Budget chaos: Crisis or opportunity? – Marius Roodt - Biznews

Marius Roodt

The chaos around the Budget Speech was unprecedented in post-apartheid South Africa. One would probably be hard-pressed to even find a precedent from any time since South Africa became a Union in 1910.

And while the canceling of the Budget Speech seems to show a Government of National Unity (GNU), which is chaotic, there are a number of silver linings in this mess, but also a number of traps. And this could finally be the impetus for real reform, which South Africa urgently needs.

The first silver lining is that the ANC needs to learn that it cannot govern as it has in the past – as a huge political juggernaut which always gets its own way.

With the DA, the ANC’s largest partner in the GNU, opposing the two-percentage-point increase in VAT, the party’s options are limited. It seems that most of the other parties in the GNU also oppose the increase, and even if they did not, it would be difficult for the ANC, with its 40% of parliamentary seats, to secure the votes needed to pass the Budget. (The GNU without the DA has exactly 200 seats in Parliament). The ANC could approach the EFF, as it has threatened to do, but that party has also said it would not support a rise in VAT.

The ANC must start getting used to this new reality, where it doesn’t get everything all its own way.

Good for politics
But overall, this is good for South African politics in the long run. This is the first time that this country is being governed by a coalition since the National Party formed a coalition with the Afrikaner Party in 1948 to secure a majority. It would be naïve to think that it would have been all smooth sailing, with coalitions at provincial and national level in South Africa still being relatively rare.

When all is said and done, the GNU has held up fairly well. Coalition formation is difficult enough in countries which are far more homogenous than South Africa and do not have the racial, ethnic, and language cleavages which exist here. And coalitions often fail because of disagreements over budgets.

That is the reason why the Social Democrat-led coalition collapsed in Germany last year. Germany is a country with a much longer history of national coalitions, and they still face the kinds of problems coalitions bring, which South Africa is now learning about.

Of course, the GNU could still collapse. It is clear that there are tensions within it, and the ANC could still throw its lot in with the EFF and MK (an outcome too ghastly to contemplate for many people, including this writer). That said, many would never have believed that a national coalition between the DA and ANC would be possible, or that it would already have lasted as long as it has.

Real reform
But the postponement of the Budget speech has another silver lining, which South Africa dare not miss, and this is that it could be the trigger for real reform.

It is often in crisis that reform happens, and South Africa is not far off that point.

India was pushed to reform and end the so-called “Licence Raj” in the early 1990s. The country found itself in a precarious position and unable to pay its bills, giving it the impetus to deregulate and reduce state involvement in the economy. This involvement had hindered the country’s economic growth rate. Today India has one of the fastest-growing economies in the world, and millions of people have been lifted out of poverty.

South Africa itself is an example. In the late 1980s, South Africa was also facing growing economic pressures and rising internal unrest which, along with a favourable geopolitical situation with the collapse of the Soviet Union, saw FW de Klerk having the space to begin the reforms which saw the end of apartheid.

Of course, at the other end of the scale, crisis can often see governments double down on bad policies, such as happened in Zimbabwe. Faced with a moribund economy in the late 1990s, and growing and more-organised political opposition, Robert Mugabe and his ZANU-PF government became more authoritarian and continued to drive the Zimbabwean economy over a cliff.

Grab the nettle
But for the reformers in the ANC (few and far between they might be), now is the time to grab the nettle. And if the ANC wants to survive over the next decade or so, this is what it should do. The party performs best when the South African economy is doing well – it won nearly 70% of the vote in 2004, when post-apartheid South Africa was enjoying something of a golden economic era.

Subsequently as the country and the economy have started to decline, the ANC has faced a similar decline, resulting in it being forced to form a coalition last year. And new polling by the Social Research Foundation – which fairly accurately called last year’s election – shows that ANC support is now in the low 30s. If the party wants to win back its lost support, it can only do this through rapid economic growth, which it can only do by jettisoning policies that hold the economy back.

South Africa is on the brink, and the country needs to “adapt or die”, to use a South African political phrase from the 1980s. The government can either “adapt” by seizing the nettle of reform and putting the country onto a path of sustainable and rapid economic growth, or “die”, and keep doing things as they’ve been done for the past fifteen years, and letting South Africa slide further into mediocrity and decay.

Marius Roodt is currently deputy editor of the Daily Friend and also consults on IRR campaigns. This is his second stint at the Institute, having returned after spells working at the Centre for Development and Enterprise and a Johannesburg-based management consultancy. He has also previously worked as a journalist, an analyst for a number of foreign governments, and spent most of 2005 and 2006 driving a scooter around London. Roodt holds an honours degree from the Rand Afrikaans University (now the University of Johannesburg) and an MA in Political Studies from the University of the Witwatersrand

https://www.biznews.com/events/budget/2025/03/07/budget-chaos-crisis-or-opportunity-marius-roodt

This article was first published on the Daily Friend.