Government just doesn’t have the capacity to deliver on its promises: business

Despite putting infrastructure at the core of his economic recovery plans, the latest budget delivered by National Treasury shows that government simply lacks the capacity to deliver on president Cyril Ramaphosa’s ambitions.

This is the view of Business Leadership South Africa chief executive officer, Busi Mavuso, who said that the numbers in the 2021 budget were a big disappointment on this front.

Commenting on the latest developments in the country, Mavuso said that moving to lockdown level 1 this month will be a boon for the tourism and hospitality industry – but the reality of the Covid-19 pandemic and economic fallout is that businesses face an uphill climb to recovery.

With restrictions still in place – particularly around space limits, which will keep many operations constrained – the country has to look to the president’s promises on infrastructure development to feed economic recovery.

Although Ramaphosa has talked up this aspect of the economy, his cabinet has been slow to deliver, Mavuso said.

“I was struck in particular by National Treasury’s comments on infrastructure – both how little is being done, but also how changes are being mooted to regulation that is constraining it,” she said.

“Infrastructure rightfully holds the promise of boosting economic growth. It is one sure way to improve economic potential by putting in the rail, ports, energy and other capacity to improve the costs of doing business. However, I was disappointed by figures that showed infrastructure spending by the public sector was far below the levels that had been budgeted a year ago,” she said.

The outcome for the 2019/20 year showed spending of R187 billion on infrastructure projects, when a year ago it was expected to be R257 billion. That is a R70 billion shortfall in planned spending, the business leader said.

“There have also been significant reductions in expected spending over the next three years. That is a big disappointment and means we are drifting further away from the National Development Plan goal of spending 30% of GDP on investment in infrastructure.

“Countries that grow fast invest in infrastructure to expand their capacity. It is what we need to do to turn around our economic fortunes,” she said.

“We need to be realistic about this disappointing outcome. It shows that the state lacks the capacity to deliver. That is not a surprise given the loss of key skills experienced over the past decade combined with the fiscal crisis at many levels of government and at state-owned enterprises.”

Despite the poor numbers and the bleak reality of the situation, Mavuso said that businesses remain hopeful to the dream.

“Even though the budget showed very disappointing actual delivery on the ground, it also showed several positive moves towards fixing the regulatory framework that affects these outcomes.

“Business is excited at the potential – if we get the framework right, we really can bring business capacity to fund, build and operate infrastructure that will grow the economy and deliver better services to our people,” Mavuso said.

Read: The biggest takeaways from Mboweni’s budget speech – including tax changes, and who will pay for Covid vaccines

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Government just doesn’t have the capacity to deliver on its promises: business