South Africa’s Minister of Finance, Malusi Gigaba gave the 2018 Budget Speech on Wednesday afternoon (Feb 21), touching on key industry points. 

“South Africa needs to be bold and co-ordinated in building sectors where we have competitive advantage and can be truly world class,” said Gigaba. These included various sectors with tourism being one. 

SA’s 2017 GDP growth projection was revised and is anticipated to grow in 2018. Gigaba expanding on this, said: “While this is a good start, there are immediate policy interventions that we need to make to ensure that we create the right environment for investment, growth and employment.”

Drought

The national government would continue to work with municipalities to effectively respond to the water crisis, therefore a provisional allocation of R6 billion (€418m) had been set aside for 2018 and 2019 for several purposes, including drought relief and public infrastructure investment, explained the Minister. 

Allocation for drought response funds for water infrastructure projects and the Expanded Public Works Programme (EPWP) will be made in the Adjustment Budget, providing short term assistance, including disaster relief grants for provinces and municipalities worth R473 million (€33m) in 2018 and 2019. 

Alan Winde, Minister of Economic Opportunities said he welcomed the allocation of R473 million in drought relief funds, commenting on the Cape’s water situation: “The province has already spent R72 million (€5m) of its own funds, and a further R40 million (€2.8m) in national funding on drought relief support. In total, R369 million (€25.7m) has been diverted from our core functions to supplement disaster funding since 2015/16. By delaying the national declaration of the drought as a disaster, the government is also delaying relief efforts.”

During the State of the Nation Address (SONA), SA’s President Cyril Ramaphosa placed the spotlight on the tourism industry. Cape Town Tourism CEO, Enver Duminy, added: “We recognise that this growth will boost the economy, while providing and sustaining employment. This can be done in a collaborative effort between government, industry and our citizens, as we strive to grow our economy while seeking to save our water resources.” 

Fuel increase

The main tax proposals for the 2018 Budget include an increase in the value-added tax (VAT) rate from 14% to 15%, effective as of April 1 and a 52 cents per litre increase in the levies on fuel, made up of 22 cents per litre for the general fuel levy

Evelyn Patrick, Operations Manager at Snappy Coach Hire told Tourism Update that it was a disaster for small transport businesses, as clients were already under the perception that smaller vehicles were expensive and the increase pushed up rates further.

“It has been considered to rather have a rack price and add the fuel levy separately so that clients can see where their money goes.

”We are all aware that the government needs make up some funds, however it feels that we are all being squeezed with an increased levy. This will not only affect my business but may others, ultimately the consumer across the board,” concludes Patrick. 

Suzette Vorster, National Sales Manager for Springbok Atlas Charter, said it would honour its 2018 rates despite the increase. The company will absorb the costs this year, and most likely next, as clients have already started selling packages. 

However, Vorster did mention that the increase would be taken into consideration when calculating future rates.

State-owned companies

Gigaba touched on state-owned companies, those that underpin the country’s economy, such as transport and electricity. 

During Ramaphosa’s recent address to the nation (SONA), he committed to intervene in order to stabilise and revitalise state-owned enterprises. He outlined that measures would be taken to implement further meaningful and far-reaching reforms to these state-owned companies. 

Gigaba mentioned what had been done thus far, including appointing a new board, CEO and restructuring officer at SAA, as well as implementing a long-term turnaround strategy for the entity. 

“State-owned companies are expected to fund their own operations,” said Gigaba.