On 26 February 2020, Minister of Finance - Tito Mboweni delivered the 2020/2021 National Budget Speech. In his address Mboweni advised that much like the Aloe Ferox plant South Africans would need resilience if they were to flourish in what is a continually arid economic environment; characterised by an expected growth rate of only 0.9 percent and a Gross national debt of R3.56 trillion, equating to 65.6 percent of GDP.
In his speech Mboweni acknowledged that “start-ups will ignite the economy” and in attempting to be responsive to this Government is allocating R6.5 billion for small business incentive programmes - R2.2 billion of which will be transferred to the Small Enterprise Development Agency. He also advised that the Innovation Fund will be capitalised with R1.2 billion over the next three years. Further to this Treasury is reviewing the effectiveness of the preferential small business tax regime, the VAT registration threshold as well as turnover tax.
In remaining with the positives in as far as business is concerned the minister advised that industrial business incentives worth R18.5 billion will result in the creation and maintenance of 56 500 jobs. With the Development Bank of Southern Africa packaging blended finance mega-projects to the value of R200 billion, this is response to capital spending being the fastest growing component of non-interest spending.
Other Key takeaways include the following:
- A further R60 billion is to be provided to try and bail out Eskom and South African Airways.
- Learning and culture receive R396 billion making it the largest spending area
- An additional R107 million is reprioritised for the refurbishment of 27 industrial parks in townships and rural economies
- The fuel levy goes up by 25 cents per litre
Click here for a full version of the 2020 budget speech
Please visit the National Treasury's website for additional information on the 2020 budget.
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