The Budget Speech : A kasi Analysis

A funny but true depiction of our black communities.

The budget speech was announced yesterday,  and the shop owner in my township just heard one thing out of it! “The price of beer and cigarettes will increase”! So he quickly put out a notice that says “as from tomorrow 26 February 2015 the price of beer and cigarette will increase by 50 cents each”. The same stock that he had yesterday now costs 50 cents more because the finance minister said so.  If you also happen to come across this kind of behaviour from shop owners in your township tell them that the changes will only come into effect from the 1st of April 2015 when the new fiscal year starts, akungadlalwa ngathi!

On the 25th of February 2015 finance minister Nhlanhla Nene was in the forefront of South African government and politics when he delivered his first Budget speech as the minister of finance. With the exception of the shop owner in your township who just decided to up his prices just after the speech, does the budget speech have any economic impact for us as kasi residents? For the average kasi resident in the country we can imagine that this speech didn’t seem to have any economic significance for them, well at least they think so. We always hear people say  “we don’t even watch that thing” in the townships, “what will it do for us”? These are usually the questions and statements that justify our ignorance.  Well I think we are sick,  and we are suffering from ignorance we don’t even want to know what’s happening in our sphere of influence. This sickness isn’t a coincidence though!

Let me paint a picture about where I come from and you will understand, its hard man really hard its a struggle against all the negative things you can think of amongst young people. High teenage pregnancy, high alcohol and drug abuse and to add the cherry on top, high unemployment rates ,but we always stay high on drugs just to balance the lows . That’s where I come from, with that said you can now imagine which part really matters to us on the budget speech  and that’s if we just happen to watch some part of it.

Child support grant, imali yeqolo as it is popularly known amongst the youth is one of the items we look for. The second item is the increase in the prices of our medicine, yes alcohol and cigarette. Sin tax on beer and cigarette really annoys us, every year they increase our medicine and every year we always need more of it  . Now you can see that out of the entire budget document the important items that we look at are the grants and sin taxes and some other pensions and hand outs.

The budget speech, this is where the “doing part” of economic policy is fulfilled, this is where the promises made to us are supposed to be kept. In a mixed market economic system the government and the citizens of the country both participate in the economy, but the main thing that makes them different is the objective of their participation in the economy. Private individuals like you and me participate in the economy to make money and profits to survive and satisfy our basic needs and wants. While the government participates in the economy in order to provide public goods and services that are essential to the running of a country and are usually not provided by private companies. Examples of public goods and services include things such as schools and healthcare services public infrastructure such as roads and sports ground and so on. This is how government works, the government of a country usually sits down with its economists and they look at the economic positions of the country as well as the economic problems and opportunities in the country. Basically they analyse the country’s economy

The national treasury is the government agency responsible for this economic analysis in South Africa.  They basically look at a country’s strengths, weaknesses, opportunities and threats to its economic and social well being.  When they finish with this analysis a formula to take the economy forward is then presented by government.  This formula is called an economic policy, and it details the plans of the government over a certain period and aims to make sure that we take advantage of our strengths, follow-up new economic opportunities, strengthen our weaknesses and also take care of the threats to our economy. The National Development Plan ( NDP) is the current economic policy that South Africa has adopted. The plan has some really difficult goals to achieve but that’s a subject for another day.

Essentially the government budget is the implementation of government policy such as the NDP in order to achieve objectives outlined in the initial plan of the economic policy . The NDP is a national strategy that has a national agenda and aims to uplift the whole country.

The national budget is then broken down into provincial governments and further into municipal budgets. In order to understand how the government allocates the funds amongst the different sectors in the economy amongst the nine provinces, we would have to look at the State Of the Province Address (SOPA) closely for that particular province.

Every citizen in the economy has a role to play, but it is the responsibility of the government to provide opportunities that enable the citizens of the country to do so. I believe that the ANC government is indeed corrupt BUT they have provided us with opportunities to strive in the economy.  In that regard we should look at the level of government that directly influences us on a daily basis.

A smart way of using and analysing the budget speech is to first look at the national budget allocation in terms of the different sectors and departments in national government.  After that look at the province’s budget allocation, and from there look at the sectors that received a bigger pie of the budget in the province. The SOPA  is key in this analysis. During the speech of the SOPA for different provinces, provincial leaders emphasised which sectors had growth potential and which sectors were threats. The SOPA is basically a plan of the provincial government so the provincial budget is the practical part of it.

The SOPA and the provincial budget allocation allows for one to have a picture of the key sectors in the economy that have growth potential. So if you’re able to identify key sectors in the economy you could have a business opportunity that is recommended by government and is backed up by research as a sector that has growth potential. Sources of funding wouldn’t be much of a problem because you would be targeting a sector that is in line with the national agenda. For instance if we look at the E learning system that the government aims to implement in schools across the country. This means that the Internet will need to be installed, shelving and carpentry, computers and software will also be installed. This is a clear opportunity for people doing business in these sectors. With that said, we need to stop looking for handouts and start to be strategic thinkers. If we do that our analyses of the budget will change drastically. Well stop analysing grants and start analysing opportunities that the budget and government policy present to us.

Until we as the citizens of the country are willing to take up the initiative of participating in the economy positively and productively nothing will change. The government budget if looked at closely does provide us with insights on which sectors to target if we wanted to establish profitable business with medium and long term prospects. But we have to be willing to work hard and meet the government half way. The government really has done its part. Ideally it up to us to change our thought patterns and strive for pure innovation and inclusion in our economy. So pick up a budget report and start analysing!