Budget must deliver economic growth

18 February 2022 Citadel
Maarten Ackerman, Chief Economist at Citadel

Maarten Ackerman, Chief Economist at Citadel

Wealth manager Citadel’s Chief Economist and Advisory Partner, Maarten Ackerman, hopes to see Finance Minister, Enoch Godongwana, prioritise policies that grow the economy, stimulate foreign direct investment, prevent further poverty-fueled civil unrest, and ease South Africa (SA) out of its fiscal challenges.

When Finance Minister Enoch Godongwana delivers his inaugural National Budget Speech on 23 February 2022, he will need to focus on investment- and business-friendly policies that stimulate sustainable economic growth to save South Africa from economic disaster, according to wealth management experts, Citadel.

Citadel Chief Economist and Advisory Partner Maarten Ackerman says all eyes will be on Godongwana to see if he will be able to implement President Cyril Ramaphosa’s bold policy vision, expressed at the recent State of the Nation Address (SONA), to “unleash the economy”.


“One can’t really fault Ramaphosa’s economic policies, but what we need to see now is proper implementation to kickstart economic growth of at least 3%. It all boils down to fixing economic growth. We need to stimulate business growth, grow the fiscus and spend strategically to create jobs. If we set in motion proper sustainable economic growth, we don't need to worry about anything else. SA’s economic growth has been stagnating for almost a decade while we’ve seen greater population growth and an all-time high unemployment rate. The debate should boil down to what our government is going to do within this limited fiscal room to get growth going.”

Ackerman believes Godongwana must use this opportunity presented by the National Budget to show the world that SA is serious about getting its spiralling debt and unemployment under control, and that it is serious about attracting foreign direct investment.

“The South African economy can’t rely solely on the reopening of the global economy and SA’s strong commodity and agricultural exports as these are never guaranteed long-term. We need a strong economic foundation,” says Ackerman.


“I’m hoping for fast tracked policy reform and implementation. I think we need to see evidence of better implementation from this administration.”

Ackerman continued: “We keep on talking about the budget deficit, but I think the biggest deficit we should talk about is the execution deficit, because government is not executing on great policy. I think there's nothing wrong with the policy and what the president is saying is exactly what we need to do. Yes, we need to engage with the private sector and with entrepreneurs, but we still have a lot of red tape.”

Ackerman also points out that while the government has little room to manoeuvre between delivering populist policies to address poverty, quell further political unrest as experienced in July 2021, and creating economic growth, it needed to “focus on creating an environment of returning business confidence” and foreign direct investment, as this would also help solve poverty and unemployment in the long term.

“From where we're sitting in the stadium, our view is that if Treasury comes up with 1.6% growth at the end of the framework, it’s just not good enough and it will create the impression that they don't believe in their own policies and ability to deliver. We need to get into an environment where we can actually get to a sustainable growth rate of 3%.”

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