CEO Chirp: "Some budget positives"

It’s a common private sector refrain that Government should govern, and let business get on with doing business.  

Better still, Government should adopt a business-like approach to its assets and investments, to underpin its programmes with fiscal wellbeing.  

The 2026 budget was at least a move in this direction, albeit a qualified success.  

In dissecting the Finance Minister’s speech, some have rightly highlighted concerns around a paucity of deep structural reforms. As one expert opined, we saw ‘good housekeeping’, rather than the bold moves many believe necessary to elevate GDP growth beyond 2%.  

However, the budget did contain at least one policy pivot that, if properly applied, could see pragmatic benefits.  

It's a shift most clearly evidenced by the allocation of R27.7 billion as a performance-linked grant for municipalities. This mechanism introduces a level of control previously absent from the intergovernmental fiscal framework; should a metro fail to demonstrate that it is reinvesting service revenue into critical infrastructure—specifically the water and electricity grids—its budget will be redirected to more capable agencies.  

This "performance link" mirrors a fundamental private sector business philosophy that prioritises outcomes and efficiency over mere expenditure. In the corporate world, capital is allocated based on a proven return on investment and the ability of a unit to maintain its productive assets. 

By applying this logic to local government, the State acknowledges that the "muddling through" of previous years—characterised by the failure of local municipalities and the capture of resources by patronage networks—is no longer fiscally sustainable.  

The scale of this mindset is further reflected in the R1.07-trillion public-sector infrastructure estimate over the medium term. 

The strategic decision to ensure that infrastructure spending specifically promotes economic growth represents a significant pivot. It aligns public spending with the "investment motive" that drives business: the unblocking of freight and rail bottlenecks to lower the cost of doing business and enhance export capacity.  

By adopting this pragmatic approach, the State will make a better contribution to economic growth and job creation, and even increase future tax revenue.  

Government's future budget success should rely less on ‘good luck’ and temporary commodity booms—which some analysts suggest underpinned this latest improved budget—and more on improved revenue generated through genuine, sustainable economic growth. 
 

John Lawson
CEO of the Cape Chamber of Commerce and Industry