The Steel and Engineering Industries Federation of Southern Africa (Seifsa) has welcomed government’s commitment to supporting business by creating an “enabling” environment and providing tax incentives for local manufacturing, as expressed by Finance Minister Pravin Gordhan in his 2014 National Budget address to Parliament on Wednesday.

Seifsa CEO Kaizer Nyatsumba said during a breakfast briefing in Johannesburg on Thursday that, following President Jacob Zuma’s State of the Nation Address last week and the recent comments by Gordhan, it was “clear” that government had “finally” recognised the strategic importance of private sector partnerships.

“In a normal situation, government, business and labour are important partners and allies; there is absolutely no way that one of the three can win while the others lose. We are [thus] delighted that the Minister has committed R15.2-billion to stimulate and support domestic economic competitiveness,” Nyatsumba noted.

Seifsa further welcomed Gordhan’s provision of R9.3-billion for manufacturing incentives and a “significant” amount for the establishment of special economic zones across the country.

The State aimed to accelerate public infrastructure investment to reach 10% of gross domestic product (GDP), spending R847-billion on infrastructure over the next three years.

Government’s infrastructure spend was currently at 7% of GDP and was largely funded through tariffs, private–public partnerships, taxes as well as loans focused on transport, energy and water.

The Minister’s confirmation of government’s “firm” commitment to the National Development Plan and to shale gas exploration and production was also met with approval by the federation.

PALLIATIVE BUDGET?

Commenting on the political context of the 2014 National Budget, however, Nyatsumba cautioned that the largely welcomed budget could “very easily” have been an “election budget” intended primarily to palliate an “increasingly frustrated” electorate.

“That nothwithstanding, it must be said that Gordhan and the government succeeded in striking a good balance between an election budget and a balanced National Budget. For that, they need to be commended,” he noted.

The business community would do well, Nyatsumba added, to anticipate “enormous” pressure from the incoming administration to advance or accelerate economic transformation initiatives over the next five years, as Julius Malema’s Economic Freedom Fighters aggressively championed economic liberation.

“The ruling party can hardly afford to remain silent on the matter,”  he believed.

PRUDENT FINANCES

Seifsa chief economist Henk Langenhoven added that it was “reassuring” that the South African economy had avoided the danger of a “double-dip turndown” and that there was a resolve to shape government finances in a “prudent” way for future growth.

“While the global economic environment is still an uncertain place and risks that could upset the domestic economy still exist, it would appear that we have weathered the storm and that the economy has adapted sufficiently to allow government to set a new course in its financial focus,” he commented.

Langenhoven added that, while continued robust State spending was necessary to counter the slowdown in other parts of the economy since 2008, the objective had now been achieved.

“The danger was always that spending would be difficult to control and that high deficits would continue, with the resultant mushrooming of government debt. Thankfully, both have been well managed, with government now changing gear from protecting the economy to investing in it,” he said.