2022 Medium Term Budget Policy Speech falls short

2022 Medium Term Budget Policy Speech falls short

The medium-term budget delivered by Finance Minister Enoch Godongwana on Wednesday 26th October 2022 lacks a gender responsive lens, undermines socio-economic rights, and wilfully ignores calls for just and accountable governance. 

The rising levels of inequality and poverty are unsustainable. They are also a direct consequence of unequal access to opportunities and consequently, unequal access to public services. 

Social spending cuts in a country with the highest levels of inequality, growing levels of hunger and mass unemployment is unjustifiable.  It is women and children who bear the burden of inequality.

In 2021, Oxfam South Africa and other civil society organisations, wrote to the then Minister of Finance, to express deep concern about the lack of transparency and consultations foregrounding the approximate allocation of R 105 billion that South Africa borrowed from international financial institutions (IFIs), namely the International Monetary Fund (IMF), the World Bank, the African Development Bank (AfDB) and the New Development Bank (NDB).  

At the close of 2022, we are still awaiting a response from the Finance Minister providing clarity on how this money has been spent.  South Africans have a right to know and are entitled to transparency in relation to IFI debt. Furthermore, during the month of October 2022, Oxfam South Africa, in collaboration with its partner, Centre for Applied Legal Studies (CALS) lodged a Protection of Access to Information Act (PAIA) request on the IMF $4.2 billion loan for emergency support to South Africa (under the Rapid Financing Instrument) to address the COVID-19 pandemic to determine the social impact of conditionalities associated with debt agreements which are often negotiated at the expense of much needed basic services.

Furthermore, South Africa is heavily affected by illicit financial flows (IFFs) and is ranked number 13 in terms of IFFs among developing countries. The Organisation for Economic Co-operation and Development (OECD) estimates that annually, South Africa is estimated to be losing $3.5 billion to $5 billion- more than 1 % of the country’s GDP – to IFFs. 

This erodes the total tax base and harms the capacity to maximise development. In a country that is staggering behind in its socioeconomic development mandate, it is crucial for the state to find progressive ways of increasing its tax base and to curb illicit financial flows in order to prioritise spending based on a commitment to the realisation of socio-economic rights enshrined in the constitution.  

Women are carrying the cost of the government’s failure to implement the National Health Insurance (NHI) and to provide universal health coverage for all. Women carry the burden of unpaid labour that arises from this failure. Furthermore, women are forced to care for sick relatives and children and rely heavily on state provided safety nets. While we commend the announcement to extend the social relief of distress grant (to March 2024) to advance post-COVID19 recovery, our view is that the government has an obligation to explore complementary social protection mechanisms such as the basic income grant to cushion marginalised communities who are often on the periphery of state interventions.   

Oxfam South Africa supports the call for a universal basic income grant and for the urgent implementation of a Covid 19 Recovery Plan that prioritises the vulnerable and for targeted development of sustainable food security systems. 

Furthermore, South Africa’s political landscape is characterised by brazen corruption, resulting in the looting of state coffers through a political project to undermine South Africa’s democratic project, which has entrenched a culture of impunity, resulting in the loss of an estimated R1.5 trillion over a five-year period of State Capture between 2014 and 2019. The erosion of effective governance, maladministration in state-owned enterprises (SOEs) has contributed to the erosion of trust between citizens and the state. Bailouts for SOEs, particularly Eskom, are not permanent solutions. More needs to be done to leverage the Just Energy Transition Partnership to unlock much needed financial resources to address the energy crisis in South Africa.

Finance Minister Enoch Godongwana’s medium-term budget falls far short of safeguarding the rights of marginalised communities and advancing sustainable livelihoods. It is tone deaf to the dire state of inequality, undermines socio-economic rights, and remains wilfully silent on illicit financial flows and IFI debt that could go far in funding much-needed social spending. South Africa as a country should aim to mobilise domestic resources through exploring viable economic alternatives such as amplifying productive capacity in the agricultural sector, advancing regional economic integration and trade across regional economic communities (RECs) and promoting infrastructural projects that scale job creation to boost the national fiscus and economic performance. These and other efforts to accelerate economic recovery will cascade the countries efforts to reduce poverty and inequality and transform economic 

For media queries and interviews contact: Gaopalelwe.Phalaetsile@oxfam.org.za | 0724005602