“South Africa’s economic growth rate is far too low to address its poverty and unemployment challenges” (Minister of Finance, Enoch Godongwana, 26 October 2022)
Finance Minister Godongwana’s 2022 Medium-Term Budget Policy Statement (MTBPS) makes an admission about the South African government’s failure to decisively deal with the country’s triple challenges of poverty, unemployment and inequality. The Finance Minister acknowledges South Africa’s economic growth is “too low to address its poverty and unemployment challenges.” The MTBPS further shows that the government has no credible plan for reducing inequality.
South Africa’s low economic growth is really no surprise. Economic growth has been stubbornly low for several years and as a result, the country’s unemployment rate is one of the highest in the world. About 2.3 million people lost jobs from the beginning of 2020. The economic outlook is still not promising given the contraction in major sectors of the economy, among other reasons. With such a dire economic outlook there is no hope of recovering these lost jobs, let alone creating any significant number of new decent job opportunities.
Various studies have demonstrated the socio-economic benefits of land and agrarian reform, including increasing employment opportunities, which government fails to appreciate. Yet, the MTBPS makes minimal funding allocation for land and agrarian reform. The government’s failure to sufficiently fund agrarian reform has led to our over-dependence on retailers for basic food.
Consequently, South Africa is especially vulnerable to global market shocks, making food more unaffordable which increases household food insecurity. The government has sacrificed strengthening local food systems in the interests of unsustainable industrial farming practices. This budget reveals that the current administration has no intention of honouring its land and agrarian reform promises, despite that land and agrarian reform will help mitigate food insecurity, unemployment and poverty.
Given the National Treasury’s own inflation forecast of 5,1%, social spending will actually decrease in real terms. This reduction in health, education as well as safety and security spending when we have a structural unemployment crisis, will be devastating for the millions who are already experiencing the brutal reality of hunger, poverty and unemployment. Due to the limited employment opportunities, millions of poor and unemployed people are completely reliant on public services which are now under further threat because of the government’s commitment to austerity budgeting.
The governing party has also betrayed its constitutional obligation to progressively implement the Basic Income Grant (BIG). Instead, the budget only allows for a one-year extension of the R350 Social Relief Distress Grant without increasing the amount. This is despite the real value and purchasing power of the R350 SRD grant having decreased significantly , due to inflation, since it was first implemented in 2020.
The 2022 MTBPS shows that the poor are on their own.