KASI economist attends South Africa budget speech

The annual Nedbank and Old Mutual Competition

The Nedbank and Old Mutual Budget Speech competition is a yearly event that was initiated in 1972 and has since challenged students across South Africa to engage with socio-economic topic and recommend ways in which these can be addressed. At the dawn of my post-graduate career (February 2018), I decided to take up the challenge and write the 2018 postgraduate essay whose topic was: “It is 2018 and a new ANC government is in place, what you as the new finance minister would do to restore fiscal credibility? What would the impact of this be on monetary policy and the economy?” The outcome of this decision proved to be extremely rewarding and I am thus sharing a snippet of my experience. All essays must go through a series of elimination stages until only ten of them are selected. It is only then that the delightful news of the opportunity to attend an all-expenses-paid trip to the following year’s budget speech event is announced to the writers of these remaining essays. I was most fortunate to be among the top 10 finalists in last year’s competition and thus had first-hand experience of the 2019 South Africa Budget Speech Event.

Realistic Fiscal Policy, Tough Choices and Increased Transparency

In my view it was necessary to begin this writing piece with a brief narrative of the historical background which led to the huge loss in investor confidence (instability in the political arena after the ousting of Former President Jacob Zuma who had many allegations of corruption and other undue conduct tied to him and a bloated Debt to GDP ratio), in addition to emphasizing the urgent need of its restoration as investments remains the main pillar of South Africa’s economic growth. The second portion of my paper was largely definitional in attempting to explain what investor confidence primarily entails. Thereafter, I began a comprehensive discussion of measures that can be implemented to restore investor confidence and these were discussed under three main headings: Prudent Formulation of Realistic Fiscal Policy and Framework, Ability to Make “Tough Choices” and finally “Increased Transparency”.

The first heading’s discourse was focused on government’s responsibility to evade false promise-making with the intent of gaining public support especially in view of a constrained budget, neither making false estimations of expectations on proposed fiscal measures as this may lead to over or under-stated effects which may have a negative impact on the economy as a whole. The second point alluded to viable ways in which the government can reduce the high Debt to GDP ratio, that is, through increase of certain tax brackets or reduction on government spending and the likely impact of this move on society i.e. the impact of these tough choices. The final point elucidated on measures to increase accountability through transparency.

From left to right, Peter Moyo CEO Old Mutual, Mondi Gungubele Deputy Finance Minister, Esther Bosha Economist KASI Insight, Mike Brown CEO Nedbank

From left to right, Peter Moyo CEO Old Mutual, Mondi Gungubele Deputy Finance Minister, Esther Bosha Economist KASI Insight, Mike Brown CEO Nedbank

An Underwhelming Budget Report and Subsequent Market Response

Great anticipation surrounded the event given the economic marsh that the country is currently in. South Africa is currently battling various economic difficulties which include high levels of unemployment (having the world’s highest youth unemployment rate), an inflated government expenditure and debt bill, deteriorating state-owned enterprises that have been run-down by inefficiency and mismanagement of resources including Eskom, the country’s largest electricity supplier, a fall in investor confidence that is hugely driven down by corruption and state capture charges amongst several reasons and finally, perhaps the uncertainty of an imminent presidential election. These unfavorable conditions and corresponding resolutions were well articulated in earlier weeks by the current President, Cyril Ramaphosa and at the beginning of his budget address, the Finance Minister announced his grim task of allocating a budget to the proposed resolutions. Several economists have raised a concern that the budget address did not adequately frame the resolutions submitted by the President and had many points of ambiguity.

Given this conclusion, I, among other economists, are not quick to believe in the optimism spelt out by the Deputy Finance Minister, of an immediately observed gain of exchange-rate and stabilization of the interest rate moments after the budget address. In my expectation, the consumer confidence index is likely to give a more accurate signal of the market’s response given that a relatively longer amount of time would have elapsed till the time of monthly release, allowing the market to establish a clearer response.

At the end of the day, Execution Trumps Vision

Admittedly, it is no small task to budget a nation's money and make the "right" decision when faced with limited resources. Despite the marshy conditions, South Africa has every reason to be bullish about its future as it remains the second largest economy in Africa. With returns drying up in western countries and ageing populations, opportunities will increasingly stem from Africa and with that in mind, South Africa is arguably one of the most investable country on the continent. If the country succeeds in creating an environment which encourages both local and foreign businesses to flourish through favorable tax regimes, in addition to greater transparency and accountability in both the private and public sector, and finally a stronger integration of society, South Africa will retain its position as a driver in African growth and development.

“ We are thrilled that Esther was able to win one of the top 10 spots of this coveted competition and to witness this important event in a country's economy - the budget speech. This is another reflection of the talent we have here at KASI ”

Yannick Lefang, Founder at KASI Insight

Download Esther CCI Commentary​

Forthcoming consumer data releases:

  • March 15th: KASI CCI (February data)

Esther Bosha, Junior economist, KASI Insight


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The KASI Consumer Confidence Score (KASI CCI) is a composite index compiled from a seven-questions survey that runs monthly via our consumer polls in the countries covered. The data output is based on fresh, randomly selected representative sample of city dwellers aged 18-64.

Released the first week of every month, the KASI Consumer Confidence Index (KASI CCI) provides a focused view on consumer perceptions in seven African urban centers (Ghana, Nigeria, Kenya, South Africa, Cameroon, Ivory Coast, Tanzania) where most spending in the continent is concentrated. The survey provides a simple measure of consumers’ optimism about their economic prospects in the near term and attitude towards making major purchasing decisions.

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