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South Africa’s budget conundrum: The link between coalition politics and the budget crisis?

11 March 2025 Photo Supplied

Budget Speech Opinion 2025 — Dr Ambrosé du Plessis and Terrance Molobela, Lecturers in the Department of Public Administration and Management, University of the Free State.

Opinion article by Dr Ambrosé du Plessis and Terrance Molobela, lecturers from the Department of Public Administration and Management, University of the Free State.

The mechanistic administrative cog stemming from the sixth administration, through which policy development and implementation took place, has created a false sense of reality regarding the African National Congress (ANC)’s authoritative position in South Africa’s political landscape. The notion that the ANC remains the central political force in the country is increasingly proving to be a fallacy, especially in the face of the changing dynamics within the so-called Government of National Unity (GNU). Even though President Cyril Ramaphosa dutifully signed off on key legislative acts such as the National Health Insurance (NHI), the Basic Education Laws Amendment (BELA), and the Expropriation acts, the ANC, and indeed the broader GNU, have grossly underestimated the complexities of coalition politics.

One of the clearest illustrations of this miscalculation was the latest budget ‘negotiations’, which exposed the growing fractures within the governing coalition. With the budget tabled just two hours before presentation, it became evident that the coalition parties – especially the ANC – are facing a harsh political reality. In a move that has shocked GNU parties, the decision to raise value-added tax (VAT) by 2% has turned into a bone of contention. This cutthroat measure, aimed at generating an additional R58 billion, has sparked fierce opposition from within the very government it seeks to support. The bitter VAT debate has led to a near standstill in the budget process, with some GNU parties staunchly opposing it, while others view it as a necessary evil.

New can of worms

The proposal to raise VAT is indicative of a deeper issue. It is, quite frankly, a regressive measure in an economy already battling a cost-of-living crisis. Raising VAT disproportionately impacts the lower and middle classes, who spend a higher percentage of their income on consumption. This move is naïve at best. VAT might raise substantial sums, but it does little to stimulate the economy or promote productivity, both of which are sorely needed to grow South Africa’s GDP and reverse the country’s economic downturn. At this moment in time, the country cannot afford to further burden a shrinking tax base.

In addition, the VAT conundrum has opened a new can of worms. The Democratic Alliance’s (DA) publicly proposed budget goes beyond the initial 2% VAT increase, challenging the secrecy with which the failed budget was concluded. More importantly, it questions the political and financial ideological foundation on which the initial budget was compiled by the ANC, led by Minister of Finance Enoch Godongwana. There can be no doubt that the DA’s shadow budget, particularly its cost-containment measures, has thrown a spanner in the works of a deep administrative state. At this juncture, the lingering question is – can the true Minister of Finance please step forward? With various proposed budgets from the GNU parties, one can only wonder if the GNU is now officially facing a Pinocchio dilemma. This identity crisis emerged when the ANC indicated that it would now turn to the Economic Freedom Fighters (EFF) – who also opposes the 2% VAT increase – to approve the budget, although the EFF recently rejected the call for negotiations with the ANC and considered it a general discussion. From this stance, it is clear that the coalition game will be played both within and outside the borders of the GNU.

One cannot help but ponder how divergent political ideologies and principles are affecting government expenditure and revenue collection. Gone are the days when the ANC held a dominant, almost unquestionable position in government, able to dictate the terms of the national budget. Today, the ANC's reduced majority has forced it into an awkward position of compromise and negotiation, with the Minister of Finance increasingly serving as a ceremonial figure rather than an authoritative decision-maker. In years past, the State of the Nation Address (SONA) and the subsequent budget speech were seamless events under ANC leadership. But now the budget process has become an all-consuming political battleground, with ideological differences and party interests shaping every decision.

GNU a ‘death sentence’

The ANC's once-solidified grasp on the country's governance is now being tested in ways the party never anticipated. The ruling coalition is no longer a harmonious entity, but a group of political adversaries forced into uneasy alliances for the sake of governance. The impact of this fractured cooperation is glaringly evident in the stalling of critical national decisions such as the budget. What was once a party-centred process where consensus was driven by a unified political party, has now become a multi-party endeavour marked by negotiation, delay, and endless political wrangling.

Reflecting on the experience of the 1996 Government of National Unity led by Nelson Mandela, one sees a stark contrast. Despite hostilities within the tripartite alliance, that government was still able to implement policies and drive the country forward. However, the current GNU coalition partners have yet to demonstrate a similar level of cooperation and trust. In fact, the words of former Deputy President FW de Klerk seem eerily prophetic today. In his 1996 resignation statement, De Klerk described the GNU as a ‘death sentence’ for a meaningful government consensus. He feared that continued participation in the coalition would weaken the National Party’s influence and undermine democratic governance.

In many ways, these words echo the current state of the GNU. The budget process has become a metaphor for a government on the brink of collapse. Consultation among the political parties within the GNU has become a source of paralysis rather than progress. The government’s inability to align itself on critical issues such as the national budget, which totals more than R2 trillion, raises serious questions about its ability to move forward.

The so-called marriage of inconvenience between the coalition partners appears increasingly centred on securing positions rather than creating policies to address the pressing needs of South Africa’s citizens. The budget, a document that should have been a focal point of discussion since the formation of the coalition, has been delayed until the 11th hour. This delay in addressing the country’s fiscal needs points to a broader failure within the GNU. The South African economy, already battered by years of stagnation and underperformance, cannot afford further dithering.

The contemporary GNU, much like the former one in 1996, may have reached its breaking point. The promise of multi-party democracy and consensus-based governance is being undermined by the very factions that have come together in the name of unity. It is hard to escape the conclusion that the continued negotiations around the budget have become a form of political ‘death row’ for the current administration, with no clear path forward. As South Africa teeters on the edge of a political and economic crisis, the time for a new direction, grounded in pragmatism and focused on national interests, has never been more urgent. As South Africa stands at a critical juncture, with the deadline of 12 March 2025 rapidly approaching, the political landscape is poised for a moment of truth. Reports have indicated that the cabinet has reached an agreement on the finality of the budget, but conflicting statements from political leaders, particularly from the DA, suggest that this agreement is not yet a certainty. DA leader John Steenhuisen has publicly declared that no final agreement has been reached and that the parties are still working towards a resolution. For the country, the stakes could not be higher.

This raises significant questions about the future of coalition governance and the state of South Africa's fragile political economy. Several plausible scenarios could unfold, each with distinct consequences for the political stability and economic viability of the nation.

Scenario 1: A unified agreement – A lifeline for the political economy

In the first scenario, we imagine that the cabinet's agreement is genuine, aimed at averting risks to public confidence and the broader market. If the market-driven partners within the GNU recognise the overwhelming importance of a stable budget, they may choose to align their interests. With political stability hanging in the balance, the realisation may set in that South Africa is simply ‘too big to fail.’ This would, in theory, prevent a collapse into chaos, as the GNU partners, acknowledging the nation's susceptibility to political upheaval, would avoid creating conditions for widespread instability.

While this scenario seems like the ideal outcome, history suggests that political cooperation within the GNU has often been fraught with difficulty. The question is whether these partners can truly put national interests before political rivalries.

Scenario 2: The ANC’s secret deal – A recipe for distrust?

Alternatively, there is the possibility that the African National Congress (ANC) has reached a clandestine agreement with the EFF behind the backs of their coalition partners. This scenario would fracture the GNU, erode trust, and create a toxic environment of distrust in coalition governance. If the ANC manages to secure its hold on power, it risks alienating the markets, which would likely lead to a downward economic spiral. The longer this instability persists, the more vulnerable the country will become to a potentially catastrophic collapse in investor confidence.

Scenario 3: DA’s contradiction – The death of coalition unity

In a third possible scenario, the DA contradicts the agreement reached by the cabinet, exposing the extent of disunity within the GNU. This situation would further highlight the lack of trust among coalition partners, and the DA might find itself either paralysed within the coalition, or removed entirely, or even decide to withdraw from the GNU. This shift would trigger an intense debate about South Africa’s continued political economic stability.

South Africa’s economy, already vulnerable to shocks, would find itself in even deeper turmoil if this scenario were to play out. The markets would respond negatively, and the ripple effect would undoubtedly extend to the lives of everyday South Africans.

The real impact on South Africans

Regardless of which scenario unfolds, one thing is certain: the consequences for South Africa’s citizens will be profound. The allocation of funds to government institutions, provinces, and municipalities is likely to be severely affected by any political instability. Without a clear and stable budget, public services will suffer, leading to disruption in the functioning of provincial governments and municipalities. This, in turn, would delay public spending, putting vital services at risk and exacerbating the inequalities, poverty, and unemployment that already plague the country.

News Archive

During 2011: Appointments

2011-12-01

Dr Lis Lange: Senior Director: DIRAP

Dr Lis Lange, an Argentinean by birth, immigrated to South Africa twenty years ago – a few weeks after Nelson Mandela had walked through the gates of Victor Verster. For the past ten years, she has been involved in quality assurance for higher education institutions at the Council on Higher Education at national level.

She is assisting our university in the areas of quality assurance and academic planning, contributing to the development of deep intellectual debate and multi-disciplinary research.

Prof. Charles Dumas, Department of Drama and Theatre Arts

Prof. Charles Dumas, Extraordinary Professor in our Department of Drama and Theatre Arts, will be spending three months per year for the next three years at our university to help develop filmmaking, specifically focusing on the development of the Video Unit Planned for the Department.

Prof. Dumas started the year off with the production, Our Father’s Daughters, which was produced during the Mini-festival as well as at the Reitz Four reconciliation meeting. The production was also turned into a short film. Prof. Dumas gave film-acting classes to the third-year drama students. He directed multiple productions, such as the third-year module production Ipi Zombi, the Grahamstown Festival production, Seven Guitars and the Dance/drama production, Race, Reconciliation and the Reitz Four.

Prof. Daniel Plaatjies, UFS Business School

Prof. Daniel Plaatjies is the former Director and Head of the Graduate School of Public and Development Management at the University of the Witwatersrand. He was mainly responsible for the leading, directing and managing of strategic academic programmes, teaching, research, governance, service management and monitoring. Prof. Plaatjies, who was appointed as Visiting Professor at our Business School this year, will as part of his new duties at our Faculty of Economic and Management Sciences, be lecturing part-time and supervise our PhD students.

Prof. Johann Neethling, Department of Private Law

Prof. Johann Neethling’s career is now completing its full circle with his appointment as Senior Professor in our Department of Private Law. In 1965 he was a first-year at this university. With his nine law text books and nearly 200 articles, together with 40 years’ experience in academic training he is of inestimable value to this Department. His publications contribute to the establishment of our university as a research institute.

Prof. Hussein Solomon, Department of Political Science

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Prof. Hussein Solomon joined our university this year as Senior Professor in the Department of Political Science. Formerly he worked in peace NGOs, advised diplomats and acts as a serving officer in the South African Air Force.

His area of research expertise includes conflict and conflict resolution in Africa; South African Foreign Policy; international relations theory; religious fundamentalism and population movements within the developing world. He is also the author of a number of books, including one on global jihad and one on India's secret relationship with apartheid South Africa.

He is also member of the internationally renowned Our Humanity in the Balance (OHIB) organisation, where his role is to bring these disparate communities together and to focus energies on a common project.

Prof. André Keet, International Institute for Studies in Race, Reconciliation and Social Justice

Prof. André Keet, our Director of the International Institute for Studies in Race, Reconciliation and Social Justice, joined the University of Pretoria on a part-time basis in 2008, whilst being a Commissioner on the Commission for Gender Equality. Later he left the Commission and joined the University of Fort Hare. “I was happy to join academia and now also serve on the Stellenbosch University Council; therefore I am very aware of the challenges facing higher education,” he said.

His vision for the Institute is to support higher-education transformation, promote non-discrimination, reconciliation and human rights, build national, regional and international networks, and developing ‘new’ languages, knowledge and discourses for reconciliation and social justice, all to the benefit of our university and South Africa.”

Prof. Helene Strauss, Department of English

Prof. Helene Strauss completed her PhD at the University of Western Ontario, London, Canada, where she taught courses on Film Studies, Children’s Literature and South African Literature and Culture. “I was subsequently appointed as an Assistant Professor in the Department of English and Cultural Studies at McMaster University, Hamilton, Canada.” She joined our Department of English this year.

Prof. Strauss has an on-going preoccupation with questions concerning social justice, race, gender and ethical interpersonal interaction in South Africa and beyond.

Prof. EC Ejiogu, Centre for Africa Studies

After 22 years in the United States of America, Prof. EC Ejiogu decided to return to Africa – to his roots – to join our university’s Centre for Africa Studies at the beginning of 2011.

Before joining the Centre, he was Assistant Research Professor in the Centre for Innovation at the University of Maryland, College Park. As Senior Researcher at the Centre, he has already helped with the streamlining of the academic programme, restructuring it to enable students to gain skills necessary to deliver a research proposal towards a dissertation after their three years of study. He has also taken up PhD and Master’s supervision.

His latest publications include a book published in March 2011 with the title, Roots of Political Instability in Nigeria, and a book co-edited with Prof. Kwandiwe Kondlo, Director of the Centre for Africa Studies, Africa in focus: Governance in the 21st century, published in April 2011.

Pura Mgolombane, Vice-Dean: Student Affairs

Bringing with him a decade of experience in Student Affairs our new Assistant-Dean for Student Life and Leadership, Pura Mgolombane, has big plans for student development. He says his office wants to help Kovsies increase its throughput rate and produce socially well-adjusted and employable graduates in South Africa, the continent and anywhere in the world.

Before joining Kovsies, he was employed as Director: Student Life, Governance and Culture at Walter Sisulu University. Pura, who has a background in Human Resources, Business Management and Corporate Law, says his academic training has empowered him with skills to ensure that the Student Life and Leadership is properly led, governed and managed.

Prof. Hasina Ebrahim, School for Social Sciences and Language Education

This former academic from the University of Kwa-Zulu Natal was appointed as Associate Professor at our School for Social Sciences and Language Education in the Faculty of Education. Amongst others, she is the project coordinator for the Faculty’s Early Childhood and Foundation Phase Teacher Education Programme and the MEd and PhD supervisor in the programme.

Prof. Ebrahim is also the Deputy-President of the first South African Research Association for Early Childhood Education (birth to nine). “This is certainly a milestone to profile the university in terms of its thrust towards excellence in research,” she says. One of the main aims of the association is to shape the research agenda for a marginalised field in South Africa.

Prof. Corli Witthuhn, Faculty of Natural and Agricultural Sciences

Description: 2011 Appointments_Corli Witthuhn Tags: 2011 Appointments_Corli Witthuhn

Prof. Corli Witthuhn, a former Bloemfonteiner, attained her PhD in Microbiology at our university. Therafter, in 1999, she was appointed as a lecturer at Stellenbosch University and later as Vice-Dean.

Currently she is our Vice-Dean in the Faculty of Natural and Agricultural Sciences. She hopes to sustain her research here at our University.

Her life motto? “Opportunities are presented in the form of obstacles,” she says.

Prof. Melanie Walker

Prof. Melanie Walker is a prominent South African scholar who has been working as Professor of Higher Education Studies at the world-leading University of Nottingham in the UK, where she been Director of Postgraduate Students and a Director of Research in the Faculty of Social Sciences. She will join the University of the Free State in February 2012 as Senior University Professor in the Postgraduate School.

She is a graduate of the University of KwaZulu-Natal and the University of Cape Town, where she completed her PhD, after teaching in disadvantaged secondary schools for a number of years. Prior to working at Nottingham she worked at the Universities of Sheffield, West of England and Glasgow, as well as the Universities of Cape Town and the Western Cape. She is also a Fellow of the Human Development and Capability Association. She is currently Director of Research Training and a senior researcher in the EU-funded Marie Curie EDUWEL project, which includes senior researchers from eight European countries and 15 early-stage researchers.

With a long-standing commitment to social-justice research and equality practices, she is currently widely recognised internationally as leading in the application of the capability approach and human development to higher education policy and practice. Among others, she has led or participated in research projects funded by the NRF (South Africa), the Higher Education Academy (UK), HEFCE (UK), EU, and ESRC/DfID, which funded the Public-Good Professionals’ Capability Index research project.

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