<\/p>\n
South Africa\u2019s Constitution and regulatory environment stifle growth, according to Finance Minister Enoch Gondongwana.\u00a0<\/p>\n
Speaking at an RMB-hosted breakfast in Cape Town, a day after presenting the Medium-Term Budget Policy Statement (MTBPS),\u00a0 Godongwana said many issues stifling growth are regulatory, not fiscal \u2013 or relating to government revenue, spending and debt.<\/p>\n
When host, RMB economist Isaah Mhlanga mentioned Rwanda had recently signed a 10-year agreement to host the official Formula 1 Africa Grand Prix before South Africa won a bid, Godongwana retorted.<\/p>\n
\u201cI\u2019m sure Rwanda doesn\u2019t have the same constitution.\u201d<\/p>\n
Gondongwana said in addition to corruption and a lack of competency, \u201cour Constitution and regulatory framework\u201d created challenges to the government\u2019s growth mandate.<\/p>\n
He said energy firms are able to explore for offshore gas in Namibia and start developing resources, but the same exploration and development does not take place in South Africa \u2013 as it gets fought by environmentalists in court until the energy and gas firms give up.<\/p>\n
Read:
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Don\u2019t write off oil and gas exploration in SA \u2013 Tau
TotalEnergies in court over offshore oil and gas drilling<\/p>\n
\u201cSo our Constitution and our regulatory environment, sometimes, does not create an environment for investment.\u201d<\/p>\n
The Constitution devolves power across three distinct yet interdependent spheres of government: national, provincial, and local. Rather than allowing a top-down chain of command, which would give National Treasury more power, the Constitution ensures that each sphere of government retains its own original powers.<\/p>\n
Additionally, regulatory reform takes time, and Treasury sometimes pursues regulatory changes such as suggesting in the MTBPS that the Municipal Finance Management Act be amended to allow them say over which CFOs are appointed in municipalities.<\/p>\n
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Boosting mining sector necessary\u00a0<\/p>\n
In Wednesday\u2019s MTBPS, South Africa reported a tax overrun of R17.1 billion largely thanks to tax receipts from the mining sector on the back of high commodities prices, as well as an extra R6.8 billion in mining royalties.<\/p>\n
Godongwana said the Treasury was having a conversation with the Minerals Council SA that represents the mining industry.<\/p>\n
\u201cWe need to solve the regulatory issue in mining. We should be able to increase mining exploration.\u201d<\/p>\n
He said in 2025, Australia and Canada conducted exploration worth billions, when South Africa completed substantially less mining exploration.\u00a0<\/p>\n
\u201cWe have got a vested interest in improving mining revenue. We are a mineral resource country.\u201d<\/p>\n
Read:
SA\u2019s abandoned mines expose costly failures in regulation and accountability
Fewer own goals, that\u2019s what SA needs
SA\u2019s mining sector is at a crossroads<\/p>\n
Will the proposed fiscal anchor work?<\/p>\n
In the MTBPS, Treasury announced it would table legislation for a principle-based fiscal anchor, a financial rule that governs government spending and debt to prevent debt overruns.<\/p>\n
It chose not to propose a numerical target, such as limiting debt-to-GDP to 80%, but a principled commitment to fiscal discipline.<\/p>\n
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Asked whether such an anchor would work in practice, when it could be contested by lawmakers, Godongwana said: \u201cThe way we avoid that argument is by constructing not a numerical target, but a principled rule.\u201d<\/p>\n
Read:
Finance Minister sets fiscal sustainability as a benchmark for MTBPS 2026
SA raises borrowing requirement to fund bond buyback
The fiscal ship has turned \u2013 now it needs momentum<\/p>\n
He said parliament must agree that a fiscal standard must be maintained.<\/p>\n
Once lawmakers agree to a principle, and it becomes legislation, any new government administration must develop a fiscal plan and that fiscal plan must meet that standard, he said.<\/p>\n
\u201cWill that succeed? It\u2019s going to depend. I\u2019m saying populism is growing in this country.\u201d He said maintaining fiscal discipline will depend on the balance of forces politically.<\/p>\n
He said he could think of two parties \u2013 suggesting the MK and EFF \u2013 that would not support a fiscal anchor.\u00a0<\/p>\n
\u201cI suspect that in the current [political] environment, we may persuade each other successfully\u201d <\/p>\n
He said he suspects the current parliament \u201cwill probably get fiscal anchor [legislation] across the line\u201d.<\/p>\n
#Godongwana #takes #aim #Constitution #holding #growth<\/p>\n","protected":false},"excerpt":{"rendered":"
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