Banking Association South Africa: Thenji Nhlapo on the 2015 Budget Speech

I congratulate Finance Minister Nhlanhla Nene on his maiden budget speech and outlining the overarching fiscal and macroeconomic framework for implementing Government’s medium term strategic priorities.

Acknowledging that the Budget was developed within a challenging and constrained local and global socio-economic context, the Finance Minister has achieved a broad balance in addressing various short, medium and long-term imperatives.
We now look to Parliament to also take forward this approach through its legislative and oversight mandate, as well as the public consultation process on the Budget, the Budget Review and Recommendation Process (through the Parliamentary Budget Office) and the tabling of Budget Votes.
We welcome the confirmation by the Minister of Finance that the “Twin Peaks” legislative reforms establishing two new regulatory authorities for market conduct and prudential regulation will be tabled in this year.
South Africa’s banking systems remain sound, safe and secure due to continued regulatory enhancements and strengthening, and consistent efforts by the banking sector to ensure responsible lending, inclusive banking, consumer protection and sound market conduct practices.
It is for these reasons that our banking system has been consistently ranked as a top performer globally for stability.
Beyond these effects of effective regulation, the banking sector can only do sustainable business in a conducive and enabling environment for meaningful socio-economic development.
I therefore recognise the Minister’s commitment and emphasis through the budget framework to support Government interventions in respect of:
• A fair tax increase to generate revenue, without discouraging investment and capital flight
• Small business development and support
• The Jobs Fund, education and training
• Urban development and investment

Whilst the temporary increase in the electricity tariff is aimed at supporting the country to manage supply and demand during the prevailing energy challenge in the short term, the medium to long-term focus must entail a detailed focus on energy master planning across a diverse range of energy value chains to ensure reliability and security of supply. An essential element of this must be improvements in efficiency within ESKOM and a more aggressive approach on its part to enable increasing private sector involvement in the provision of energy.
The Budget is however not a panacea to immediately or aggressively resolving all of our socio-economic and developmental challenges and objectives.
Whilst the Budget is an important instrument and tool, in and of itself it can only achieve so much in the context of the current economic and fiscal climate. We must urge government to ensure positive and consistent messaging to attract investment from the private sector, both locally and globally. The plethora of proposed legislation and discussion documents on the security industry, commercial agricultural land and ownership of land by foreigners do not instill confidence in investors and government must follow the Minister’s lead in ensuring such negative messages are not conveyed.
The Budget thus provides a guiding framework within which all Government departments and agencies must consistently operate within, in order to achieve a coordinated approach to stimulating and driving economic growth, job creation and an enabling environment within which to sustainable business. This will go a long way to ensure higher impact policy alignment, implementation and certainty across Government.

Issued by Banking Association South Africa

Edited by: Creamer Media Reporter