About R60-billion a year would have come in from the additional VAT in the aborted proposal to raise it by 2%. The loot of State Capture is estimated in trillions.

There has been a wide range of different reactions to the postponement of the Budget Speech in Parliament on 19 February 2025, a truly unprecedented event in the history of South Africa.

In a dominant-party state, such as South Africa was between 1948 and 2024, the Budget is a mere formality. Coalition governments around the world, on the other hand, have been brought down due to their failure to formulate budgets that are acceptable to the required majority to be enforceable in law.

As South Africa takes its first baby steps on the road to coalition governments, both current and future, the politicians and the people will become accustomed to the vagaries of contentious Budget votes in coalition country.

Stephen Grootes is upset and fearful, and in his reading of the situation, he pigeonholes it as descending from confidence into chaos. At the other end of the spectrum, Solidarity welcomed the postponement.

The Free Market Foundation has a similar reaction to that of Solidarity, while Cosatu “celebrates” the defeat of the proposed two-percentage-point VAT hike proposed. The Black Sash is angry at the postponement on behalf of the poor. It describes the delay as reckless.

The DA wishes to seize the opportunity to “to fight… to introduce a new Budget that is anchored in growing the economy, rather than increasing taxes or debt”, according to its leader, John Steenhuisen. The IFP points out that increasing VAT runs contrary to the commitments of the GNU. The EFF reads paralysis in government into the postponement, while the SACP says the GNU must guard against policy direction that hurts the workers and poor of the country.

On the other hand, the ANC welcomes the postponement, saying that decisions must be taken responsibly, balancing the need for economic stability with the demands of service delivery and social justice. President Cyril Ramaphosa, taking time off from his G20 duties, “wishes to assure South Africans that Cabinet’s continuing deliberations on the Budget will deliver outcomes that will protect vulnerable citizens and lay a platform for economic growth”.

He said “the postponement… of the tabling of the Budget in Parliament was the result of disagreement, but also collegial and mature consensus within Cabinet that Budget proposals be worked through comprehensively and productively to secure the wellbeing of the economy and individual citizens…

“We are called upon as the national leadership to pursue all initiatives aimed at growth in order for us to increase employment and alleviate the effects of poverty. The government of national unity will in the coming days and weeks intensify our efforts to balance the imperatives that drive the fundamental growth objectives of this administration with the realities of a constrained fiscal environment.”

If there is indeed a crisis due to the postponement, it should be used as an opportunity to reconsider positions taken and to refine the outcome of Cabinet deliberations in a pro-growth way.

The President wishes to grow the economy as a means of addressing grinding poverty, endemic joblessness and ever-increasing inequality. It is surely not lost on him that he has made equality one of the goals of the G20 for the year of his presidency of that body, namely 2025. He aims at 3% growth in GDP in the year ahead while most experts hover around 1.8%.

The presidentially desired 3% can only be achieved via boosting economic growth markedly. This growth does not happen through the wave of a governmental magic wand. It has to be rooted in improved business confidence and a willingness on the part of investors, both local and international, to take the risks involved in investing in South Africa.

Many investors are averse to taking the risks involved in putting their funds, expertise, time and effort into the South Africa economy. They point to the breakdown in law and order and to the high level of grand corruption in South Africa.

Canny investors have regard to the Transparency International Corruption Perception Index for South Africa which now places the country on its worst score yet; a lower score than it achieved even during the Jacob Zuma years, which the President has described as “the nine wasted years”.

Taking steps to reverse the lack of business confidence and investment are needed urgently.

We all know from the report of the Zondo Commission that State Capture has been prominent in South Africa for many years. Repurposing the state to benefit private interests instead of the public weal is an ongoing feature of economic life in South Africa.

Procurement systems are bent to the will of the corrupt. Bribery, embezzlement and mafia-like activities in the construction, transport and nightclub spheres are rife. Extreme gender-based violence and common criminality are increasing, making South Africa less attractive as an investment or even tourist destination.

The government needs to clean up its act by taking steps to end the corruption and to rake back the loot extracted from the public purse by the corrupt. A great deal of the wealth of the nation has been frittered away by the corrupt and a good part of that wealth can be recovered if only the political will to sue for its return can be generated.

South Africa has the lawyers, the investigators and the Zondo records to trace a great deal of money. The amount involved is more by far than what the defeated VAT increase would have delivered had VAT been increased as intended by two percentage points. About R60-billion a year would have come in from the additional VAT.

The loot of State Capture, still an ongoing feature of economic activity that is of no help to the country, is estimated in trillions.

It is within the power of the President to instruct the national debt collectors, the Special Investigating Unit, to collect the state funds (and those of SOEs) looted by the corrupt.

Civil proceedings, in which the onus of proof is a mere balance of probabilities, can be launched worldwide using the services of counsel who led evidence in the Zondo Commission and attorneys who would be prepared to enter into contingency fee arrangements with the state, or even act pro bono in order to right the ship of state by collecting the loot wherever it may be found.

These steps could be taken immediately. They should have been taken years ago. The President could sign the necessary proclamations tomorrow if only he can generate the political will to do so.

To avoid a repeat of the pain of State Capture it is also necessary to reform the (currently broken) capacity of the state to counter the corrupt. To do so in a constitutionally compliant way involves implementing the judgments in the Glenister litigation properly and honouring the international treaty obligations of South Africa too.

The two private member’s bills of the DA that are aimed at the establishment and enablement of a new Chapter 9 Anti-Corruption Commission address the issues appropriately. Since August 2021 the progenitor of these bills, the Integrity Commission proposed by Accountability Now, has been on the desks of the presidency, the NPA and Parliament. See “Under the Swinging Arch”, appendices Three and Four.

The GNU needs to get behind the rapid adoption and further processing of the DA’s bills as a matter of urgency in order to signal to the world, and particularly those interested in investing in South Africa, that the days of impunity for those involved in State Capture and other corrupt activities are numbered in South Africa.

Former Chief Justice Raymond Zondo has warned that drastic action is urgently needed to bring an end to the corruption that now poses an existential threat of the kind anticipated by the court in the Glenister litigation. The GNU would do well to heed his warning and that of the majority judgment in the second Glenister case:

“There can be no gainsaying that corruption threatens to fell at the knees virtually everything we hold dear and precious in our hard-won constitutional order. It blatantly undermines the democratic ethos, the institutions of democracy, the rule of law and the foundational values of our nascent constitutional project.

“It fuels maladministration and public fraudulence and imperils the capacity of the State to fulfil its obligations to respect, protect, promote and fulfil all the rights enshrined in the Bill of Rights. When corruption and organised crime flourish, sustainable development and economic growth are stunted. And in turn, the stability and security of society is put at risk.”

It is axiomatic that big government is more expensive to run than small government. Our national Cabinet is unnecessarily bloated and our public administration seems to carry more passengers than the railways, at least in part due to the prevalence of cadre deployments in the pre-2024 era in the liberated politics of South Africa.

There are more than 500 government entities under scrutiny by the GNU during the budgetary process. Consolidating, rationalising, liquidating and even privatising them is perfectly possible and should be considered with a view to reducing the expenses of the state.

It is unarguable that increasing VAT impacts most heavily on the poor. There are already far too many poor people in South Africa – increasing their number through ill-considered budgetary measures is not indicated in the year in which the G20 is focused on equality.

It is encouraging that the President seems equanimous about the postponement of the Budget. If that postponement results in the pruning of those 500-odd entities, the swift addition of a new Chapter 9 Anti-Corruption Commission and some muscular and immediate debt collection by the SIU in respect of looted state funds, there will be a resurgence of business confidence and an increase in new investment just as surely as night follows day.

The crisis will indeed present an opportunity. DM