Cape Chamber Summary and Comment on WC Medium Term Budget Policy Statement

The 2024 Western Cape Provincial Government MTBPS (Medium Term Budget Policy Statement), tabled together with the Provincial Government’s 2024/25 Adjustment Estimates and the Municipal Economic Review and Outlook (one for each of the five districts and one for the Metro), was tabled on the 26 November 2024.

These collectively offer an overview of the Provincial Government’s estimated fiscal challenges, steps to either overcome or ameliorate these, a subregional and provincial socio-economic picture, and the policy goals that the Provincial Government intends to pursue over the next medium term.

It cites five main objectives of the GNU formation: inclusive economic growth; job creation; reduction of poverty; ameliorating the cost of living; and building an ethical, capable and developmental state.

It laments the carry-through effect to the tune of R8,4 billion from austerity cuts to the equitable share transfers by the National Government in the 2021 and 2024 Medium Term Expenditure Framework (MTEF) years.

Regional economic growth of 1% in 2024 and 2.2% in 2025 is expected, further reducing the current 19,6% unemployment rate in the Province.

Budget priorities have been categorised under four main headings:

1.    Growth for Jobs, targeting a R1 trillion economy by 2025 with a 600 000 growth in employment, via:

• investments in small businesses, 
• improving the ease of doing business, 
• boosting exports and investments, 
• revival of the tourism industry, 
• advancing skills programmes (targeting the youth), and
• an infrastructure pipeline and spatial planning focus.

2.    Safety, by amongst others, halving the province’s murder rate by the year 2030.

3.    Wellbeing and dignity through scaling up housing opportunities, early childhood development programmes, food security, healthcare resilience,  cost of employees review and climate change, disaster, water and energy risk mitigation.

4.    Innovation, culture and good governance enhancement, such as building a fiscal futures model, integrated data systems, AI implementation, inclusivity and a strong economy.

5.    Engagement with the National Treasury via phased updates to the provincial equitable share formula, stating that the Western Cape with the third most population only receives the fifth largest allocation.

Schematically, some 40 budget policy priorities are depicted overleaf. As should be noted from the above and the schematic layout, the set of budget policy priorities is going to require a significant effort from the Provincial Government to adequately draw in the affected parties, whether they be local government (with the City of Cape Town a major player), national departments and entities, various business sectors (inclusive of the taxi industry) and labour, to cite a few.

An additional challenge is that this programme of action coincides with relatively weak relationships between the Province and the aforementioned affected parties, without whom most of the intended objectives will not be possible to attain.

 
What is potentially laudable is the intended creation of an “Interconnected Data Ecosystem”, presumably to track the composition and delivery of all the intended policy priorities by (a) designated contributor(s) against its/their agreed milestones. 

For that to be useful, it will have to be constructed and viewable in a transparent manner(such as an online dashboard) that would allow for open viewability, due accountability and contribution review by all affected parties. Similarly, the ability to evaluate the degree of progress against the stated delivery parameters, where and by whom. 

If not, then such a composite endeavour will most likely struggle to get out of the starting blocks.

Similarly, while the target to grow jobs by 600,000 is laudable, this will require an implementable strategy to accelerate economic growth. The Growth for Jobs Initiative does not provide this clear strategy. Logically however, a clear plan to accelerate exports from the Western Cape must be a fundamental driver of accelerated economic growth. 

The question is where can this export growth come from given that there are natural resource constraints to the agriculture sector’s contribution to exports? 

The answer is that this export growth must primarily come from the Province’s existing manufacturing exporters, and the Western Cape Government is advised to work intimately with these manufacturing exporters to identify their company-specific obstacles to growing their exports, and then to assist exporters in addressing and reducing these obstacles so that they can leverage off their existing capacity and meaningfully grow the Province’s manufactured exports. 

Of course, apart from job creation possibilities, bringing in private sector operators to assist with selected port operations such as the Cape Town Container Terminal and developing inland freight villages is also critical to ensure these exports can timeously and cost-efficiently reach their international customers and markets. 

Jacques Moolman
President of the Cape Chamber of Commerce and Industry