The 29th Conference of the Parties (COP29) to the UN Framework Convention on Climate Change (UNFCCC) recently concluded in Baku, Azerbaijan, and it has been a pivotal event in the global climate agenda. Here are the key outcomes and implications of COP29:
The 2024 Medium-Term Budget Policy Statement (MTBPS) in South Africa, presented by Finance Minister Enoch Godongwana on October 30, 2024, outlined the government's strategic response to economic challenges and fiscal constraints amid declining tax revenues. This year’s MTBPS comes at a time when the National Treasury faces a significant revenue shortfall of around R22.3 billion for 2024/25, attributed to lower-than-expected collections across various tax categories, including income tax and fuel levies. Factors like reduced energy-related imports and weaker private sector employment have contributed to this shortfall, while domestic VAT has performed slightly better due to increased corporate earnings in certain sectors.
In a recent consolidated media briefing, the Department of Trade, Industry, and Competition (dtic) highlighted significant outcomes from the 21st African Growth and Opportunity Act (AGOA) Forum in Washington, DC, and the 14th BRICS+ Trade Ministers Meeting in Moscow, Russia. The South African delegation engaged with key stakeholders to bolster trade and investment ties, focusing on economic growth and job creation.
National Treasury expressed its satisfaction as the President signed the Pension Funds Amendment Act (31 of 2024) into law, marking the final step in implementing the two-pot system set to begin on 1 September 2024. This act introduces crucial changes to various pension-related laws, including the Pension Funds Act of 1956 and the Government Employees Pension Law of 1996, essential for retirement funds, including public sector funds, to adopt the two-pot reform.
President Cyril Ramaphosa has recently announced the formation of a Government of National Unity (GNU) in South Africa. This decision was made in response to the clear desire of South Africa’s people for political parties to cooperate for the nation’s future. The GNU is a coalition of 11 parties that have committed to collaborating together.
Operation Vulindlela (OV) has emerged as a crucial initiative in South Africa, aimed at accelerating the implementation of structural reforms to foster economic growth. Recently, a successful two-day conference was held to assess the progress made by OV and chart the way forward for the next five years. This article will delve into the key highlights of Operation Vulindlela and explore the support it has garnered, including that of the Democratic Alliance (DA).
Key Points:
StatsSA has released gross domestic product (GDP) data for the first quarter of 2024, showing South Africa’s GDP has decreased by 0,1%.
The upcoming South African elections hold the promise of change, introducing a range of potential impacts on local businesses. As business leaders, we must pay attention to several factors that could significantly affect the business environment:
Electricity Minister Kgosientsho Ramokgopa has stated that his department is advocating for the tax incentive for solar PV to be extended to batteries and inverters¹. The government wants more businesses and households to opt for rooftop solar, and efforts are under way to push for a tax incentive to be extended to inverters and batteries part of solar PV systems.
The Medium-Term Budget Policy Statement (MTBPS) presented by Minister Enoch Godongwana on 1 November 2023 outlined several key reforms aimed at delivering growth over the medium term:
The Medium-Term Budget Policy Statement (MTBPS) for 2023 was unveiled by Finance Minister Enoch Godongwana on 1 November 2023. The MTBPS, also referred to as the "mini-budget", allows government departments to apply for adjustments to their budgets, apply for rollovers, and request additional funds for unforeseeable and unavoidable expenditures. It sets government policy goals and priorities, forecasts the macroeconomic trajectory, and projects the fiscal framework over the next three years by outlining spending and revenue estimates.
Finance Minister Pravin Gordhan has unveiled a sweeping plan to overhaul the governance and management of state-owned companies, which he said have been plagued by corruption, inefficiency and poor performance. The plan, which was announced in his medium-term budget policy statement on Wednesday, aims to restore the financial viability and strategic relevance of the entities, which collectively have more than R1 trillion in assets and employ over 300 000 people.
The Companies First Amendment and Second Amendment Bill were tabled in Parliament on the 28 August 2023, and have been published. [The initial draft of the Companies Amendment Bill was published in 2018, followed by a revised draft Bill in 2021, both of which have undergone extensive public consultation and engagement].
The government and business leaders have announced the progress made in their partnership to address the most pressing challenges facing the country. The partnership, which was launched last year, aims to foster collaboration and innovation across sectors and regions, and to leverage the strengths and opportunities of both public and private actors. Some of the key achievements of the partnership include inter alia:
Knowledge of and compliance with both the common law and legislation is essential for good governance. Not only do directors need to make sure that they are maintaining the highest standard in respect of their duties, but they must also ensure that they are complying with the administrative provisions of other legislation, such as the Income Tax Act. In addition, it is important that directors have a working knowledge of the guidance provided in King IV ™.
Ms Yanga Mputa has been appointed as the new Chief Director of Tax Policy at the Ministry of Finance. Ms Mputa has a wealth of experience in tax administration and policy, having served as a senior manager at the South African Revenue Service (SARS) and as a tax consultant at PwC. She holds a Master of Commerce degree in Taxation from the University of Cape Town and a Bachelor of Accounting Science degree from the University of South Africa.
Since the establishment of Operation Vulindlela in October 2020, government implemented structural reforms to stabilise South Africa’s energy supply, establish a competitive logistics network, reduce the cost and improve the quality of digital communications and reform the visa regime to enable businesses to attract the skills they need to grow, and to make it easier for tourists to experience a world-class African destination.
In South Africa, idiosyncratic factors continued to weigh on domestic financial sector resilience and overall economic growth prospects. The most notable country-specific vulnerability is the increasingly detrimental and widespread ramifications of an insufficient and unreliable electricity supply, while concerns over the deteriorating South African rail and port infrastructure networks also continue to grow.
The South African Reserve Bank (SARB) has introduced upgraded banknotes and coin into the South African market with effect from 4 May 2023. The denominations will be introduced incrementally. The upgraded banknotes and coin have enhanced security features and new designs; however, the broad themes for the upgraded banknotes remain the same as the current banknotes, while the theme for the coin is deep ecology.
In March the Monetary Policy Committee decided to increase the repurchase rate by 50 basis points to 7.75% per year, with effect from the 31st of March 2023. Three members of the Committee preferred the announced increase. Two members preferred a 25 basis points increase.
President Cyril Ramaphosa has signed into law the Employment Equity Amendment Bill of 2020. The Amendment Bill seeks to advance transformation of South Africa’s workforce by setting equity targets for economic sectors and geographical regions, and requiring enterprises to develop transformation plans.
As this year commences, high inflation and weak economic growth continue to shape global conditions. Russia’s war in the Ukraine drags on and recession risks remain elevated in the Euro Area, even though energy constraints have eased. Growth prospects for the United States this year are lower. The growth outlook for China has improved but is likely to remain modest by historical standards. In the developing world, a number of economies face debt distress, exacerbated by tighter global financial conditions.
The Minister of Finance, Mr Enoch Godongwana, will deliver the National Budget Speech on 22 February 2023. As usual, the budget allocation always aims to strike a balance between competing national spending priorities and limited resources.
