Johannesburg, 26 February 2020 – The Steel and Engineering Industries Federation of
Southern Africa (SEIFSA) welcomes Finance Minister Tito Mboweni’s budget speech,
which outlined seven guiding plans towards a turnaround economic strategy for South
Africa, SEIFSA Chief Economist Michael Ade said.
Dr Ade identified the seven plans as strengthening macroeconomic policy to improve on
certainty, transparency and lower borrowing costs, restructuring State-Owned
Enterprises (SOEs), opening markets to trade on the continent, implementing the re-
imagined industrial strategy, lowering the cost of doing business, leveraging the private
sector as far as possible and implementing a sound macroeconomic framework for
enhanced growth.
He said the budget continued on the trajectory set last year by indicating that fiscal
sustainability will form the basis of economic recovery and growth this year, with a number
of steps announced to achieve a net downward adjustment to the main budget non-
interest expenditure of R156.1 billion over the next three years, relative to the 2019 budget
projection.
Dr Ade said the public transport spending adjustment by R13.2 billion and the R5,2 billion
and R3,9 billion respective adjustments in education infrastructure and health allocation
were unfortunate but understandable. He said these spelt trouble for the Metals and
Engineering (M&E) cluster of industries. However, he welcomed the commitment to
infrastructure spending announced by the President during his State of the Nation
Address.
Dr Ade said the poor growth scenario and the persistent existence of downside risks from
erratic electricity supply and the 25c per litre increase in the fuel levy would compound
logistics costs, while the 25c increase in the plastic bag levy to 25c will have additional
cost implications for producing companies in the M&E cluster.
SEIFSA Chief Executive Officer Kaizer Nyatsumba said overall the budget showed a
welcome determination by the Government to stimulate the economy and to reduce the
public wage bill. He expressed the hope that labour would partner with Government to
make the country attractive to potential foreign investors.
Mr Nyatsumba welcomed the financial support provided to Eskom, stressing that it was
crucially important that the country has reliable electricity supply. He said the provision of
resources to the crime-fighting and prosecution authorities was also to be welcomed.
Dr Ade noted the fact that attention is being given to proposals from ITAC on scrap metals
and welcomed steps being taken to address productivity growth and to reduce the cost
of doing business by strengthening the registration of new businesses within a day.
He said that once the supply side of the economy is directly taken care of, monetary policy
can be used to stimulate the demand side, through consumer spending.
Dr Ade said while it would take time before the economy can be turned around,
nevertheless the speech by Minister Mboweni was a bold start. He hoped that it would be
received positively by credit ratings agencies.
ENDS
Issued by:
Ollie Madlala
Communications Consultant
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za
SEIFSA is a National Federation representing 21 independent employer Associations in
the metals and engineering industries, with a combined membership of 1600 companies
employing around 200 000 employees. The Federation was formed in 1943 and its
member companies range from giant steel-making corporations to micro-enterprises
employing fewer than 50 people.
