Cape Town – Finance Minister Pravin Gordhan has announced a number of spending areas that are aimed at boosting economic activity and growth across different sectors of the economy.
Tabling his Budget Speech in the National Assembly on Wednesday, the Minister said several hurdles that hampered growth, including drought conditions, production stoppages associated with industrial disputes and energy constraints, had since been mitigated in most parts of the country.
“Effective implementation of these and other programmes and initiatives will set us on a higher growth trajectory than currently projected. Progress in engagements between government, the business sector and social stakeholders is imperative,” the Minister said.
Nearly R30 billion for agriculture, rural development and land reform
National Treasury said in its Budget Review that spending in these sectors is aimed at stimulating rural development and food production, and assist emerging farmers.
Expenditure is expected to grow to R29.8 billion by 2019/20 at an average annual rate of 4.7%, accounting for 1.9% of total government spending over the next three years.
Over the next three years, government will spend more than R5.5 billion on Comprehensive Agricultural Support Programme conditional grants to provide about 435 000 subsistence and smallholder farmers with equipment, fencing, fertilisers and seedlings, improved extension services and repairs to flood-damaged infrastructure.
National Treasury said, meanwhile, that the Department of Rural Development and Land Reform will intensify the One Household One Hectare initiative to provide land to the landless and fast-track the establishment of agri-parks in district municipalities.
“In areas where land has been distributed, the department will provide mechanised irrigation, mentorship and inputs so that redistributed land becomes productive and profitable.
“About R4.3 billion will be spent on this programme over the medium term. Since it began in 2008/09, more than 4.7 million hectares of land have been acquired for redistribution and 1 496 farms have been created.”
R3.9 billion for SMMEs, cooperatives
National Treasury said over the medium term, R3.9 billion will be provided for small, medium and micro enterprises and cooperatives.
The National Informal Business Upliftment Scheme aims to develop more than 5 000 informal businesses and cooperatives through financial and other support. This will help improve competitiveness, promote entrepreneurship, advance local content programmes and facilitate market access.
The Black Business Supplier Development Programme will provide about 2 000 small, medium and micro enterprises with financial support to help them become competitive sustainable, job-creating firms.
Promoting industrialisation and economic transformation
To promote industrialisation, economic transformation and inclusive growth, government continues to provide incentives for Special Economic Zones (SEZs), critical infrastructure and manufacturing.
Over the next three years, R4.2 billion will be allocated for industrial infrastructure projects, with 32 strategic projects expected to be approved for SEZs and industrial parks.
About 1 450 companies are expected to benefit from the Manufacturing Incentive Programme, which is allocated R9.6 billion over the medium term, including R1.3 billion to bolster competitiveness.
Government will allocate R95 million to the Industrial Development Corporation to support the establishment of the Steel Development Fund, intended to improve the competitiveness of foundries and steel fabricators.
New performance incentive for provincial roads maintenance
National Treasury said road infrastructure expenditure is expected to increase from R40.8 billion in 2016/17 to R47 billion in 2019/20.
To improve spending efficiency, a new performance incentive is introduced in the provincial roads maintenance grant in 2017.
According to National Treasury’s Budget Review, despite a budget reduction of R687 million over the next three years, the South African National Roads Agency Limited plans to resurface 3 200km and strengthen 1 475km of national roads, ensuring that 95% of the national network meets global standards.
R1.9 billion allocated to broadband
National Treasury said efforts to expand access to high-speed internet to low-income households have been delayed.
“With R1.9 billion allocated to broadband over the medium term, the Department of Telecommunications and Postal Services plans to connect 6 135 schools and public buildings to internet services at a speed of 10 megabits per second by 2020.”
Spending on water infrastructure flows over
Despite a reduction of R584.5 million, growth in spending on water infrastructure remained strong.
“The Water Trading Entity, which is responsible for water resource management, receives a medium-term allocation of R6.2 billion.
“These funds support a long-term solution for acid mine drainage in the Witwatersrand basin, bulk distribution infrastructure for the Olifants River Water Resource Development Project, and improvements to dam safety and storage capacity.”
Expenditure on health
To achieve a sharp reduction in the country’s disease burden and to build a strong public health system, government spend in this area will grow from R170.9 billion in 2016/17 to R217.1 billion in 2019/20.
“Health expenditure growth is mainly driven by expanded provision of antiretroviral treatment, which now reaches 3.5 million people. Since September 2016, government has been implementing a universal test-and-treat policy, offering all patients diagnosed with HIV antiretroviral treatment.
“To sustain this initiative, R1 billion has been earmarked for the comprehensive HIV, AIDS and TB conditional grant in 2019/20. As indicated in Chapter 1, government plans to launch a national health insurance fund during 2017/18,” Treasury said.
The Minister said, meanwhile, that government would also spend:
- R3.9 billion for the Council for Scientific and Industrial Research;
- An additional R494 million for tourism promotion;
- An additional R266m to support the aquaculture sector and realise the goals of the Oceans Economy Phakisa Operation.