorities of the Government’s Medium Term Development Plan, a five-year programme of action that prioritises rapid, inclusive growth, creating a more just society and building state capacity.

“At a time when our singular focus must be the South African people, we need to use the limited resources we have to work together for the common good,” he said.

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A BUDGET TO GROW THE ECONOMY AND SUPPORT DEVELOPMENTAL GOALS

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Picture: The RSA President, Cyril Ramaphosa

By CYRIL RAMAPHOSA

Last week, the Minister of Finance presented a national budget that will help us to achieve more rapid and inclusive economic growth while supporting our developmental goals.

Over the last five years, we have taken several actions to get our economy back on track. We have implemented far-reaching reforms in the energy, logistics, water and telecommunications sectors to address the binding constraints on growth. We have created a stable macroeconomic environment to encourage investment. And we have expanded public employment and social protection to create jobs and provide an income for those who are unemployed.

This budget takes us further along the path of reviving our economy and rebuilding our institutions, in at least three important ways.

First, the 2024 budget shows that we staying the course in our commitment to achieve a sustainable fiscal trajectory. 

Over the past fifteen years, our debt burden has grown to a point where we are spending more on interest payments than we are on education or health care services. By reducing debt, we will create more space to spend on the things that matter – building our infrastructure, improving our schools and hospitals, and making our communities safer.

At the same time, the less the state borrows the more can be invested in the economy. This will help to create a virtuous cycle of investment and growth in the years to come.

Second, the budget protects critical services and social spending, making sure that government can deliver on its most important obligations to all South Africans.

We have allocated additional funds for service delivery, which will help to pay the salaries of police officers, teachers, nurses and doctors. This year alone, we will spend more than R480 billion on education, R272 billion on health and R265 billion on other services like water, housing and public transport.

A further R7.4 billion will go towards the Presidential Employment Stimulus, which has already created more than 1.7 million opportunities for work and livelihoods over the last three years, ensuring that key programmes like school assistants will continue.

We are also increasing social grants to help the poorest households cope with the rising cost of living. Additional money has been allocated to the fight against corruption and state capture, following through on the commitment I made in the State of the Nation Address.

Third, the budget includes new measures to support growth and create jobs, while rebuilding infrastructure.

A new R2 billion grant has been established to fund the rollout of smart meters in municipalities, which will help to modernise our electricity system and reduce load shedding. A generous incentive will be introduced to support the manufacturing of electric vehicles from 2026 onwards, as part of our commitment to position South Africa as a leading player in the green economy.

Innovative new funding instruments have been introduced for infrastructure projects, and the National Treasury has published revised regulations to make it easier to implement public-private partnerships. These measures will enable much greater investment in infrastructure.

Our economy has been weighed down by more than a decade of low growth and rising debt, made worse during the state capture era as confidence was eroded. During the course of this administration, we have worked hard to change this and build a foundation for higher growth and more jobs. 

The 2024 budget shows that we are heading in the right direction. We are determined to continue on this path, following through on economic reforms, getting our public finances in shape and protecting basic services for the poor. Working together we will ensure that better years lie ahead.

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OPENING UP SOUTH AFRICA’S GATEWAYS TO THE WORLD

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Picture: The RSA president, Cyril Ramaphosa

By CYRIL RAMAPHOSA

Last week, I launched the first export shipment of goods produced by South African companies destined for other African countries under the preferential trade provisions of the African Continental Free Trade Area (AfCFTA) from the Durban port.

We can expect many more products and many more shipments to follow as South African companies sell South African made goods into the massive African free trade area. Exports to AfCFTA countries already account for nearly a quarter of South Africa’s global exports. This figure will now increase quite dramatically.

South African companies have a great opportunity to take advantage of the AfCFTA by exporting their goods into the rest of the African continent. In order to take this great opportunity up, as a country we need to ensure that our products make it from the factory gate onto the ship and head towards their destinations with the least possible delay and at the lowest possible cost.

For some years now the efficiency and competitiveness of our ports and rail network have been in decline. In order to give our companies the ability to take up these export opportunities we need to fix our logistics architecture.

Transnet, which operates our ports and freight rail lines, has had to contend with severe challenges, including the effects of state capture, the impact of the COVID pandemic, natural disasters and rising levels of theft and vandalism of its infrastructure. As a result, the volume of goods transported on our rail network has decreased significantly, forcing more companies to use trucks and causing congestion on our roads.

Working together with the private sector, we are turning the situation around, guided by the Freight Logistics Roadmap that was crafted by Transnet, government and social partners. The roadmap outlines a clear set of actions to stabilise and improve Transnet’s performance in the short term and to fundamentally reform the logistics system in the long term.

To ensure this work receives dedicated attention, we established the National Logistics Crisis Committee (NLCC), which is chaired by the Presidency and brings together all of the relevant government departments to drive a coordinated response to the logistics challenges.

We have also established Corridor Recovery Teams which bring Transnet, the private sector and independent experts together to improve the performance of strategic rail and port corridors.

This single-minded approach to improving performance is already showing results. For example, the number of ships waiting to berth at the Port of Durban – which has experienced severe congestion in recent months – reduced from more than 60 ships in mid-November to just 12 ships at the end of January.

At the Port of Cape Town, which is preparing for the important fruit season, Transnet has deployed new leadership and is putting in place several measures to improve its capacity in the short term. Seven new cranes, which are used for moving and stacking containers, were delivered to the port last month, and the number of work shifts is being increased to improve vessel turnaround times.

In addition to these short-term measures, the Freight Logistics Roadmap includes far-reaching reforms to modernise our logistics system and enable much greater investment in infrastructure. These reforms will introduce private sector investment and competition in port and rail operations, improving efficiency and bringing down prices, while ensuring that infrastructure remains owned by the state.

A key milestone in this reform journey will be the implementation of ‘open access’ to the freight rail network, which will allow private rail operators to invest alongside Transnet Freight Rail for the first time.

Another key step is the introduction of strategic partnerships in container terminals, which will enable new investment to expand port capacity and upgrade equipment. Progress has already been made with the appointment by Transnet of an international container terminal operator for the Durban Pier 2 terminal. Transnet will retain 51% ownership of the terminal and no workers will lose their jobs once the partnership is established. The private partner will have full management responsibility for the terminal and will contribute both capital and expertise to improve its performance.

The process of reform takes time and there are no quick solutions to the challenges facing Transnet. However, the steps we are taking now will not only improve performance in the immediate term, but will also create a truly competitive and efficient system into the future.

This week’s Mining Indaba in Cape Town will showcase the enormous potential of the mining industry to drive economic growth and job creation. The actions underway to improve the logistics system will help us to unlock this potential, given that mining companies depend on the rail network and ports to compete in global markets.

From the work already underway, we have shown that it is possible to overcome the barriers to growth by working together in partnership. We are building momentum and have begun to see the results.

As more and more of our products leave our shores, whether to the African continent or other parts of the world, more companies will thrive, more investment will be made and more and more jobs will be created.

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