Agriculture sector commends finance minister’s Budget but highlights the challenges ahead

Finance Minister Enoch Godongwana on the way to deliver his Budget speech on Wednesday in Parliament, Cape Town. Picture: Ayanda Ndamane Independent Newspapers

Finance Minister Enoch Godongwana on the way to deliver his Budget speech on Wednesday in Parliament, Cape Town. Picture: Ayanda Ndamane Independent Newspapers

Published Feb 23, 2024


Agri SA CEO Johann Kotzé said the organisation commended the government’s resolute stance on state-owned enterprise (SOE) bailouts, coupled with targeted investments in key sectors.

The allocation of R27.7 billion to agriculture and rural development, coupled with securing $3.3bn (R63bn) from multilateral development banks for disaster response grants, underscored a strategic approach to address pressing needs.

“While challenges persist, particularly in public infrastructure such as electricity and logistics, we recognise the pivotal role of private sector partnerships in critical infrastructure projects.

“Godongwana's emphasis on job creation and fostering increased private sector energy bode well for attracting much-needed investment and broadening our tax base,” Kotzé said.

He emphasised that the successful implementation of these initiatives, alongside a concerted effort to address infrastructure deficiencies, held the key to unlocking sustained economic growth.

“As we navigate these challenges, collaboration between the public and private sectors will be imperative for realising our shared vision of a prosperous and resilient economy,” he said.

He further said that Finance Minister Enoch Godongwana had delivered his Budget speech for the fiscal year 2024/25 in the face of many challenges posed by an election year and a challenging economic landscape.

“We commend the government’s commitment to curbing the growth of our national debt. While drawing R150 bn from the Gold and Foreign Exchange Contingency Reserve Account is a significant step, it signifies a prudent move toward alleviating debt-servicing costs and redirecting funds towards vital economic stimuli,” Kotzé said.

Nevertheless, it was crucial to acknowledge that this approach offered short-term relief rather than a sustainable solution.

Agri SA said addressing the fundamental issue of government spending, exceeding earnings, was paramount; achieving higher levels of gross domestic product growth stood as the primary avenue toward rectifying this imbalance.

Meanwhile, Agbiz CEO Theo Boshoff said the agricultural sector, while having performed broadly positively in the past few years, was confronted with various challenges.

“Energy security, logistics, and declining municipal service delivery are front and centre of these challenges. Over the past few days, we listened intently as agribusinesses and rural communities shared initiatives under way to improve their local circumstances at the conference arranged by Landbouweekblad and Senwes.

“It is remarkable how innovative and resilient the sector is, but one simple fact cannot be overlooked: these communities have to incur duplicate costs to provide basic service delivery, fix roads and water infrastructure, and improve safety and security for their communities,” Boshoff said.

He said that additional costs eroded the competitiveness of local rural industries.

“While the fiscal measures to support turnaround strategies for Eskom and Transnet are welcome, we cannot put all of our eggs in the state-owned enterprise (SOE) basket. We desperately need to upscale the incentives provided to communities that meet their own energy, infrastructure, and service delivery needs.

“Extending the solar panel rebate to batteries and inverters, a zero-VAT rating for the inputs required to fix potholes, and excluding diesel used in all generators or graders used to maintain roads are a few examples that can help these communities recover some of the costs,” he said.

Boshoff said that he sincerely hoped the conditions placed on fiscal assistance to local SOEs could contribute to efficiencies, but until that time, tax incentives were required to maintain competitiveness where companies spent funds outside their core areas of work.

Boshoff lamented that the notable increase in excise duties in the wine industry was worrying as the industry was still recovering.

Following years of financial pressure linked with Covid-19 lockdowns, Agbiz hoped Godongwana would be more sensitive to the challenges of the industry and its sustainability.

Agbiz also said that this year’s Budget speech was delivered against the backdrop of a profoundly challenging macroeconomic environment where South Africa’s economy was expected to continue underperforming, averaging at 1.6% in the next three years.

Meanwhile, Agbiz chairperson Francois Strydom said yesterday that the country could not be satisfied with a steady decline in economic conditions and innovative interventions were needed to turn the current trajectory around.

Strydom said: “Increased spending on grants and other social security measures may be needed in the short term, but a shrinking tax base cannot sustain this trend in the long run. As the minister noted, we need to grow the pie. The 2024/25 budget presented a valuable opportunity to do so but was largely silent on incentives for business.”