By: Takudzwa Makoni

Nelson Mandela, as quoted by Miss Ina Cronje

“Houses, electricity and job creation top the list of demands of thousands of people who were consulted regarding the national and provincial budgets.” 
This according to Miss Ina Cronje, MPL MEC for Finance, on the tabling of the 2014 MTREF Budget in the Provincial Legislature.

Miss Cronje’s address, while acknowledging that there was still much to do, identified the following as indicative of the progress South Africa’s economy had achieved:

-A stable democratic country at peace with itself.
– The economy has created 5.9 million jobs since 1996.
– In the last 19 years, the South African economy grew by 77% in real terms.
– Near-universal school enrolment and the steady increase in average years of education have improved the life prospects of millions of South Africans. University enrolment has doubled.
– Access to basic services has grown rapidly.
– There has been a significant increase in black participation in the economy, most visible in the transformation of the middle class.
– Black ownership of the Johannesburg Stock Exchange (JSE) listed shares increased from 5% in 1995 to 21% in 2012. The percentage of executive managers who are black (both public and private sector) increased from 13% in 2000 to 32% in 2012, and senior managers who are black increased from 19%in 2000 to 39%in 2012. Africans now make up the majority of South Africa’s middle-class.
– Well-regulated and well-managed financial institutions are able to respond to changing global conditions.
Miss Cronje, in reference to the adoption of the National Development Policy, acknowledged that the NDP served to clarify the nation’s goals and provide a workable framework within which these goals could be realised. 
According to Cronje, “Our budget must therefore progressively realise our goals”, namely:
1. Job Creation
2. Human Resource Development
3. Human and Community Development
4. Environmental Sustainability
5. Strategic Infrastructure
6. Good Governance and Policy
7. Spatial Equity
Cronje was clear that in order for these goals to be met, The NDP and associated initiatives and entities would have to demonstrate synchronicity, acknowledging the priorities laid out in the Provincial Growth and Development Plan {PGDP} and the Provincial Growth and Development Strategy {PGDS}. 

Cronje went on to acknowledge that the South African budget did not exist in a vacuum, and was informed to a large degree by the international context. She acknowledged that while the global economy’s recovery was slow, growth was projected to be slightly higher in 2014 compared to October 2013 forecasts, “largely due to the continuing recovery in the advanced economies.”
 The world output is currently expected to increase at 3.7% in 2014, and rise to 3.9% in 2015 (IMF, 2014).
Regionally, the economy was on the right track, with emerging market economies expected to continue to account for the bulk of global growth. Economic growth in emerging market economies, according to Cronje, is estimated to reach 5.1% and 5.4% in 2014 and 2015 respectively. “Growth prospects in emerging market economies are constrained by the slow implementation of structural reforms, high inflation, fiscal imbalances and tight financial conditions”, she qualified.
Cronje shared her optimism for the Sub-Saharan African economy, with the growth rate expected to accelerate to 6.1% in 2014.
“Government remains committed to a counter-cyclical fiscal policy. However, the fiscal stance maintains an expenditure ceiling, supported by critical measures and policies to improve spending efficiency”, said Cronje. 
She went on to note that global economic realities, “limit the space available to the fiscus over the next years”, and pointed to the significant current account deficit, as an example of these realities. “The projected debt-service costs for 2014/15 are R5 billion higher than estimated in October 2013. According to government’s debt management plan the consolidated budget deficit is expected to narrow from 4.0% of GDP in 2013/14 to 2.8% in the outer year, supporting a stabilisation of debt at 44.3% of GDP.”

In mitigation, Cronje offered that despite these somewhat alarming debt figures, “tax revenues have remained buoyant in 2013/14 and the revenue estimate presented in last year’s budget has been reviewed upwards by R1 billion to R899 billion.” She went on to note that the onus for responsible spending was on individuals, referencing the percentage of household debt to GDP towards the end of 2012- 47.6%.
In response, government has initiated significant savings reforms intended to better insulate South African’s from unmanageable debt:
-Changes to the taxation of contributions to retirement funds will provide relief to most retirement fund members and encourage them to save for retirement.
-To encourage investments in bank deposits, collective investment schemes, exchange-
traded funds and retails savings bond tax-preferred savings accounts will proceed.
-Finance Minister Pravin Gordhan also mentioned in his budget speech the agreement with the Association of Savings and Investment of South Africa on a way forward to reduce the level of charges for retirement savings products. Draft regulatory reforms will be published shortly. In that regard, citizens will be kept posted through the KwaZulu-Natal Financial Literacy Association, our public private partnership that co-ordinates and drives financial literacy programmes in KZN. 

Referring specifically to KZN, Cronje stated that, “while expected growth was 2.4%, it will most probably come in at around 2% for 2013. The projected 3% in 2014 has been lowered to 2.6%, and 3.4% is projected for 2015.”
KZN’s GDP, estimated at R322.2 billion in 2012, is a significant contributor to the national GDP, coming in well above the 14.8% national average.nificant contributor to the national GDPdividuals, referencing thatnternational context

Notable achievements in the province include:
-Sustainable public finances, enabling further service delivery. 
-KZN is the fastest growing destination for tourism in the country. 
-Inflation in KZN was estimated at 5.2% in 2013, lower than or equal to the National
Inflation (Stats SA).
– Of the nine provinces KZN has created the second most jobs with 128 000 jobs from October
2012 to December 2013.
“The provinces total Revenue over the MTEF has risen to R96.9 billion, R103.7billion, and R106.5 billion in the outer year.”

Cronje indicated that allocation of additional funds to departments was as a result of Own Revenue collected by departments, as well as using the provincial cash resources which remain available from the 2012/13 positive net financial position and the 2013/14 budgeted contingency reserve.

-The Office of the Premier receives an additional allocation of R56.928 million over the 2014/15 MTEF. 
-The Provincial Legislature receives an additional R19million in 2014/15
-Agriculture, Environmental Affairs and Rural Development receives R70.498 million in 2014/15
-Economic Development and Tourism receives R110.043 million over the 2014/15 MTEF
-Education receives R50 million, R60 million and R65 million over the 2014/15 MTEF
-Provincial Treasury receives funds for various transversal projects, with R213.058 million allocated in 2014/15, R123.035 million in 2015/16 and R90.325 million in 2016/17
-Health receives R46.777million in 2014/15, R880 000 in 2015/16 and R670 000 in 2016/17 for the take-over of McCord Hospital and the operational costs of St. Mary’s Hospital
-Community Safety and Liaison receives R7.723million in 2016/17 only. This is in line with an agreement reached between the MEC for Finance and MEC for Community Safety and Liaison that any under-spending on Compensation of employees will be rolled over for the Department to implement its new structure which is informed by the Civilian Secretariat for Police Services Act.
-The Department of Co-operative Governance and Traditional Affairs receives R38.250 million in 2014/15
-Transport receives R60 million per year over the 2014/15 MTEF to assist the Department with the spending pressures they are experiencing with their road maintenance and construction projects.
-Social Development receives R31 million in 2014/15, being the suspension of funds relating to the Isibindi model from 2013/14 as the Department indicated that these funds will only be utilised in 2014/15, in line with the approved implementation plan.
-Public Works receives an additional R652.500 million over the 2014/15 MTEF
-Arts and Culture receives an additional R59.056 million over the 2014/15 MTEF
-Sport and Recreation receives an additional R52.975 million over the 2014/15 MTEF
-KZN’s conditional grant allocation increases by R1.983 billion in 2014/15 and R1.664 billion in 2015/16 while decreasing by R261.168 million in 2016/17
Provincial infrastructural changes were also mentioned in Cronje’s address. The Transport, Health and Educational departments were specifically mentioned as recipients of infrastructural investment, with early childhood development acknowledged as playing a key role in the success of the provinces education imperatives.

The Province is budgeting to spend R37.200 billion over the next two years on infrastructural development. The Department of Transport alone will spend R21.105 billion over the 2014/15 MTEF on numerous infrastructure projects, which is up from the R19.381 billion budgeted over the 2013/14 MTEF The untold opportunities for economic growth are myriad, and means good news for the provinces business sector.
The Department of Health’s infrastructure budget over the 2014/15 MTEF is R3.029 billion.
The department of Human Settlements is slated to spend R9.612 billion over the 2014/15 MTEF.
The budget for the Provincial Legislature increases from R454.820 million in 2013/14 to R480.352 million in 2016/17, which is an annual average growth of 1.8% in nominal terms.
The Agriculture, Environmental Affairs and Rural Development increases expenditure from R2.850 billion in 2013/14 to R3.241 billion in 2016/17, which is an annual average increase of 4.4% in nominal terms.
The Economic Development and Tourism’s budget allocation increases from R1.979 billion in 2013/14 toR2.103 billion in 2016/17, showing nominal growth of 2.0%.
The budget allocation for Provincial Treasury increases from R653.971 million in 2013/14 to R759.449 million in 2016/17 which is an annual average nominal growth of 5.1%.
The budget allocated to the Department of Health increases from R29.141 billion in 2013/14 to R33.822 billion in 2016/17.
The budget of the Department of Human Settlements increases from R3.591 billion in 2013/14 to R3.908 billion in 2016/17, which is an annual average nominal increase of 2.9%.
The budget allocation of the Department of Community Safety and Liaison is set to grow from R171.347 million in 2013/14 to R198.470 million in 2016/17, which is an annual average nominal increase of 5.0%.
The Royal Household’s budget allocation decreases from R68.746 million in 2013/14 to R59.549 million in 2016/17. This is a nominal decrease of 4.7%.
The budget of the Department increases from R1.246 billion in 2013/14 to R1.436 billion in 2016/17, showing an average annual increase of 4.8%in nominal terms.
The budget allocated to the Department of Transport increases from R8.046 billion in 2013/14 to R10.002 billion in 2016/17 which shows an average annual growth of 7.5% in nominal terms.
The budget of the Department of Social Development increases from R2.316 billion in 2013/14 to R2.768 billion in 2016/17, which is an annual average increase of 6.1% in nominal terms.
The budget of the Department of Public Works increases from R1.314 billion in 2013/14 to R2.046 billion in 2016/17, reflecting an average annual nominal growth of 15.9%.
The budget of the Department of Arts and Culture increases from R691.026 million in 2013/14 to R805.982 million in 2016/17, showing nominal growth of 5.3%.
The Department of Sport and Recreation’s budget increases from R401.524 million in 2013/14 to R435.024million in 2016/17, showing an average annual nominal growth of 2.7%.
The Department of Sport and Recreation’s budget increases from R401.524 million in 2013/14 to R435.024million in 2016/17, showing an average annual nominal growth of 2.7%.
 The province will be pleased to note that according to Cronje, “The largest portion (40.8%) of the budget continues to go to Education. The Education budget is set to increase from R37.597 billion in the 2013/14 Adjusted Appropriation to R42.882 billion in 2016/17. This shows an average annual nominal growth of 4.5%.”