Budget 2025: Will Minister Godongwana Deliver the Relief South Africans Need?

By Nco Dube

As South Africans brace themselves for the 2025 Budget Speech, to be delivered by Finance Minister Enoch Godongwana on Wednesday, the nation finds itself at a crossroads.

With a sluggish economy, persistent unemployment, and a cost-of-living crisis that continues to squeeze households, this budget has the potential to either inspire hope or deepen frustration. The stakes are high, and the country will be watching closely to see if the Minister can strike a balance between fiscal discipline and addressing the urgent needs of ordinary citizens.

The Budget Speech is not just a dry financial document; it is a reflection of the government's priorities and its vision for the future. It is an opportunity for the state to demonstrate its commitment to tackling South Africa's most pressing challenges. But will this year's budget rise to the occasion? Or will it be another exercise in rhetoric that fails to translate into meaningful change?

Navigating the Dynamics of the Government of National Unity

Formed in the wake of the May 2024 elections, the Government of National Unity (GNU) represents a coalition of various political parties, including the African National Congress (ANC) and the Democratic Alliance (DA). This coalition is intended to foster collaboration and stability in a politically fragmented landscape. However, the dynamic within the GNU is fraught with competing interests and policy positions that Minister Godongwana must navigate carefully in his budget speech tomorrow.

The GNU's formation was seen as a necessary step towards uniting disparate political factions to address South Africa's pressing economic challenges. Yet, as we have witnessed in recent months, the coalition has been tested by internal tensions and ideological divides. The ANC, while keen to maintain its historical role as the ruling party, faces pressure from its Alliance partners to adopt more progressive policies that address social inequalities on the left, while on the right it faces pressure from its coalition partners to adopt more market-friendly policies. The DA also attempts to position itself as a counterbalance, advocating for fiscal prudence and market-driven solutions. This tug-of-war creates a challenging environment for any budget proposal.

Minister Godongwana will need to strike a delicate balance in his budget speech, appeasing both ANC constituencies that demand increased social spending and DA members who advocate for dramatic fiscal discipline. The challenge lies in crafting a budget that not only addresses immediate economic relief but also lays the groundwork for sustainable growth. This balancing act will require deft political maneuvering and an understanding of each party's priorities.

One of the most significant aspects of this year's budget may be the first allocation towards the National Health Insurance (NHI) scheme. The NHI has been a contentious issue within the GNU, with various factions expressing differing views on its implementation. The ANC has long championed universal healthcare as a fundamental right, while some partners within the GNU coalition have raised concerns about its feasibility and funding mechanisms. By allocating funds for NHI in this budget, Minister Godongwana could signal a commitment to advancing healthcare access while also addressing concerns from coalition partners about financial sustainability.

The potential inclusion of NHI funding in this budget reflects broader trends within South Africa’s socio-economic landscape. With millions of citizens lacking access to quality healthcare services, there is an urgent need for comprehensive reforms that prioritise health equity. However, such reforms must be accompanied by transparent budgeting processes and accountability measures to ensure that funds are used effectively.

A Nation Under Pressure

South Africa's economic challenges are well-documented. The latest debt-to-GDP ratio is projected to peak at around 75.5% in 2025/26, underscoring the country's precarious fiscal position. Unemployment remains stubbornly high, with millions of South Africans unable to find work. Load shedding (although currently suspended) continues to disrupt businesses and households alike, while global trade tensions and currency volatility add further pressure.

Against this backdrop, Minister Godongwana faces a daunting task. He must navigate between maintaining essential services, avoiding excessive borrowing, and fostering economic growth, all while ensuring that vulnerable communities are not left behind.

The government has already signalled some of its intentions through President Cyril Ramaphosa's recent State of the Nation Address (SONA). Infrastructure development, energy reform, and job creation were highlighted as key priorities. However, translating these lofty goals into actionable plans requires more than just words; it requires money and lots of it.

What Can We Expect?

The 2025 Budget Speech is expected to focus on several key areas:

Fiscal Discipline:

With a budget deficit estimated at R300 billion, fiscal discipline will be crucial. Minister Godongwana is likely to emphasise measures aimed at reducing wasteful expenditure and improving efficiency within government departments. However, this must be balanced with the need to invest in critical areas such as education, healthcare, and infrastructure.

Revenue Collection:

There is speculation that the government may introduce new revenue collection measures to fund its programmes. This could include adjustments to personal income tax brackets or significant increases in sin taxes (on alcohol and tobacco). While these measures may provide short-term relief for the fiscus, they risk placing an additional burden on already overstretched taxpayers.

Social Grants:

Social grants remain a lifeline for millions of South Africans living below the poverty line. The Minister is expected to announce an inflation-linked increase in grant payments. However, with rising food prices and escalating living costs, many argue that these increases will not go far enough.

Infrastructure Development:

Infrastructure investment has been touted as a key driver of economic recovery. Projects such as the Mtentu Bridge and Polihali Dam are expected to feature prominently in the budget speech. While these initiatives are welcome, their success will depend on timely implementation and effective management.

Energy Reform:

The ongoing energy crisis has crippled South Africa's economy. Minister Godongwana is likely to allocate significant resources towards Eskom's turnaround plan and renewable energy projects. However, questions remain about whether these efforts will be enough to end load shedding once and for all.

Support for SMEs:

Small and medium enterprises (SMEs) are often described as the backbone of the economy. The budget speech may include measures aimed at providing financial support and reducing regulatory burdens for SMEs. This would be a positive step towards fostering entrepreneurship and job creation.

Public Sector Wage Bill:

The public sector wage bill remains a contentious issue. While unions are likely to push for higher wages, the government must balance these demands with its commitment to fiscal sustainability.

Debt Management:

South Africa's rising debt levels are a cause for concern. The Minister will need to outline a clear strategy for managing this debt while ensuring that critical services are not compromised.

Education and Skills Development:

Investment in education and skills development is essential for addressing long-term unemployment. The budget speech may include funding allocations for initiatives aimed at improving access to quality education and vocational training.

Transparency and Accountability:

In light of recent corruption scandals, there is growing demand for greater transparency in how public funds are allocated and spent. Minister Godongwana will need to reassure South Africans that their hard-earned tax money is being used responsibly.

Balancing Act: Growth vs Relief

One of the central challenges facing Minister Godongwana is how to balance short-term relief with long-term growth objectives. On one hand, there is an urgent need to address immediate issues such as poverty and unemployment. On the other hand, sustainable economic growth requires structural reforms that may take years to bear fruit.

For example, while increasing social grants can provide immediate relief for vulnerable households, it does little to address the root causes of poverty. Similarly, while infrastructure investment can create jobs in the short term, its long-term impact depends on effective planning and execution.

The Minister must also consider how his decisions will impact investor confidence. South Africa cannot afford another credit rating downgrade; attracting foreign investment is crucial for boosting economic growth.

What Should Be Prioritised?

If Minister Godongwana wants this budget speech to resonate with ordinary South Africans, he must prioritise:

Job Creation:

Unemployment remains one of South Africa's most pressing challenges. The government must invest in sectors with high job-creation potential, such as agriculture, tourism, and manufacturing.

Energy Security:

Ending load shedding for good should be a top priority. This requires not only investing in Eskom but also creating an enabling environment for sustainable independent power producers (IPPs).

Support for Vulnerable Communities:

Social grants must be increased significantly to keep pace with rising living costs. Additionally, targeted food assistance programmes could help alleviate hunger among low-income households.

Education Reform:

Improving access to quality education should be seen as an investment in South Africa's future workforce.

Corruption Crackdown:

Restoring public trust requires decisive action against corruption at all levels of government.

SME Development:

Providing financial support and reducing red tape for SMEs can stimulate entrepreneurship and drive job creation.

Looking Ahead

As we await Minister Godongwana's 2025 Budget Speech, one thing is clear: this is not just another routine address; it is an opportunity for the government to demonstrate its commitment to building a better future for all South Africans.

While there are no easy solutions to South Africa's economic challenges, bold leadership and decisive action can pave the way forward. Whether this year's budget will rise to the occasion remains to be seen — but one thing is certain: South Africans deserve nothing less than a budget that puts their needs first.

(Dube is a Political Economist, Businessman, and Social Commentator on UkhoziFM and various newspapers. His views don't necessarily reflect those of the Sunday Tribune/ Independent Media or IOL )

SUNDAY TRIBUNE