speech of unemployment in south africa

SONA 2024: President Cyril Ramaphosa's full speech

President cyril ramaphosa delivered his 8th state of the nation address ahead of the 2024 general elections..

State of the Nation Address (SONA)
Cyril Ramaphosa

President Cyril Ramaphosa delivers his 2024 State of the Nation (SONA) at Cape Town City Hall on 8 February 2024. Picture: GCIS

JOHANNESBURG - President Cyril Ramaphosa delivered his eighth State of the Nation Address on Thursday night.

His address comes at a critical time as South Africa marks 30 years of democracy this year.

With the address, the president is tasked with painting a picture of the state of country socially, politically, and economically.

At the same time, South Africans will participate in the seventh national and provincial elections, the date of which is soon to be proclaimed by the number one citizen.

Read his full speech below:

The 2024 State of the Nation Address by Nica Schreuder on Scribd

Home » News » South Africa » Politics

By Siyanda Ndlovu

4 minute read

16 Feb 2022

‘Unemployment, state of SA’s economy gives me sleepless nights’ – Ramaphosa

'it concerns me a great deal," the president says..

President Cyril Ramaphosa says unemployment and the poor state of South Africa’s economy is giving him “a torrid time”.

Ramaphosa said this in a Q&A session with journalists on Wednesday just after responding to the opposition’s State of the Nation Address (Sona) debate.

“What keeps me awake at night, and I am seriously kept awake, it is the state of our economy that keeps me awake, state of unemployment. It is very difficult to countenance 11 million people out of work who are not economically engaged in any activity.

“That is enough to keep me awake at night and it concerns me a great deal,” the president said.

Ramaphosa’s Sona last week was largely focused on the measures the government was taking to enable faster economic growth and the creation of employment.

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ALSO READ: Ramaphosa’s views on job creation is ‘blame shifting’, says Groenewald

He said that this was because “fixing the economy is our most pressing challenge at this moment, and is essential to progress in almost every other area of life.

“Our focus on the economy does not, however, diminish the importance of the many other areas of government’s work.

“Many of these issues have been raised in the debate and will be dealt with in greater detail in upcoming budget votes and public engagements by ministers.”

While the Sona focused on growth and employment, millions of South Africans face the immediate challenge of feeding themselves and their families.

It is estimated that food poverty affects some 5.5 million households.

Gatvol South Africans slate Sona on social media

Ramaphosa said that without monthly grants for children, the elderly and persons with disabilities, many people in South Africa would face destitution.

“We know that grants have provided an effective system for income redistribution and poverty alleviation, in a society with unacceptable levels of inequality.

“Given the scale of unemployment and the impact of the pandemic, the interventions we are undertaking to create jobs will take many years to reach all 11 million South Africans who are unemployed.”

He said this were some among other reasons that the government took a decision to extend the R350 Covid-19 grant to March next year.

READ MORE: Ramaphosa’s Sona is not a blueprint but a wish list, says Buthelezi

“We are extending for another year precisely to reach these people and to stave off hunger. We are doing this within a fiscal environment that has been badly worsened by the pandemic.

“We need to do so while making sure that we do not further weaken our macroeconomic position and that we do not allow our debt service costs to further crowd out social spending.

“As a country, we nevertheless need to fill the gap in social protection to achieve a minimum level of support for those who cannot find work.”

Ramaphosa said that finding a sustainable, affordable and effective solution must be one of the central pillars of the renewed social compact that the government has undertaken to build.

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The struggle of unemployment: A South African perspective

South Africa achieved independence in 1994, but years later, there has been little improvement in the general populace’s poverty levels. While the country remains one of Africa’s strongest economies, statistics indicate that close to 50% of the population lives in poverty. (Based on south African government poverty measure where the upper bound poverty line is approximately $70 per month.)

The covid-19 pandemics have exacerbated the issues of poverty in the country. South Africa has one of the highest infection rates in Africa and more recently has been dealing with a mutated version of the virus that has since been christened the South African variant. Lockdowns and covid 19 restrictions have pushed many out of employment, and businesses have been forced to shut down. Estimates indicate that close to 1million people may fall below the poverty line.

According to a World Bank Report , the inequality of apartheid lives on. The report indicates that inequality of opportunity is extremely high in the country.

To compound issues, unemployment among youth stands at more than 50% , substantially higher than comparable countries.

South Africa’s economic issues run deeper. The economy is not growing enough to absorb its youth and reduce the trends in employment. Compounded by the lack of equal access to education and other services, the youth are not adequately set up for employment. Part of the challenges stems from the inadequate capacity generated in the manufacturing industry.

The manufacturing industry has grown no more than 1% from 2010 to 2018. Manufacturing jobs are usually low skills mass jobs that absorb a large portion of employable young people. As such, the lack of traction in the manufacturing sector has added to the employment woes that the country faces.

While the manufacturing sector has not shown significant growth, the financial sector has shown considerable improvement. However, this sector is primarily a high-skill industry and cannot cater to meaningful employment.

This is given the fact that the bulk of this unemployed group consists of medium to low skilled employees.

The employment statistics released by the countries statistics agency remained bleak.

Statistics South Africa reported that the unemployment rate was at 32.5% in the last quarter of 2020. This means that up to 7.2 million people were out of employment. This figure was higher than the 30.8% reported in the second quarter of last year.

What are the leading causes of unemployment in South Africa?

The country’s background and apartheid-induced inequality have created a legacy system of inequality. To date, black people in the country face an unemployment rate quadruple that of their white counterparts.

This can in part be attributed to the country’s legacy of apartheid that created a system of inequality that excluded black people from the education system. This gave rise to a perpetual vicious cycle in which this class of people has not been adequately reintegrated into the quality education segment.

The inequality can also be in part a direct result of a failure to address the systemic issues of inequality plaguing the country. Some of the structural challenges include the high university fees, for example. The fee structure excludes a sizeable chunk of the population from receiving higher education.

As the levels of education decrease, the unemployment levels rise significantly.

Like the rest of Africa, South Africa also has a very young population. As such, more and more people flock into the labor market, which has no capacity to absorb large numbers. Coupled with the low education levels, this creates a large unskilled labor pool.

Another factor contributing to unemployment is trade unionism. South Africa has an active trade union culture. Lobbying for higher wages, especially in an economy facing slow growth levels, may reduce new employment levels.

It is important to note that reports have indicated some waves of xenophobic attacks on foreign nationals working within South Africa’s borders. It has been reported that some of these attacks have been linked to the dire unemployment situation, which has seen locals blame foreign nationals for taking their jobs. However, this situation wanes investor confidence even further, indirectly contributing to increased unemployment.

How can stakeholders improve employment levels?

An attempt to solve the urgent problem of unemployment involves addressing the education system. An adequately funded education system accessible to all regardless of background will help improve the young disadvantaged children’s skills.

Roping in private education institutions that provide high-quality, low-cost education, as is the case with institutions like Bridge International Schools in East Africa, can improve quality education.

Further opening up the economy to encourage entrepreneurship through access to funding, government support, and promoting entrepreneurship within the education system may help open up the economy to allow for economic growth sufficient to cater to the ballooning population levels.

An all stakeholder approach to addressing chronic inequality will help focus further towards improving equality as defined by socio-economic status to help open up access to opportunities.

The fragile state of the economy

Going forward, there is a need to adapt to the new normal while seeking solutions to address the fragile state of the economy. According to the Bureau of Economic Research, the economy remains weak, as evidenced by a drop in business confidence. As businesses battle with the effects of covid 19, including dwindling demand, operational challenges, they continue to struggle to operate viably.

As if to pour paraffin on an already burning situation, the looming threat of the coronavirus remains on the horizon. There has been a slow rollout of the vaccines, which has led to fear that gatherings and movement over the Easter season may become super-spreaders of the virus. The result would be a rise in the infection rate that may force the government’s hand to tighten lockdown restrictions once again.

The start and stop cycle that businesses find themselves stuck in is of significant concern. The lack of certainty not only plummets investor confidence but also contributes to the unemployment issues. As long as businesses cannot find their footing, they remain hardpressed and can not create the employment level necessary to absorb the growing numbers of unemployed South Africans.

In conclusion, the South African unemployment rate remains high. In the midst of the covid-19 pandemic, South Africa remains one of the continent’s highest affected countries and continues to grapple with finding solutions.

The economy remains volatile. In unprecedented times like these, the unemployment issues in South Africa remain highly problematic.

Read also: Unemployed and underprivileged hit hardest by S.Africa’s declining GDP

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Tackling youth unemployment: What works, what doesn't

Youth unemployment is one of South Africa’s most intractable challenges, made worse by COVID-19. Prior to the pandemic the unemployment rate (including people who had given up looking for work) was just under 70% for people aged 15 to 24 .

A year later the rate had increased to 74% – despite government investments. So it is crucial to understand what interventions are working. But how do we evaluate whether youth employment programmes are successful, particularly when unemployment is caused by the structure of the economy ?

The obvious answer, of course, is whether a programme results in a young person getting employed.

This is logical and easy to measure. It can easily be linked to the release of funding to programmes. And it allows for programmes to be compared. This was done in a systematic review of 113 programmes internationally .

However, as we have explored in several recent studies, there are a number of drawbacks to relying solely on job placement as an indicator of successful intervention. Doing so misses out on outcomes that are equally important, or more so, amid high structural unemployment.

Together, these studies show that job placement alone is an insufficient goal and measure of the success of youth employability programmes.

These lessons are particularly important in economies that have been severely affected by the COVID-19 pandemic, where youth employment recovery will take time.

Inadequate measure of success

We make this argument based on several studies. The first looked at long-term employment outcomes of 1,892 youth between 18 and 25 who participated in youth employability programmes over the period 2017-2018. These are programmes run by NGOs, business and the state. They typically include technical and soft skills training.

The proportion of participants who found jobs and stayed in them over time was just 28% – somewhat better than a matched sample from the quarterly labour force survey data , but still low. But we also found evidence that programmes had other important outcomes. These included a continued positive orientation to the labour market, and improved self-esteem and self-efficacy – important attributes for managing the protracted transition to work in a low growth economy.

The second involved analysis of the quarterly labour force survey and general household survey data to understand the nature of young people not in employment or in education and training. It found that while many such youth have never worked, a significant portion find themselves in and out of work without making much longer-term progress.

The third study draws together several qualitative studies conducted in the past 10 years. It shows that young people are frustrated by the constant cycle of finding and taking up training and employment opportunities, without making progress towards a longer-term career.

Together, these studies show that job placement alone is an insufficient goal and measure of the success of youth employability programmes. Four reasons for this argument emerge from these studies.

First, job placement says more about demand than supply. A young person’s ability to find a job doesn’t depend only on their skills but also on whether the labour market is creating sufficient demand for employees. No matter how well a programme trains and supports a young person, if there are limited jobs, young people are unlikely to be employed.

Second, if a programme is getting young people into jobs even though job numbers are not growing – as in South Africa – these placements may be at the expense of other work seekers.

Individual programmes can get people into jobs while the overall youth unemployment rate stays stagnant or rises. In the context of a rapidly contracting economy in the COVID-19 era , this is a particularly important argument against job placement as the only measure of a programme’s success.

Third, using this single indicator takes attention away from longer-term pathways towards sustainable livelihoods. Many jobs in South Africa, especially at entry level, are insecure, part time or casual. There’s a risk of disregarding whether a job is decent and has prospects for learning and career development.

Young people typically do not stay in jobs . This is either because the job is not a good fit or is for a short term only. Other barriers, such as transport costs, also account for why they are unable to stay in jobs.

Qualitative and quantitative evidence shows that young people find jobs that are typically short lived, before having to look again for their next placement. Policymakers should consider whether these short term experiences add up to something longer term – or there’s a risk of perpetuating the cycle of underemployment.

Finally, and perhaps most importantly, evaluating programmes on the basis of job placement alone underestimates the multidimensionality of poverty . Evidence repeatedly shows how many barriers and challenges young people face as they leave the education system and begin to find their way towards a job, and perhaps even a career.

Evidence repeatedly shows how many barriers and challenges young people face as they leave the education system and begin to find their way towards a job, and perhaps even a career.

These barriers are not only related to the labour market or education system. They also include issues such as food insecurity, income poverty, and care responsibilities , among others. Each of these limit the ability of young people to look for work.

These interrelated challenges influence young people’s ability to take up training or job opportunities.

Taken together, these challenges require far more intensive support than simply training and placing a young person in a job.

Alternative approaches

It is crucial that funders, policy makers, and programme developers invest in more intensive support that can help young people meet the challenges they face in seeking work. They must also insist on measures beyond job placement as indicators of success. International evidence bears this out. It shows that across 113 programmes reviewed, multidimensional programmes that seek to provide more comprehensive support to youth are more effective than those that offer training only. They are particularly successful when they target the most vulnerable youth.

Further, our research recognises the crucial contribution such programmes play in keeping young people connected to opportunities, and reducing social exclusion and social drift. This is when young people become increasingly disconnected from the labour market, training opportunities and positive social inclusion, which in turn can have negative consequences on mental health.

Given this evidence and the fact that South Africa is facing a stagnant economy for some time, it is crucial that funders, policy makers and those working on youth employment interventions evaluate and invest in programmes on the basis of their ability to keep young people positively oriented towards the labour market. The programmes should help improve their employability, even if the young participant is not yet able to find an actual job.

Outcome indicators that can more adequately measure these factors include enhancing job search resilience, promoting self-esteem and self-efficacy, and reducing discouragement .

There are ample reasons to move away from evaluating employability programmes on the basis of employment outcomes alone. Rather, a range of indicators should be used to track whether young people remain engaged, believe in themselves and keep trying to find a job. This, while developing the personal attributes that will make them attractive to future employers.

Each of these outcomes is more difficult to measure than a simple count of job placements. But it’s not impossible.

Lauren Graham, Associate professor at the Centre for Social Development in Africa, University of Johannesburg, University of Johannesburg; Ariane De Lannoy, Senior Researcher: Poverty and Inequality Initiative, Southern Africa Labour and Development Research Unit, University of Cape Town, and Leila Patel, Professor of Social Development Studies, University of Johannesburg.

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The Fourth Industrial Revolution: Impact on unemployment and inequality in South Africa

By makhethe makamase.

The Fourth Industrial Revolution (4IR), a concept reconstructed by Founder and Executive Chairman of the World Economic Forum, Prof Klaus Schwab , elucidates the increasing merger of technology with the physical and biological spheres, thus indefinitely altering how humans interact with their surroundings and amongst themselves. This phenomenon has subsequently been placed at the centre of various economic and political agendas. South African President, Cyril Ramaphosa, in his 2019 State of the Nation Address (SONA), emphasised the urgency of equipping the nation for the fourth industrial revolution and the necessity to adapt and embrace the various opportunities it presents. However, according to Prof Schwab “organizations might be unable to adapt; governments could fail to employ and regulate new technologies to capture their benefits; shifting power will create important new security concerns; inequality may grow; and societies fragment”. This commentary piece seeks to provide an overview of the fourth industrial revolution from a South African perspective and its impact on the country’s biggest challenges of inequality and unemployment.

The establishment of the Presidential Commission on 4IR was announced in the SONA (2019). The commission consists of thirty members comprised of prominent individuals from various sectors with relevant knowledge and skills to advance the nation’s 4IR mission. New partnerships such as the African Fourth Industrial Revolution Centre (SAFIRC) to be hosted by the Council for Scientific and Industrial Research ( CSIR ) will equally serve to strategize, plan, create and regulate policies towards advanced 4IR technologies in the pursuit of national and pan-African development objectives. Despite the optimism portrayed by the current government on 4IR, potential for disappointment especially for the poor and unemployed youth is irrefutable. The commitment to generate over two million jobs in ten years through government and private sector cooperation as stated at the SONA (2019), was ostensibly contradicted in his 25 years of democracy speech at the University of Johannesburg when President Ramaphosa informed the nation to brace themselves for mass job losses and furthermore acknowledged the lack of progress by government in job creation.

South Africa’s total unemployment rate recently reached 29.1% . However, when factoring in discouraged job seekers and the economically inactive population the number escalates to nearly 40%. This is especially severe when factoring in that over 50% of the youth are unemployed. Approximately ten million people are unemployed, seven million are actively seeking employment and about three million are unemployed, despondent and stopped seeking jobs. The majority of South Africans (mainly black) are impoverished and the inequality gap has significantly increased since 1994. The top 1% controls 70% of the country’s wealth , leaving the bottom 60% with only 7% of the wealth. Rural areas, townships and informal settlements occupied predominantly by poor black people have less or no infrastructure, meaning electricity and access to technological resources amongst other services are a challenge. Competition for resources and increasing marginalisation of the poor has resulted in cases of social unrest, which manifest in forms of violent protests and xenophobic attacks amongst other imminent issues.

The large scale retrenchments in the banking sector serve as one of the first and major examples of 4IR’s implications on human labour in South Africa. In March 2019, Standard Bank announced a closure of 91 branches nationwide and in June 2019, the number had increased to 104 branches closing and the loss of 1200 jobs . In July, Nedbank announced an estimate of 1500 job redeployments or retrenchments, while Absa is in the process of restructuring its operations processes. In September 2019, the Johannesburg Labour court interdicted what would have been the biggest bank strike since 1920, led by the The South African Society of Bank Officials (Sasbo), the Finance Union supported by the Congress of South African Trade Unions (Cosatu) – who are equally threatened as human labour becomes obsolete in some areas. The strike was expected to have 30 000 to 40 000 participants.

According to the World Bank, South Africa’s net wealth distribution is one of the most unequal in the world. Though South Africa – alongside Kenya and Nigeria – has been globally recognised as an emerging technological hub with the potential to transform and increasingly integrate their society with the rest of the world and benefit from 4IR, a quarter of its population (13.8 million) is living below the poverty line at less than R19 a day which does not cover basic food and certainly not other living expenses. A people centered development approach and public participation towards building social and human capital is vital. The empowerment of people through skills and access to resources in different sectors will enable their economic participation and curb the impact caused by fading jobs and slow economic growth. A response mainly from government at this pivotal moment is crucial as President Ramaphosa stated that “the promise of our nation’s birth will forever remain unfulfilled” if the country fails to adapt and not take advantage of the 4IR.

Ms. Makhethe Makamase is a Research Assistant at the Institute for Global Dialogue (IGD) associated with UNISA. Her views do not necessarily reflect those of the IGD.

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The State of Youth Unemployment in South Africa

Subscribe to africa in focus, aalia cassim and ac aalia cassim researcher, development policy research unit, university of cape town morné oosthuizen mo morné oosthuizen deputy director, development policy research unit.

August 15, 2014

13 min read

Youth unemployment has been inordinately high for many years in South Africa and is one of the country’s major socio-economic challenges. [1] Cross-country comparisons regularly affirm that South Africa’s unemployment rates are among the highest in the world. In 2013, the youth unemployment rate was 63 percent of the youth labor force (3.2 million individuals) according to the expanded definition of unemployment, which includes as unemployed those who are not actively looking for a job (i.e., the non-searching unemployed, or “discouraged work-seekers”). Youth unemployment is high, even in comparison with South Africa’s very high average unemployment rate of 34 percent. (By international comparison, while the ratio of youth to adult unemployment is fairly similar for other countries that are economically comparable to South Africa, the overall unemployment rate is far higher than in other emerging markets.) [2] Of the 10.2 million individuals aged between 15 to 24 years, one-third are not in employment, [3] education or training (and are often referred to as “NEETs”). Roughly 30 percent of male youth and 36 percent of female youth are NEETs, disconnected from both the labor market and opportunities that promote future employability.

Unemployed youth are characterized by their lack of employability resulting from a range of socio-economic factors. They often have low levels of education, have dropped out of school and invariably do not have the literacy, numeracy and communication skills needed in the labor market. They also have little work experience, which is a particularly undesirable characteristic for employers. These young people lack strong networks or social capital that allow them to source job opportunities, and tend not to have sufficient financial resources to enable mobility to areas where there is demand for labor. Of those who do have resources available as a result of their family support or network, they often have unrealistically high reservation wages, thereby resulting in relatively long periods of unsuccessful searching (Mlatsheni, 2007; Von Fintel and Black, 2007; Rankin and Roberts, 2011; Roberts, 2011). These socio-economic factors have resulted in a gap between productivity and entry-level wages for young workers, which is a constraint on job creation.

Persistently high unemployment suggests a lack of effective policy interventions. To date, policies that have been implemented have largely been supply-side initiatives aimed at the structural causes of youth unemployment. These include targeting the formal education system, post-school training, public employment and deployment programs, entrepreneurship interventions and an attempt at job placement programs. From the demand side, an employment subsidy has been recently proposed by the National Treasury to incentivize employers to hire young people.

Supply-Side Policies Targeting Unemployed Youth

Challenges within the South African education system are key structural issues underlying youth unemployment. In short, school-leavers do not exit the system with the requisite skills demanded by the labor market. For this reason, a number of funding and policy interventions are aimed at improving the education system such that it would raise youth employment prospects. In the National Treasury’s budget for the 2013/14 fiscal year, education spending increased to 232.5 billion rand (R) ($21.8 billion), targeting infrastructure, services and the backlog in numeracy and literacy skills. However, there are large cohorts of young people that have already been impacted by weaknesses in the education system. This group of early school-leavers, dropouts and unemployed high school diploma-holders requires interventions tailored to their particular needs and characteristics if they are to be fully able to participate in the economy.

A number of skills and training programs have been set up through various publicly funded technical and vocational education and training (TVET) institutions with the aim of facilitating entry into the labor market. These institutions—known in South Africa as further education and training colleges (FET)—have been unable to ramp up capacity and provide the types of training required by the economy. TVET institutions primarily provide vocational education programs, but these do not necessarily meet the skills—such as completing a school qualification or training in a particular non-vocational skill—demanded by youth. TVET institutions are also not always easily accessible in terms of location or financing, as there seems to be less financial support than is available for tertiary education. Furthermore, partnerships between TVET institutions (and other educational institutions) and employers are weak, demonstrated by the falling number of apprenticeships [4] offered in recent years after graduation.

The trajectory of labor demand in the South African economy favors skilled workers and, in light of the limited job opportunities available for low skilled workers, the government has implemented publicly funded programs that offer (i) employment in the provision of essential basic services to vulnerable South Africans; and (ii) deployment in programs that can provide income while additional skills are developed, thereby improving future employability .

The Community Works Program (CWP) was rolled out in 2008 and is designed as an employment safety net whereby a person’s existing livelihood is supplemented by offering a basic level of income through work. The program is a direct replica model of India’s Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) program. This program has been used in the poorest communities and complements the social grant system. Communities play a central role in determining the types of work created through this program by deciding what activities would benefit them most. This program was extended to the Extended Public Works Program (EPWP). While these programs are not geared directly to youth employment, the EPWP reported that 57 percent of CWP participants in 2010/11 were under the age of 35 years (Department of Cooperative Governance, 2011:2). [5] However, these programs have been found to be less attractive to youth because they are not tailored to youth aspirations. Further, this type of work experience, which includes repairing community or school infrastructure, creating food gardens or home-based care, often does not lead to better paying jobs in the labor market, particularly those in urban areas.

Public deployment programs have only been implemented in South Africa to a limited extent through the National Youth Development Agency (NYDA), which targets unemployed youth and the unskilled. The NYDA ran a 12-month program that trained young people, providing them with qualification credits in fields, such as construction or enterprise development, where labor demand was stronger. While the NYDA annual report presents evidence of meeting their targets for the 2012/13 financial year, these targets were set particularly low: For example, they set a target of 800 job placements (just over 3,000 were actually created).

The National Rural Youth Service Corps, targeting rural youth, was implemented in September 2010. The intervention comprised a comprehensive two-year skills and incubation program after which participants would be involved in community development projects and be paid by government for their services. Training was conducted in numeracy, literacy, construction and entrepreneurship skills relevant to community development. This, it was hoped, would stimulate the rural economy. While this project was seen to be somewhat successful, there was an oversight on the part of the program coordinators who underestimated the amount of training required for youth to actually take on the community projects. The project will, however, continue to run into its second phase in the near future. Future iterations of this program should work toward scaling up the training that facilitated employment in the previous round.

There have also been policy attempts at targeting youth entrepreneurship. The NYDA in particular plays a role in funding and facilitating youth cooperatives and provides training and support to youth entrepreneurs. These services are, however, not well targeted with very few young people accessing the services offered . Often interventions such as these are not pitched at the correct level or are offered to a community that does not demand these skills.

Apart from programs targeted specifically at young people, unemployed youth also benefit from general programs, given that they constitute the majority of the unemployed. One such example is the system of sector education and training authorities (SETA), which play a pivotal role in skills development in South Africa. Of particular relevance to young people is the learnership program, which allows the achievement of a nationally recognized qualification through a combination of structured learning and practical work experience. Learnerships involve individuals being placed within workplaces and are open to both students and the unemployed. Another example of a general program that benefits youth employment is the Department of Trade and Industry’s small business support programs.

The Department of Labor also aims to create an enabling environment for job creation through regulation. The Employment Services Act was passed in April 2014. The purpose of this legislation is essentially to promote employment, to improve the prospects of those looking for work by training and to facilitate job matching. In terms of youth, it aims to provide specialized services to access work with government requiring registration of job seekers as well as job vacancies and other placement opportunities and acting as an intermediary. Given very high cellular telephony penetration rates in the South African market, there seems to be extensive scope to explore available technologies to improve the accessibility—and, indeed, the evaluation—of such services.

South Africa’s Jobs Fund represents a significant intervention aimed at reducing unemployment generally. Launched in mid-2011 by the South African minister of finance in response to the loss of more than one million jobs in the wake of the global recession, this is the world’s largest challenge fund, with projects selected for funding through competitive processes with particular criteria relating to eligibility and impact. The fund provides public funding in four areas: enterprise development, infrastructure investment, support for job seekers and institutional capacity. The fund has created nearly 100,000 jobs at a cost of R63,000 (roughly $6,300) per job.

Demand-Side Policies Targeting Employers

In 2011, the National Treasury suggested that the high rate of youth unemployment was a result of insufficient demand within the labor market to meet the rising number of young job seekers entering each year. It is within this context of weak labor demand that the option of a youth employment subsidy has been proposed. Employment subsidies are appealing because they target job creation instead of indirectly incentivizing the absorption of youth into the labor market. They also offset the cost of employment and training of new workers for employers. Treasury is in favor of an employment subsidy as it operates through the tax system and can rapidly reach a scale that cannot necessarily be achieved through employment or deployment programs such as those discussed above. In terms of the proposal, employers who employ youth will be subsidized for two years, with a larger proportion of wages being subsidized in the first year.

Piloting of this type of initiative has yielded favorable results. Commissioned by National Treasury, the African Microeconomic Research Umbrella at the University of the Witwatersrand ran a pilot study with 4,000 participants from three provinces (Gauteng, Kwazulu-Natal and Limpopo). In terms of the experiment, half of the sample was given vouchers to cover up to 50 percent of their wage for six months and the rest of the sample group was given nothing. The key finding was that job seekers that had received vouchers showed a higher inclination to stay in a job, even after two years, thereby showing the positive impact of the voucher even after it had lapsed.

Unemployed youth differ widely in terms of demographic, locational and educational attainment characteristics, and it is a concern that the subsidy may not be inclusive in terms of targeting the youth (Yu, 2011: 16). Broadly, though, there are two key youth subgroups: First, those who are better off, have more work experience and are normally actively looking for a job; and, second, those who are located in poorer provinces, are less mobile, are more likely to have a lower level of education and who have no work experience. The latter group includes normally discouraged work seekers. There is concern as to whether the subsidy will actually encourage discouraged work seekers to actively look for a job and, furthermore, and whether this group would become any more attractive to employers. This policy will obviously have to work in conjunction with sector employment projects, training institutions and financial support for further education programs to have a wider scope in terms of the youth that will be targeted.

The South African government has implemented a number of initiatives aimed at creating jobs and reducing unemployment, as well as ameliorating the impact of high unemployment on individuals and their households. The past 20 years has seen a significant expansion of the existing social grants system that, while not specifically targeting the unemployed, has helped reduce poverty among households impacted by unemployment. Thus, by mid-2013, nearly 16.2 million social grants of various types were being paid by government on a monthly basis, equivalent to over 30 percent of the country’s population. Further, there is some evidence that social grants have helped facilitate job search among unemployed household members.

There is general recognition, though, that government alone cannot resolve the unemployment crisis. As a result, there are now a significant number of ongoing interventions spearheaded by organizations in the non-governmental and non-profit spheres. These interventions range from small business support, to youth training, to the provision of bursaries for education and training, to facilitating the matching process between job seekers and employers.

In summary, there are certainly concerns around South Africa’s youth unemployment policy interventions in terms of design, targeting and ability to adequately address the needs of young labor market entrants as well as employers. Perhaps the key constraint in generating impact has been scalability, as many interventions have been too small or too localized to impact aggregate unemployment rates. An important lesson is that supply-side initiatives addressing structural issues are insufficient on their own to generate sufficient new jobs. Instead, these interventions should interface closely with demand-side incentive programs. There are, also, political economy constraints that need to be resolved. For example, the generalized lack of jobs results in resistance to certain interventions on the part of those who view them as a zero-sum game between the youth and older workers.

Note : Morné Oosthuizen is the deputy director of the Development Policy Research Unit (DPRU) at the University of Cape Town. DPRU is one of the Brookings Africa Growth Initiative’s six local think tank partners based in Africa. This blog reflects the views of the author only and does not reflect the views of the Africa Growth Initiative.

[1] Youth are defined by the International Labor Organization as individuals between the ages of 15 to 24 years. It is important to note, however, that South Africa utilizes a broader definition, covering individuals between the ages of 15 and 34 years, and its youth-targeting policies focus on this broader age group. However, for the sake of comparison, we use the international definition unless otherwise stated.

[2] The National Treasury (2011) used the ILO and QLFS 2010 to make this assertion for the 18-29 age cohort. The ratio of youth to adult unemployment in Africa is about 2.5 (i.e., the youth unemployment rate is two and half times larger than the adult unemployment rate), and cross-country comparisons indicate that this is broadly in line with other emerging markets such as Morocco, Mexico and Chile. South Africa was an outlier in terms of the magnitude of the unemployment rate. It was just under 40 percent while other emerging markets varied between 10 percent and 30 percent.

[3] Youths “not in employment” are not considered members of the youth labor force because they are not economically active.

[4] Between 2008 and 2009, the number of apprentices declined 25 percent from 12,000 to 9,000 placements (Janse et al. 2012:45).

[5] Department of Cooperative Governance (2011). Communities at Work: Community Work Program 2010/2011 . Pretoria: Department of Cooperative Governance.

2 Minute Speech On Poverty In South Africa In English

Good morning to everyone in this room. I would like to thank the principal, the teachers, and my dear friends for allowing me to speak to you today about poverty in South Africa. At the tip of the African continent, South Africa is a country with a rich cultural heritage that borders the Indian and South Atlantic Oceans.

The nation, which is home to 56.5 million people, is an exceptional example of national progress and has made several discoveries, some even more significant than one might anticipate. Since apartheid was abolished in South Africa in the 1980s, there has been a demonstrable improvement. Nevertheless, poverty is still a major problem in South Africa.

Poverty is more severe for some sections of South Africa than for others. These categories include black people, women-headed families, the elderly, those with less education, the jobless, and those who live in rural regions, including those in KwaZulu-Natal, Limpopo, and the Eastern Cape.

A job in the official sector of the economy is essential for overcoming poverty, and people have a greater chance of finding work if they have abilities that are in high demand in the labor market and are located close to locations where opportunities are present or might arise.

In South Africa, a large majority of the poor reside in locations with few employment options, and their chances of finding work are sometimes further limited by their lack of or inadequate education.

Many people who were trapped in poverty have found relief from the extension of social assistance, but long-term progress in the fight against poverty and its effects needs rapid economic growth and substantial transformation of the South African Education System. Thank you.

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Minister Enoch Godongwana: 2024 Budget Speech

Honourable Speaker, Nosiviwe Mapisa-Nqakula

His Excellency, President Cyril Ramaphosa

His Excellency, the Deputy President Paul Mashatile

Cabinet Colleagues

Members of the Executive Committees for Finance

Honourable Members

The Governor of the South African Reserve Bank

The Commissioner of the South African Revenue Service Fellow South Africans

Introduction

Madam Speaker, according to two prominent economists, Alberto Alesina and Dani Rodrik, “A crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it”. The point, Madam Speaker, is that the size and quality of the national pie is what informs, and ultimately determines, the realisation of our political imperative of redistribution.

Our mission over the past 30 years has been to restore both social and economic justice to our nation, and to decisively address the inequality that was the hallmark of systemic discrimination and dispossession.

The budgets we have tabled since 1994, have been about securing the goal of growing the economy, so that we can do more to address the inequalities and deprivation that still scar our society and undermine the promise of democracy.

So, it is with a great sense of privilege and purpose that I stand before you to present this last budget of the sixth democratic administration.

Madam Speaker, I therefore table the following documents before this House:

The 2024 Division of Revenue Bill;
The 2024 Appropriation Bill;
The Estimates of National Expenditure;
The 2024 Budget Review;
The 2024 Fiscal Framework;
The Second Adjustments Appropriation Bill;
The Budget Speech; and
The Gold and Foreign Exchange Contingency Reserve Account Adjustment Bill

Economic Outlook

Global Outlook

Allow me to begin, Madam Speaker, with the global outlook.

Global growth is forecast to increase, from 3.1 per cent this year to 3.2 per cent in 2025.

The moderate improvement is due to growth in the United States and several large emerging economies.

There are downside risks from potential spikes in the global oil price, if the conflict in the

Middle East escalates and if growth falters in China – the country’s largest trade partner.

Domestic Outlook

Despite the improved global outlook for 2024, South Africa’s near-term growth remains hamstrung by lower commodity prices and structural constraints.

We estimate real GDP growth of 0.6 per cent in 2023. This is down from 0.8 per cent growth estimated during the 2023 MTBPS.

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

Between 2024 and 2026, growth is projected to average 1.6 per cent.

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.

But, there are also risks to the domestic outlook. These include persistent constraints in electricity supply, freight rail and ports; and a high sovereign credit risk.

Our challenge, honourable members, is that the size of the pie is not growing fast enough to meet our developmental needs.

Fiscal Outlook and Strategy

As such, our fiscal strategy supports economic growth and reduces risks to the economy while ensuring fiscal sustainability.

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

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

Debt-service costs will absorb more than 20 per cent of revenue. To put this into perspective, spending on debt-service costs is greater than the respective budgets of social protection, health, or peace and security.

For this reason, Honourable Members, we are strengthening our strategy and sticking to our fiscal goals.

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. And, we have taken the decision to introduce a reform of the Gold and Foreign Exchange Contingency Reserve Account, also known as GFECRA.

Taken together, even with the spending increases I will announce later, the national government gross borrowing requirement will decline, from R457.7 billion in 2024/25 to R428.5 billion in 2026/27. The deficit will begin to improve from 2024/25, to an estimated 4.5 per cent of GDP, reaching 3.3 per cent by 2026/27.

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

All of this puts us in a position to continue to protect core services. It allows 60 per cent of non-interest spending to be directed to the social wage. It also allows us to preserve capital spending.

Compared to the MTBPS, we are adding R57.6 billion to pay for the salaries of teachers, nurses and doctors, among many other critical services.

Madam Speaker, as I mentioned earlier, in this budget we are announcing a reform of GFECRA. GFECRA is an account held at the Reserve Bank that captures gains and losses on the country's foreign currency reserve transactions.

Simply put: if the Rand strengthens against the US Dollar and other reserve currencies, the account balance declines, and vice versa. The account balance has grown to over R500 billion over the years because the Rand has depreciated over time.

A new settlement arrangement is being introduced that will reduce government borrowing and improve the Reserve Bank’s equity position.

Ultimately, we are bringing South Africa closer to our peers and ensuring alignment to international best practice. We will draw down R150 billion of the GFECRA balance once we have ensured that sufficient buffers are available to absorb exchange rate swings and the solvency of the Reserve Bank is not compromised.

Supporting Economic Growth

We have embarked on a broad structural reform agenda that aims to address the challenges that have held back our growth.

This agenda has included areas like electricity, logistics, water, telecommunications and visa reforms. The Budget Review details the good progress that has been made in these areas over the past few years.

But, obstacles remain and let me focus on the two largest of these.

Electricity

Load shedding is a problem that confronts all South Africans. It disrupts production, operations and livelihoods.

Reforming the sector will result in long term energy security. We took the necessary decisions in the past five years and these are bearing fruit.

To promote further investments in renewable energy, this budget proposes an increase in the limit for renewable energy projects that can qualify for the carbon offsets regime, from 15 megawatts to 30 megawatts.

Eskom continues to be a key role player in the electricity sector. And the debt relief plan allows the entity to focus on its core business.

We will release the report on the independent review of Eskom’s coal-fired power stations in the coming week. The review was done to inform part of the conditions attached to the debt relief plan.

The recommendations will feed into Eskom’s corporate plans to bolster accountability and oversight.

It is through the combination of private investment in new energy projects, rooftop solar installations and improvements in Eskom’s generation fleet that load shedding will reduce, and reliability and security of supply improve.

In addition, to support these efforts, we are 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.

To address South Africa’s increasingly unreliable logistics system, Cabinet approved the Freight Logistics Roadmap in December 2023.

The roadmap outlines immediate steps needed to improve port equipment, locomotive availability and network security.

It also sets out a clear path for enhancing efficiencies, facilitating the introduction of competition and leveraging the financial and technical support of the private sector.

In this regard, third-party access to the freight rail network will be introduced by May 2024.

In ports, a private partner has been secured to upgrade Pier 2 of the Durban Container Terminal. This should increase private investment in equipment, enhance technological capability and improve operational efficiency.

Government has provided Transnet with a R47 billion guarantee facility to support the entity’s recovery plan and meet its immediate debt obligations.

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. This will improve Transnet’s sustainability and support the implementation of the roadmap.

Supporting Public Infrastructure Investment

Madam Speaker, I am proud to announce that as part of this budget, we are introducing fundamental and far-reaching reforms to infrastructure financing and delivery.

The reforms are to optimise the infrastructure value chain to be effective and efficient.

In this way, we will strengthen the public investment management and the associated value chain. We will also attract private sector participation.

In this regard:

We gazetted the amendments to the PPP regulatory framework for public comments earlier this week. The amendments seek to reduce the procedural complexity of undertaking PPPs, create capacity to support and manage PPPs, formulate clear rules for managing unsolicited bids, and strengthen the governance of fiscal risk.
We are reviewing institutional arrangements and governance for catalytic infrastructure. The intention is to create clearer mechanisms for accountability, cooperation and coordination.
We are also consolidating similar functions to reduce duplication and inefficiencies. The intention is to fast-track delivery, particularly of blended finance arrangements.
We are introducing several new financing instruments, such as infrastructure bonds and concessional loans. As part of this, a flow-through tax vehicle for specific infrastructure projects, similar to trusts and other investment vehicles, is being considered.
A new funding window for proposals under the new dispensation of financing instruments will be opened to public institutions shortly.

Through these reforms, greater efficiency gains and infrastructure delivery will be fast tracked.

This will benefit network sectors, social infrastructure, PPPs and blended finance projects.

Mainstreaming Climate Finance

Madam Speaker, the National Treasury plays a crucial role in mobilising resources, designing incentives, and influencing policy to mainstream climate change.

As climate-related disasters intensify, a multi-layered risk-based approach is being developed to manage the associated fiscal risks.

This considers various funding instruments from grants to contingency funds, including the Climate Change Response Fund, depending on the incidence and intensity of the disaster event.

The National Treasury is reviewing disaster response grants to improve efficiency and create incentives for disaster planning, preparedness and risk reduction.

It is also developing a climate-budget tagging framework to influence policy, planning, and budget decisions, by tracking climate-related expenditures in public budgets.

The support of concessional funding providers, such as Multilateral Development Banks, is going a long way to support our climate adaptation, mitigation, energy transition, and sustainability initiatives.

Crowding-in the private sector is necessary to managing the climate disaster funds.

The government has raised US$3.3 billion so far from Multilateral Development Banks and International Finance Institutions to support climate change, energy, and just transition objectives.

We are actively participating in climate negotiations, aligning with the government's advocacy for reforming multilateral finance institutions.

We are also working with eight municipalities to adapt and mitigate the effects of climate and weather-related events, by providing technical assistance for climate-responsive capital projects.

Supporting the Production of New Energy Vehicles

The Electric Vehicles White Paper outlines our strategy to transition towards a broader new energy vehicle production and consumption in South Africa, starting with electric vehicles.

It aims to transition the automotive industry from primarily producing internal combustion engine vehicles to a dual platform that includes electric vehicles, by 2035.

To encourage the production of electric vehicles in South Africa, government will introduce an investment allowance for new investments, beginning 1 March 2026.

This will allow producers to claim 150 per cent of qualifying investment spending on electric and hydrogen-powered vehicles in the first year.

The incentive will be implemented in addition to the existing support under the Automotive Production Development Programme.

Government has also reprioritised R964 million over the medium term to support the transition to electric vehicles.

Leveraging Procurement for Transformation

Honourable Members, the Public Procurement Bill was expeditiously passed by the National Assembly. The amended Bill has now been referred to the National Council of Provinces for concurrence.

National Treasury is supporting provincial legislatures as they process the Bill and conduct nationwide public hearings.

The Bill provides for transformation measures through set asides, pre-qualification and advancement of persons disadvantaged by unfair discrimination.

These measures would be applicable to specified categories of persons including small enterprises owned by black people, black women, black youth, black people with disabilities, and enterprises within a particular geographical area including enforcement of transformation through the BBBEE level status.

The Bill also makes provision for local industrialisation through designations and measures for sustainable development, labour absorption and enterprise development, amongst others.

We are well aware that currently, procurement processes often fall short of delivering the most cost-effective solutions to government’s needs.

Too often, there is a substantial disparity between the prices government is being charged and the prevailing market prices.

For instance, the government buys ICT hardware such as laptops, uninterrupted power supply devices, monitors, and toners, at between 1.2 and 2 times more than market price.

Given that government buys in large quantities, we should in fact be paying less and leveraging our buying power to get more value for our money.

Obtaining value for money, as well as the principles of efficiency, transparency, and competition, remain paramount. And we want to assure South Africans that these principles are not incompatible with transformation.

Revenue trends and tax proposals

Honourable Members, the weak performance of our economy has resulted in a sharp deterioration in tax revenue collection for 2023/24.

At R1.73 trillion, tax revenue for 2023/24 is R56.1 billion lower than estimated in the 2023 Budget.

The shortfall is largely due to the decline in corporate profits and revenue from taxes on mining.

Over the medium term, revenue projections are R45.6 billion higher than the 2023 MTBPS estimates which increased personal income tax and additional medium term revenue proposals.

This budget contains tax measures that will raise R15 billion in 2024/25 to alleviate immediate fiscal pressure and support faster debt stabilisation.

Revenue is mostly raised through personal income tax by not adjusting the tax brackets, rebates and medical tax credit for inflation.

For alcohol products excise duties, above-inflation increases of between 6.7 and 7.2 percent for 2024/25 are proposed. This means:

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 extra 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.

We also propose to increase tobacco excise duties by 4.7 per cent for cigarettes and cigarette tobacco, and by 8.2 per cent for pipe tobacco and cigars. This translates to:

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

Kamogelo Mogane from Soweto, one of the over two-thousand-seven-hundred South Africans who sent Budget Tips to the Minister, has a suggestion I would like to share.

Kamo says: “I would suggest an introduction of tax payment for hubbly bubbly, e-cigarettes and other alternatives. The country has seen an increase in the number of youth smoking these products and parents are not pleased with this at all.”

Kamo, as a parent myself, I agree with you. And I am certain the Minister of Health also agrees.

You will be happy to hear then, that we are tabling an increase of the excise duty on electronic nicotine and non-nicotine delivery systems, known as vapes, to R3.04 per millilitre.

On environmental taxes, the carbon tax increased from R159 to R190 per tonne of carbon dioxide equivalent as of 1 January 2024.

The carbon fuel levy will increase to 11 cents per litre for petrol and 14 cents per litre for diesel effective from 3 April 2024.

A discussion paper outlining proposals for the second phase of the carbon tax will be published for public comment later in the year.

Madam Speaker, we are mindful of the already high cost of living and the impact fuel prices have on food and transport costs.

In this regard, we are proposing no increases to the general fuel levy for 2024/25. This will result in tax relief of around R4 billion. This is money back in the pockets of consumers.

Madam Speaker, progress has been made on the two-pot retirement system since I last addressed you during the MTBPS.

Contributions to retirement funds will be split, with one-third going into a “savings component” and two-thirds going into a “retirement component”.

From 1 September 2024, the first cash withdrawals could be made from the savings pot.

The two-pot system ensures that we strike a balance between preserving contributions to safeguard a better retirement for members, while addressing the plight of the people to access some of their retirement funds to help ease their financial burdens in times of distress.

Over the next few years, we are also implementing a global minimum corporate tax to limit the negative effects of tax competition.

Multinational corporations with annual revenue exceeding €750 million will be subject to an effective tax rate of at least 15 per cent, regardless of where their profits are generated.

The proposed reform is expected to yield an additional R8 billion in corporate tax revenue in 2026/27.

I encourage interested parties to provide comments on the draft Global Minimum Tax Bill published today.

Our long-term tax policy strategy remains focused on broadening the tax base while improving tax compliance and administrative efficiency.

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.

To address the high levels of illicit tobacco, SARS is deploying CCTV and related technologies at licensed tobacco manufacturers. Investigations and prosecutions have resulted in R10 billion in additional assessments from the key players in the illicit gold and tobacco industry, of which over R4 billion from key players in the illicit gold and tobacco industry.

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

Our bigger challenge, as I have stated earlier, is that our pie is not growing fast enough and this limits our ability to generate sufficient revenues to distribute among our priority areas.

Spending Plans

Madam Speaker, at the time of the 2023 MTBPS when revenue collection had performed much worse than anticipated, departments had to reprioritise spending and absorb the wage increase within their baselines.

These measures were taken to protect our fiscal integrity. Equally, critical programmes had to be protected. This is a practical expression of fiscal consolidation that supports delivery of core services and the social wage.

Since then, we have been able to reverse some of the fiscal consolidation announced at the time of the MTBPS.

In this Budget, I am able to announce that the education sector is allocated an additional R25.7 billion for the carry-through costs of the wage increase over the medium term.

At the same time, we were able to protect the budgets of critical programmes such as the school nutrition programme. The programme provides food to pupils in almost 20,000 schools.

The early childhood development grant is allocated R1.6 billion rising to R2 billion over the medium term.

Health is allocated a total of R848 billion over the MTEF. These allocations include R11.6 billion to address the 2023 wage agreement, R27.3 billion for infrastructure, and R1.4 billion for the NHI grant over the same period.

The allocation for the NHI is a demonstration of the government’s commitment to this policy. There remain a range of system-strengthening activities, that are key enablers of an improved public health care system that must be undertaken.

Such activities include:

Building a national health information system and digital patient records;
Upgrading health facilities and improving quality of care to ensure that they meet the minimum criteria to be certified and accredited for contracting under NHI;
Strengthening facility and district management in preparation for contracting;
Granting semi-autonomous status for central (and potentially other) hospitals; and
Developing reference prices and provider payment methods for hospitals.

Many of these activities are already underway but require further development before the NHI can be rolled out at scale.

Madam Speaker, there has also been significant progress in improving access to public transport services for low-income commuters.

The rail recovery programme of the Passenger Rail Agency of South Africa is continuing, with 27 corridors reopened by December 2023. This will increase the number of passengers on Metrorail from 15.6 million in 2022/23 to an estimated 48.6 million by 2026/27.

To ensure the effective discharge of its duties during elections, and its other responsibilities beyond the polls, the Independent Electoral Commission is allocated an additional R2.3 billion. The police and defence are also allocated an additional R350 million to support elections. A further R200 million will be allocated for political party funding as political parties prepare for the general elections.

Government also supports resettled farmers through land redistribution and tenure reform programmes, which have been allocated R6 billion over the MTEF.

To keep pace with inflation and increase access, permanent social grants are increased.

An increase of R100 to the old age, war veterans, disability and care dependency grants. This amount will be divided into R90 effective from April, and R10 effective October;
A R50 increase to the foster care grant; and
A R20 increase to the child support grant.

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.

In this regard, we have done as much as the fiscal envelope allows.

Work is currently underway to improve the COVID-19 Social Relief of Distress Grant by

April this year. National Treasury will work with the Department of Social Development in ensuring that improvements in this grant are captured in the final regulations.

These improvements will be within the current fiscal framework. For the extension of the grant beyond March 2025, the social security policy reforms, together with the funding source, will be finalised.

We have also made provision for key initiatives aimed at job creation.

R61.4 billion is allocated for employment programmes over the medium term. R7.4 billion has been identified for the Presidential Employment Initiative.

Government is also prioritising fighting crime and corruption with a focus on enhancing law enforcement agencies. A total of R765 billion is allocated to the peace and security cluster.

In the coming financial year, 10,000 new police recruits will be trained.

As part of the country’s responsibility to promote regional peace and stability, this budget will also allocate funding for the deployment of soldiers in Mozambique and the DRC.

Work on costing and identifying the needs for these critical missions will continue throughout the year and funding will be allocated as such.

R628 million has been allocated to the Department of Justice and Constitutional Development for the implementation of FATF and State Capture Commission recommendations bringing the total funding to these efforts to R2.3 billion.

Government is using R2.9 billion from the Criminal Asset Recovery Account to combat illegal mining and other priority crimes, with 60 per cent allocated for police deployments, including vehicle procurement.

This budget is also prioritising infrastructure provision. Government plans to invest more than R943 billion in public infrastructure.

The spending will support the refurbishment and maintenance of existing assets and the building of new infrastructure.

Division of Revenue

Madam Speaker, R2.8 trillion, or 51.1 per cent, of total non-interest expenditures, is allocated to provinces and municipalities over the next three years.

R531.7 billion is allocated to local governments, and R2.3 trillion for provinces.

An additional R105.5 billion rand is allocated to provinces over the next three years to cover the cost of implementing the 2023 public-service wage agreement, mainly in the education and health sectors.

The provision of these additional funds will cushion the wage bill pressures faced by these critical, personnel intensive departments, while freeing up of resources for capital investment and goods and services.

Moreover, reductions that were previously made on some grants have been reversed.

Restoring the baselines of these grants will help maintain important services for the most vulnerable and provide for critical capital investments.

However, to ensure public finances remain sustainable, reductions are made to several other grant baselines, although many continue to grow over the next three years despite the reductions.

Regarding municipalities, an additional R1.4 billion is provided for the municipal disaster recovery grant to fund the repair and reconstruction of infrastructure damaged by the tragic floods of 2023.

Madam Speaker, municipalities are the coalface of service delivery. Sadly, an unacceptable number of them are experiencing weaknesses in governance, financial management, and service delivery.

To address these challenges, and to transform municipalities into engines of growth, we have adopted a multi-pronged approach.

It focusses on tightening budget processes, ramping up oversight, increasing the skills and capacity of municipal employees, and driving investment in maintaining and building infrastructure.

The year ahead

Madam Speaker, this year our country hosts the annual meetings of the New Development

Bank, which will happen for the second time since formation of the BRICS bloc.

In 2025, South Africa takes on the presidency of the G20, following that of Brazil and India before that.

South Africa’s G20 presidency is an opportunity for us to advance the most pressing economic, developmental, and financial issues that face poor and developing countries.

As President Ramaphosa rightly stated in his State of the Nation Address, our goal is to “place Africa’s development at the top of the agenda when we host the G20 in 2025”.

We are working on the necessary allocations and identification of funds to make sure the various events are a success. As we have shown recently, South Africa remains an important regional and international leader.

Through participation and advocacy on platforms such as the G20, we can push for the substantive reform of multilateral institutions like the IMF and World Bank, so that developing countries can participate more equally in the decision-making processes and global governance.

Moral courage and know-how are not in short supply in our country. We should harness these gifts, not only to better ourselves and our economy, but for the benefit of the entire continent.

Madam Speaker, we have come a long way in the last 30 years. The 30 years ahead of us, and whatever challenges and opportunities they may bring, are something we should look forward to.

Given our difficult past, and some of the inevitable challenges we have faced as a young democracy trying to find its place in a world marked by a number of new and overlapping crises, it would be easy to indulge in extremes; either of blind optimism or crippling pessimism.

We should resist both these extremes.

Rather, we should heed the words of our first democratic President, Nelson Mandela, who more than most saw that the pursuit of socioeconomic justice and shared prosperity is a journey rather than a destination.

Allow me quote him at length:

“I have walked that long road to freedom. I have tried not to falter; I have made missteps along the way.

But I have discovered the secret that after climbing a great hill, one only finds that there are many more hills to climb.

I have taken a moment here to rest, to steal a view of the glorious vista that surrounds me, to look back on the distance I have come.

But I can only rest for a moment, for with freedom come responsibilities, and I dare not linger, for my long walk is not ended.”

Inde lendlela.

Madam Speaker, as I conclude, I want to remind South Africans that the message they should take from this Budget is this: government is making the most out of very limited resources. We continue to:

Support economic growth;
Reduce the growth of government debt and the cost of debt; and
Allocate more funds for core services, provide for the social wage and preserve infrastructure budgets.

I am grateful to the President and Deputy President for their continued support and leadership.

Thank you to the Deputy Minister of Finance, Dr David Masondo, and the excellent

National Treasury team led by the Director-General, Dr Duncan Pieterse.

Thank you to the Commissioner of the South African Revenue Service and the Governor of the South African Reserve Bank.

Thank you to my colleagues in the Ministers’ Committee on the Budget and in the Budget

Council who share the heavy load of the tough decisions that we make to maintain sustainable public finances.

To Parliamentary Committees of Finance, Appropriations and Public Accounts, I express my sincere appreciation.

To my wife and family, your love, support and forbearance are a daily inspiration.

Lastly, thank you to each and every South African.

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South Africa’s president urges parties to find common ground after election deadlock

South African President Cyril Ramaphosa speaks during the announcement of the election results.

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South Africa announced its final election results Sunday that confirmed no party won a majority, and unprecedented coalition talks were starting to find a way forward for Africa’s most advanced economy. President Cyril Ramaphosa immediately called in a speech for parties to overcome their differences and find “common ground” to form the first national coalition government in the country’s young democracy.

Ramaphosa’s African National Congress party had already lost its 30-year majority after more than 99% of votes were counted by Saturday and showed it couldn’t surpass 50%. The ANC received around 40% of the votes in last week’s election in the final count, the largest share.

Without a majority it will need to agree on a coalition with another party or parties for the first time to co-govern and reelect Ramaphosa for a second term. South Africa’s national elections decide how many seats each party gets in Parliament and lawmakers elect the president later.

“Our people have spoken,” Ramaphosa said. “Whether we like it or not, they have spoken. We have heard the voices of our people and we must respect their choices and their wishes.”

The latest election results are displayed at the Results Operation Centre (ROC) in Midrand, Johannesburg, South Africa, Friday May 31, 2024. South Africa is heading closer to the reality of a national coalition government for the first time as partial election results put the ruling African Nation Congress (ANC), short of a majority. (AP Photo/Themba Hadebe)

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“The people of South Africa expect their leaders to work together to meet their needs. This is a time for all of us to put South Africa first.”

The ANC was the party of Nelson Mandela and freed South Africa from the apartheid system of white minority rule in 1994. It had governed with a comfortable majority since then. This election saw an unprecedented slump in its support, with voters seen to be deserting the party due to its failure to solve widespread poverty and extremely high unemployment levels, as well as problems with the delivery of basic government services to many in a nation of 62 million.

The ANC had said earlier Sunday that it was starting its negotiations with all major parties. More than 50 took part in the election, and at least eight had significant shares of the vote.

ANC Secretary-General Fikile Mbalula said the party was open to all negotiations, even with the main opposition Democratic Alliance, which has led the chorus of criticism of the ANC for years but is viewed by many analysts as the most stable coalition option for South Africa.

The DA won the second-most votes with around 21%; the two parties would hold a majority together and be able to govern. DA leader John Steenhuisen said his party was also initiating talks with other parties. The ANC won 159 seats in the 400-seat Parliament, down from the 230 it won in the last election. The DA increased slightly to 87 seats.

Supporters of Inkatha Freedom Party attend an election rally in Richards Bay, near Durban, South Africa, Sunday, May 26, 2024, in anticipation of the 2024 general elections scheduled for May 29. (AP Photo/Emilio Morenatti)

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There is some time pressure for coalition talks to progress and for the uncertainty to be minimized given South Africa’s new Parliament needs to sit for the first time and elect a president within 14 days of the election results being declared.

Ramaphosa is seeking a second and final term and Mbalula said his position as leader of the ANC was not in question despite the election result. Mbalula said the ANC would not consider the demands by the MK Party of former President Jacob Zuma that Ramaphosa step down as a condition for talks.

“No political party will dictate terms to us, the ANC. They will not ... You come to us with that demand, forget (it),” Mbalula said.

He said that the ANC would not be arrogant though. “The elections have humbled us, they have brought us where we are,” he said.

South Africa is a leading voice for its continent and the developing world on the global stage and is due to take over the presidency of the Group of 20 rich and developing nations late this year. It’s the only African nation in that group.

“Everyone is looking to see if South Africa can weather the storm and come out the other side,” political analyst Oscar van Heerden said on the eNCA news network.

Voters line up to cast their ballot for general election in Alexandra, near Johannesburg, South Africa, Wednesday, May 29, 2024. (AP Photo/Themba Hadebe)

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Amid many coalition options, the ANC could also join with MK and the far-left Economic Freedom Fighters, although they have been cast as partners that would make investors uneasy. Both have pledged to nationalize parts of South Africa’s economy, including its gold and platinum mines, among the world’s biggest producers.

The DA has long said it will not work with the EFF and MK, calling them a “doomsday coalition” for South Africa. Steenhuisen repeated that stance Sunday in a speech on national television but said his party was starting talks with others and would approach them “with cool heads and open minds.”

Political analyst Van Heerden said an ANC-DA coalition would “possibly give stability” but there were some within the ANC who would oppose it. Other smaller parties could be involved to dilute it and make it more palatable for the ANC, some commentators said.

“The DA has approached the ANC as the enemy over many, many years,” Van Heerden said. “The next few days is going to be a very difficult period. People will have to be mature behind closed doors.”

Magome and Imray write for the Associated Press. Imray reported from Cape Town, South Africa.

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South Africa's Ramaphosa badly weakened by ANC election slump

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South African president Cyril Ramaphosa votes in Soweto

ANC on course to lose majority for first time in 30 years
Ramaphosa likely to face calls to quit over election result
Top party official backs him to stay at ANC's helm
Analysts say there is no clear candidate to succeed him

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South Africa’s Ramaphosa calls for unity after his ANC loses majority

The African National Congress has lost the country’s elections for the first time in 30 years.

South Africa’s President Cyril Ramaphosa has called on the country’s political parties to work together for the good of the country as final results from last week’s election confirmed his African National Congress (ANC) lost its majority for the first time.

The result, announced on Sunday, is the worst election showing for the ANC – Africa’s oldest liberation movement, once led by Nelson Mandela – since it came to power 30 years ago, ending white minority rule.

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Voters, angry at joblessness, inequality and rolling blackouts, slashed support for the ANC to 40.2 percent, down from 57.5 percent in the 2019 parliamentary vote.

The main opposition party, the Democratic Alliance (DA), had 21.6 percent and uMkhonto we Sizwe (MK), a new party led by former president and ANC leader Jacob Zuma, managed to grab 14.7 percent – pulling away votes from the ANC.

Official results showed the ANC winning 159 seats in the 400-seat National Assembly, down from 230 previously.

“South Africans expect the parties for which they have voted to find common ground, overcome their differences, and act together for the good of everyone. That’s what South Africans have said,” Ramaphosa said after the electoral commission announced the final results.

He called the election a “victory for our democracy”.

“This is the time for all of us to put South Africa first,” Ramaphosa added.

Reporting from the Results Operation Centre in Midrand, South Africa, Al Jazeera’s Mike Hanna said the ANC will now try to find a way to form a new government.

“It has to find a partner in order to be able to govern. Otherwise, it could try to form a minority government, which could make it very difficult to pass any form of legislation or advance ANC policy,” he said.

Plotting a path forward

ANC officials earlier said the party was humbled by the result and had “nothing to celebrate” but stood by Ramaphosa, once Mandela’s lead negotiator to end apartheid, and said they would not bend to pressure for him to step down.

The poor showing has fuelled speculation that Ramaphosa’s days might be numbered, either because of the demands of a prospective coalition partner, or as a result of an internal leadership challenge.

“That is a no-go area,” Fikile Mbalula, ANC’s secretary general, told a press briefing, the party’s first since the polls.

“Did we commit mistakes? Yes, we did. In governance and everywhere else,” he said, adding the ANC is now committed to forming a government “that is stable and that is able to govern effectively”.

Political parties now have two weeks to work out a deal before the new parliament sits to choose a president, who would likely still hail from the ANC, since it remains the biggest force.

Local media reported the DA could be open to entering a cooperation pact with the ANC, supporting it in key decisions in exchange for top jobs in parliament. The Inkatha Freedom Party (IFP) would also be part of such a deal.

“I would almost certainly think [the ANC] wouldn’t just go with the DA. They would most probably go with somebody like the IFP as well just because of the perception that the DA is a very white party,” said Melanie Verwoerd, a political analyst.

The ANC’s leadership will meet on Tuesday to plot the path forward.

INTERACTIVE - South Africa elections results 2024-1717388721

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South Africa’s main opposition party rallies support as it concludes election campaign

South Africa’s Democratic Alliance’s (DA) presidential candidate John Steenhuisen wrapped up his campaign on Sunday at a cricket stadium in Johannesburg, where he defended his party’s record in job creation and poverty alleviation. (AP video shot by Jackson Njehia, Carl Ndaba and Mogomotsi Magome)

Supporters of the main opposition Democratic Alliance (DA) party attend a final election rally in Benoni, South Africa, Sunday, May 26, 2024. South Africa’s four main political parties began the final weekend of campaigning Saturday before a possibly pivotal election that could bring the country’s most important change in three decades. (AP Photo/Themba Hadebe)

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Supporters of the main opposition Democratic Alliance (DA) party attend a final election rally in Benoni, South Africa, Sunday, May 26, 2024. South African will vote in the 2024 general elections May 29. (AP Photo/Themba Hadebe)

The leader of Inkatha Freedom Party, Velenkosi Hlabisa, waves to the crowd during an election rally in Richards Bay, near Durban, South Africa, Sunday, May 26, 2024, in anticipation of the 2024 general elections scheduled for May 29. (AP Photo/Emilio Morenatti)

Main opposition Democratic Alliance (DA) party leader John Steenhuisen, center, greets supporters on arrival at a final election rally in Benoni, South Africa, Sunday, May 26, 2024. South Africa’s four main political parties have begun a final weekend of campaigning before a possibly pivotal election that could bring the country’s most important change in 30 years. (AP Photo/Themba Hadebe)

Supporters of Inkatha Freedom Party attend an election rally in Richards Bay, near Durban, South Africa, Sunday, May 26, 2024, in anticipation of the 2024 general elections scheduled for May 29. (AP Photo/Emilio Morenatti)

Main opposition Democratic Alliance (DA) party leader, John Steenhuisen, delivers his speech at a final election rally in Benoni, South Africa, Sunday, May 26, 2024. South Africans will vote in the 2024 general elections on May 29. (AP Photo/Themba Hadebe)

Dancers wait to take part in a performance during an election rally organized by Inkatha Freedom Party in Richards Bay, near Durban, South Africa, Sunday, May 26, 2024, in anticipation of the 2024 general elections scheduled for May 29. (AP Photo/Emilio Morenatti)

An entertainer sings from the stage as supporters of Inkatha Freedom Party attend an election rally in Richards Bay, near Durban, South Africa, Sunday, May 26, 2024, in anticipation of the 2024 general elections scheduled for May 29. (AP Photo/Emilio Morenatti)

Supporters of the main opposition Democratic Alliance (DA) party attend a final election rally, in Benoni, South Africa, Sunday, May 26, 2024. South Africa’s four main political parties have begun a final weekend of campaigning before a possibly pivotal election that could bring the country’s most important change in 30 years. (AP Photo/Themba Hadebe)

JOHANNESBURG (AP) — South Africa’s main opposition party Democratic Alliance on Sunday made its final appeal to voters to help it unseat the ruling African National Congress as it concluded its campaign ahead of elections this week .

The Democratic Alliance is the biggest opposition party in South Africa and has gathered some smaller opposition parties to form a pact known as the Multi-Party Charter for South Africa, which will see the group combine their votes to challenge the ANC after the elections.

Sunday’s rally coincided with that of the smaller opposition Inkatha Freedom Party, which has the populous KwaZulu-Natal province as its stronghold and has committed to work with the main opposition.

Recent polls have put the ANC’s support at less than 50% of the national vote ahead of the election, putting it in danger of possibly losing its majority. The Democratic Alliance is also under pressure after its support declined in the last national elections and a number of its leaders left to form new parties that will be competing in the polls.

Supporters came out in the thousands Sunday in Benoni, east of Johannesburg, where the DA’s blue colored flags and party memorabilia decorated a small stadium in the town.

Martin Griffiths, United Nations Under-Secretary-General for Humanitarian Affairs and Emergency Relief Coordinator, is interviewed at the U.N., Wednesday, June 5, 2024. Griffiths said leaders in many conflict areas are more interested in power and political rivalries than in listening to the needs of their people, improving their lives and ending the fighting. (AP Photo/Richard Drew)

“Make no mistake, if DA voters stay at home, or they split the vote among many small parties on the ballot, then our country’s next chapter could be even uglier than the past,” said party leader John Steenhuisen.

“If we sit back and allow a coalition between the ANC, the (Economic Freedom Fighters) and the (uMkhonto weSizwe), aided by the sell-outs in the Patriotic Alliance, then our tomorrow will be far, far worse than yesterday. It will be doomsday for South Africa,” he said to loud applause.

A coalition between the DA and other parties including the Patriotic Alliance in the Johannesburg council after the 2021 local government elections collapsed, handing power back to an ANC-led coalition and resulting in political animosity between the two parties.

Steenhuisen has repeatedly accused the ruling ANC and the leftist opposition party Economic Freedom Fighters of planning to go into coalition after the elections.

Speaking ahead of its final rally in the city of Richards Bay in KwaZulu-Natal on Sunday, Inkatha Freedom Party leader Velenkosini Hlabisa said their main objective was to see the current government removed.

“The IFP is campaigning to remove the ANC from power and become part of the government at a policy making level and also cut the ANC to below 50% at national level.”

“We are calling on people to take action and vote IFP to remove the government that has failed them,” said Hlabisa.

He said most negotiations would take place after the results were in. Hlabisa highlighted unemployment, poverty, crime and the country’s electricity crisis as some of the major problems South Africans are facing.

“We all know the crisis we are facing, we all know the depth of the struggle in South Africa and the daily trauma so many people endure. What the country needs to hear is that there is a way out,” he said.

Mutsaka reported from Richards Bay, South Africa.

AP Africa news: https://apnews.com/hub/africa

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