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South Africa’s budget impasse teeters on the edge of an already fractured GNU

22 April 2025 | Story Terrance Molobela | Photo Supplied

Opinion article by Terrance Molobela, Lecturer in the Department of Public Administration and Management, University of the Free State.

Despite fierce opposition of the already passed National Fiscal Framework, the African National Congress (ANC) convened several meetings within and outside the Government of National Unity (GNU) mostly pioneered by its Secretary-General Fikile Mbalula who recently stated: “We are not trickers; we do not trick people. We engaged with ActionSA, and they said they do not want VAT; that’s not tricking anyone.”

One thing is clear, there is nothing binding on the GNU that after receiving additional budget proposals to raise revenue from ActionSA and Building One South Africa (BOSA), the VAT hike will be dropped. In fact, on 16 April 2025 in an interview with Newzroom Afrika the Minister of Finance Enoch Godongwana said: “I am not married to any increase or percentages”. The minister pointed out that the initial budget without VAT hikes was still on the table, however, he further highlighted that VAT increases remain Parliamentary policy issues. His advice is: “If you remove the 0.5% VAT increase, you must find an equivalent amount on the expenditure side to ensure the fiscal framework remains balanced.”

As the budget impasse stands, people need to understand that once the budget is passed by Parliament, the minister cannot unilaterally reverse the VAT increase. This is cemented by Section 12 of the Public Finance Management Act and Section 7(4) of the VAT Act. This ball is in Parliament’s court to reverse the budget and revenue proposal once alternative revenue generation proposal have been brought forward.

With 1 May 2025 looming, South Africans have a bitter pill to swallow as they will be charged R15.50% for every R100 spent. The media covered the VAT increase with rage and concerns from various communities across the country. The people feel punished by the GNU, while facing deep-rooted socio-economic problems like inequality, high unemployment, and poverty.

Despite the GNU deadlock and its fiscal crisis, several members within the ANC have unanimously admitted that the party has grossly failed to reach an amicable consensus within the GNU to freely support the VAT hike, hence it is vehemently opposed from all sides. Some critics suggest that the ANC-led government is poised to drop the VAT hike, but it’s unclear as to where and how the minister of finance would find the money to plug the fiscal gap.

Marriage may be sweet, but divorce is bitter

Both the ANC and DA knew ahead of time that forming the GNU with other parties was what is commonly known as “a marriage of inconvenience”. Before and on the wedding day, you both blind yourselves because of the sweet cake, joy, guests, and presents that long-lost friends will bring along. You create this beautiful picture that only exists in your head and hope that the other party shares a similar picture. But after you have entered the marriage, you then realise that you each functions on different levels and do not have complementary ideologies.

The DA’s ideologies on governance and policy is far the opposite of the ANC, and although it could work, the ANC have demonstrated their thirst for power and control, hence, their ability to share power equally remains a foreign language. DA leader John Steenhuisen has made it clear that they will not sacrifice citizens’ votes for a piece of cake but would rather fight and support a budget that caters for economic growth and job creation. This they have demonstrated by challenging the legality of the budget process in court, with hopes of blocking the implementation of a VAT increase, which has led to widening the rift within the fragile GNU.

The authenticity of the parliament – flawed budget process?

Amid mounting tensions created by the budget impasse, the National Assembly narrowly facilitated the national budget process, the DA, Economic Freedom Fighters (EFF), and uMkhonto weSizwe (MK) party rejected the budget, whilst the ANC-led government through coalescing outside GNU with parties like Action SA, secured majority support for the approval of the fiscal framework.

Parliament passed the 2025 National Fiscal Framework without the formal amendment of the mounting VAT and tax hikes. This was approved without binding recommendations, although budget committees suggested that the VAT and tax hikes be reconsidered at a later stage. As 1 May 2025 approaches for the VAT hike to kick in, reversing the VAT increase would be a lengthy process because it appears untenable.

The DA leader raised concerns that the Finance Committee acted ultra vires of the standing rules of Parliament, meaning the budget was not properly presented to the committee to reject or approve it, and that only a single proposal from the ANC was prioritised, whilst neglecting the DA proposal. This legal anomaly occurred under the watch of the National Assembly on the 2 April 2025. Hence, the DA have been challenging the budget.

One would ponder – “if the tables were turned, and the DA was in the position of the ANC and visa-versa, would the National Assembly opted to approve the budget framework?” I guess we would never know.

Where does the road lead now?

GNU: the ANC has already held several talks and meetings indirectly citing that the DA should hand over their divorce papers. But the president of the ANC needs the DA to remain in the coalition because of further economic shocks, which saw R1 trillion wiped out on the Johannesburg Stock Exchange (JSE). Investor confidence in the economy has hit rock-bottom, and the current trade wars have put pressure on multiple businesses to tighten their investment belts until it is safe to continue investing. The DA has not yet declared whether they want a divorce, but critics suggest that the Deputy President, Paul Mashatile, would be delighted if the DA left since they rejected the very same budget that they expect to reap from. As for ActionSA, it is unclear whether they have decided to join the GNU, but its leader Herman Mashaba has shown interest in joining the GNU, which most critics have weighed as a betrayal to the people of South Africa.

Ordinary citizens: It is time for South Africa’s citizens to brace themselves for the oncoming VAT hike. As much as the minister of finance has argued that it was necessary to stretch the already deeply embedded financial distress of citizens grappling with over-taxation of income, the bitter pill remains theirs to swallow. The 0.5% in VAT carries an underestimated distress for households who will be left alone to deal with increased prices of goods, services, and essentials.

What should be done thus far?

More tax on the people, goods and services kills jobs, which results in reducing revenue generation by government. To avoid further inflationary hikes, the government needs to approach the problem in an unusual way – this means placing strict rules and regulations on any government transaction that takes effect, deal with corruption and mismanagement at every sphere of government. Monies lost and stolen through unfinished projects should be recovered and ensuring that all state projects remain frequently monitored.

The government needs to change its ways of approaching industries, companies, and businesses to create jobs, and transfer some of their skills to the people of South Africa. The youth is yearning to be seen, supported, trained, and placed into the real world to unleash their potential, which might be something the economy needs to re-establish and position itself in the right direction to stir desired economic growth.

News Archive

CR Swart Memorial Lecture: Mr Cecil le Fleur

2006-08-08

Khoe and San call for government to speed up policy dialogue with indigenous communities

Mr Cecil le Fleur, leader of the National Khoe-San Consultative Conference and member of the executive management of the National Khoe-San Council, has called for a national policy on indigenous peoples to protect the human rights and special needs of indigenous people in South Africa.

Mr Le Fleur delivered the 38th CR Swart Memorial Lecture on the Khoe and San at the University of the Free State (UFS). He commended the UFS for its serious approach to the Khoe and San and for initiating initiatives such as a research project on the Griqua in which various aspects linked to language, -culture, -history, - leadership, their role in the South African community (past and present) and the conservation of their historical cultural heritages will be covered.

“The policy dialogue with indigenous communities initiated by government in 1999 and supported by the International Labour Organisation (ILO), has been exceedingly slow, owing to political and bureaucratic problems,” said Mr Le Fleur.

According to Mr Le Fleur the slow pace is also impacting negatively on the United Nations’ efforts to expand the international standards and mechanisms for human rights so as to include the special needs of indigenous peoples.

“The successful adoption of a South African policy would probably have a major impact on the human rights culture of Africa and, more specifically, on the UN system,” he said.

“South Africa has a powerful moral authority internationally and is willing to use this authority in multilateral forums. At this stage, however, South Africa’s Department of Foreign Affairs (DFA) may not take an official position on UN instruments and declarations pertaining to indigenous issues, until the Cabinet has resolved its own domestic policy position,” he said.

According to Mr le Fleur it therefore came as a great surprise when the DFA brought out a positive vote in the UN for the adoption of the "Draft Declaration on the Rights of indigenous Peoples" in June this year, even before the completion of the policy process.

Policy consolidation in South Africa is the primary key to creating a new policy climate in Africa in order to protect the rights of indigenous peoples. “The existing constitution of the Republic of South Africa is one of the most liberal on the continent, and embraces the concept of redress of past discrimination. It already includes a clause (Section 6) making provision for the protection of language rights for Khoe and San peoples - the fist peoples of southern Africa,” he said.

“If South Africa can effectively integrate this ‘third generation’ of collective rights within an existing democratic constitution, this will send a clear message to Africa and the world that indigenous rights are a necessary component of human and civil rights in modern democracies,” he said.

Mr Le Fleur proposed an institutional framework based on set principles that would satisfy the needs and aspirations of the Griqua and other first indigenous peoples in South Africa. “The proposed framework was based on the notion of vulnerability as a result of colonialism and apartheid, which stripped us of our indigenous identity, cultural identity and pride as people. This injustice can hardly be addressed within the existing mechanisms provided by the current text of the Constitution,” he said.

Mr Le Fleur also proposed that the principles of unique first-nation status, as recognised in international law, should be applied in the construction of the framework of the constitutional accommodation for the Khoe and San.

Mr Le Fleur further proposed that the Khoe and San’s indigenous status in constitutional terms must be separate from the constitutional acknowledgement of their status as a cultural community, as envisaged in sections 185 and 186 of the Constitution of 1996.

According to Mr Le Fleur, the suggested mechanism should make provision for structures such as:

A statutory representative council for First Indigenous Peoples of South Africa at a national level;
a separate Joint Standing Committee on Indigenous and Traditional Affairs, in both the National Assembly and the National Council of Provinces on which the Khoe and San can be represented;
a representative structure for the Khoe and San in the legislature of each relevant province; and
ex officio membership in the relevant structures of local government.

Media release
Issued by: Lacea Loader
Media Representative
Tel: (051) 401-2584
Cell: 083 645 2454
E-mail: loaderl.stg@mail.uovs.ac.za
24 August 2006

- Full lecture
- Photo gallery

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