"Unpacking the Impact of the 2024 Budget Speech on Ordinary South Africans and Startups"

Economic Outlook:

• Global growth forecasted to increase slightly.

• South Africa's growth hampered by lower commodity prices and structural constraints.

• Near-term growth projected at 0.6% for 2023, with an average of 1.6% between 2024-2026.

• Challenges include persistent constraints in electricity supply, freight rail, and ports. Fiscal Outlook and Strategy:
  

• Budget deficit estimated to worsen, leading to higher debt-service costs.

• Fiscal strategy aims to support economic growth, reduce risks, and ensure sustainability.

• Measures include reducing non-interest expenditure and increasing revenue.

• Introducing reforms to the Gold and Foreign Exchange Contingency Reserve Account (GFECRA) to reduce borrowing. Supporting Economic Growth:
  

• Structural reforms in various sectors like electricity, logistics, and telecommunications.

• Investments in renewable energy projects and infrastructure improvements to address electricity challenges.

• Introducing a conditional grant for the rollout of smart prepaid meters.

• Initiatives to enhance logistics, including private sector partnerships and infrastructure upgrades. Infrastructure Financing and Delivery:
  

• Reforms in infrastructure financing to attract private sector participation.

• Introduction of new financing instruments like infrastructure bonds and concessional loans.

• Focus on efficiency and coordination in infrastructure delivery. Mainstreaming Climate Finance:
  

• Mobilizing resources and influencing policy to address climate change.

• Use of various funding instruments and support from multilateral development banks.

• Initiatives to adapt and mitigate climate-related events, including technical assistance for capital projects. Supporting the Production of New Energy Vehicles:
  

• Strategy outlined in the Electric Vehicles White Paper to transition to electric vehicles.

• Introduction of investment allowances and reprioritization of funds to support electric vehicle production. Leveraging Procurement for Transformation:
  

• Public Procurement Bill passed to promote transformation measures and local industrialization.

• Focus on obtaining value for money, efficiency, transparency, and competition in procurement processes. Revenue and Tax Proposals:
  

• Weak economic performance leads to a sharp deterioration in tax revenue.

• Tax measures introduced to alleviate fiscal pressure, including increases in excise duties.

• Introduction of taxes on electronic nicotine and non-nicotine delivery systems (vapes). Spending Plans:
  

• Additional allocations for critical sectors like education, health, public transport, and law enforcement.

• Investments in employment programs, combating crime and corruption, and infrastructure provision. Division of Revenue:
  

• Significant allocations to provinces and municipalities.

• Additional funds to cover wage agreement costs and disaster recovery efforts.

• Measures to address weaknesses in municipal governance and service delivery.

Impact on South African Citizens and Startups:

Positively:

• Increased investments in infrastructure and renewable energy could create opportunities for startups in these sectors.

• Tax incentives for electric vehicle production might encourage innovation and investment in the automotive industry.

• Measures to combat crime and corruption could improve the business environment and promote trust in institutions.

• No personal and corporate tax increases.

Negatively:

• Higher taxes and excise duties could increase the cost of doing business for startups, particularly those in industries affected by these measures.

• Weak economic growth projections and fiscal challenges may lead to reduced consumer spending and investment, affecting start-ups’ growth prospects.

• Persistent challenges in areas like electricity supply and logistics could continue to pose operational challenges for startups reliant on these services.