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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

Situation on the Bloemfontein Campus, and letter to parents

2016-02-28

Letter to parents from Prof Jonathan Jansen, Vice-Chancellor and Rector of the UFS

Statement by Prof Jonathan Jansen, Vice-Chancellor and Rector of the University of the Free State (UFS) about the situation on the Bloemfontein Campus

1.   As all of you know, last night we witnessed a really tragic event at Xerox Shimla Park on the Bloemfontein Campus on the occasion of the Varsity Cup rugby match between NMMU (FNB Madibaz) and UFS (FNB Shimlas).
2.   The game started at 18:30 and about 17 minutes into the match, a group of protestors sitting on the north-eastern side of the stadium decided to invade the pitch and disrupt the game in progress.
3.   After a short while, some of the spectators also invaded the field, chasing and brutally beating those protestors whom they caught.
4.   As a university leadership we condemn in the strongest terms possible the vicious attack on the protestors. Nobody, repeat nobody, has the right to take the law into their own hands. While the protests were illegal and disruptive, it did not harm to the physical well-being of the spectators.
5.   The reaction from the group of spectators, however, not only opened old wounds, it trampled, literally and figuratively, on the dignity and humanity of other human beings. This we condemn in no uncertain terms, and no stone will be left unturned to find those who acted so violently on what should have been a beautiful occasion that also brought families and young children together to enjoy an evening of sport.
6.   I cannot over-emphasise our level of disgust and dismay at the behaviour of the spectators. It is NOT what the University of the Free State (UFS) is about and we are working around the clock to gather evidence on the basis of which we will pursue both charges and, in the case of students, also disciplinary action on campus.
7.   At the same time, the invasion of the pitch is also completely unacceptable and we will seek evidence on the basis of which we will act against those who decided to disrupt an official university event.
8.   Clashes between students occurred afterwards on campus and members of the Public Order Policing had to disperse some of them. The situation was stabilised in the early hours of the morning.
9.   Disruption continued this morning (23 February 2016) when students damaged some university buildings, a statue, and broke windows. Additional reinforcements from the South African Police Service were brought in to stabilise the campus. Additional security has also been deployed.

Broader picture
10.   We are very aware of the national crisis on university campuses and the instability currently underway. While the UFS has been largely peaceful, we have not been spared this turmoil, as last night’s events showed.
11.   We are also conscious of the fact that even as we speak, various political formations are vying for position inside the turmoil in this important election year. In fact, part of the difficulty of resolving competing demands is that they come from different political quarters, and change all the time.
12.   We are therefore learning from reliable sources that the Varsity Cup competition is, in fact, a target of national protests in front of a television audience.
13.   And we are aware of the fact that these protests are not only led by students but also by people from outside who have no association with the university. Just as the violent spectators involved on Monday night also included people from outside the university.

The demands
14.   My team has worked around the clock to try to meet the demands of contract workers demanding to be in-sourced. In fact, this weekend past, senior colleagues sat with worker leaders in the township to try to find ways of meeting their demands. We were hoping that such an agreement would be finalised by Monday afternoon (22 February 2016), but on the same Monday morning workers and students were arrested after moving onto Nelson Mandela Avenue, after which the South African Police Service (SAPS) took over as the matter became a public safety concern outside the hands of the university. Since then, it was difficult to return the workers to settle on a possible agreement.
15.   The fact is that the UFS has been in constant negotiation with contract workers to provide our colleagues with a decent wage and certain benefits. In fact, towards the end of last year we raised the minimum wage from R2 500 to R5 000. We were in fact hoping that the continued negotiations would improve that level of compensation even as we looked at a possible plan for insourcing in the future. We made it clear that if we could insource immediately, we would, but that the financial risk to the university was so great that it threatened the jobs of all our staff. Those negotiations were going well, until recently, when without notice the workers broke away and decided to protest on and around campus.
16.   While these negotiations were going on, the Student Representative Council (SRC) on Monday 22 February 2016 also decided to protest. While the vast majority of our 32 000 students were in classes and determined to get an education, a very small group led by the SRC President decided to protest; some invaded the UFS Sasol Library and the computer centre, and with the President eventually made their way to Xerox Shimla Park on which route they confronted the police, interrupted traffic and in fact injured some of our security staff as well as police officials.
17.   The university is definitely proceeding to collect evidence on these illegal and violent acts and will also act firmly against students involved in these protests.

Summary
18.   The events of Monday night represent a major setback for the transformation process at the UFS. While we have made major progress in recent years—from residence integration to a more inclusive language policy to a core curriculum to very successful ‘leadership for change’ interventions for student leaders—we still have a long way to go.
19.   One violent incident on a rugby field and we again see the long road ahead yet to be travelled. As I have often said before, you cannot deeply transform a century-old university and its community overnight. We acknowledge the progress but also the still long and difficult path ahead. We will not give up.
20.   We have 32 000 students on our campuses; the overwhelming majority of them are decent and committed to building bridges over old divides as we have seen over and over again. So many of our students, black and white, have become close and even intimate friends working hard to make this a better campus and ours a better community and country. Like all of us, they are gutted by what they saw on Monday, but the hundreds of messages I received from parents, students, and alumni this past 20 hours or so said one thing—keep on keeping on. And we will.

The Big Read: An assault on transformation (Times Live kolom deur Prof Jonathan Jansen: 25 Februarie 2016)

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