Minister of Finance, Enoch Godongwana, delivered the 2025 Budget Speech during the National Assembly plenary at the Cape Town International Convention Centre
Image: Phando Jikelo/ Parliament of SA
The country's business community has given a measured response to Finance Minister Enoch Godongwana's 2025 Budget, welcoming spending discipline and the avoidance of new tax hikes, while urging faster reforms to address sluggish economic growth.
Godongwana delivered his third attempt at the national budget on Wednesday after two earlier proposals were rejected, largely due to political disagreements over a controversial 2% increase in Value Added Tax (VAT).
In his speech, Godongwana emphasised the government’s commitment to maintaining sustainable public finances, despite challenges.
"Nevertheless, this budget supports sustainable finances, the social wage and investments in economic growth. This is not an austerity budget," Godongwana said.
The budget also included an increase in the fuel levy, with petrol rising by 16 cents per litre and diesel by 15 cents per litre.
The minister said this measure was intended to boost revenue, adding that the government was focused on enhancing revenue collection, particularly by addressing unpaid taxes and combating illicit trade.
Despite some positive reactions, SA Canegrowers welcomed the decision not to increase the sugar tax but called for its complete removal, citing job losses and no proven health benefits.
"The sugar tax has been nothing but destructive for South Africa. While the Nedlac study demonstrated concrete proof of job losses, no evidence has been provided to show that the tax has reduced obesity or improved the health of South Africans in any way," the organisation said
"Ultimately, we believe that Treasury should scrap the tax, to help ensure that the government drives job creation and economic growth, as per its commitments outlined in the Sugarcane Value Chain Master Plan 2030"
Jacques Moolman, President of the Cape Chamber of Commerce and Industry, also welcomed the reversal of the VAT hike but raised concerns about the fuel levy’s knock-on effects and long-term fiscal risks.
"It was encouraging to hear Minister Godongwana reiterate the urgent need for public-private partnerships, and we welcome continued efforts to expedite this process in order to facilitate much-needed economic growth".
He warned that South Africa was “tethering far too long” on the edge of a fiscal cliff, with the national debt-to-GDP ratio posing a serious risk to economic recovery.
"In our view sustainable growth is the only way for South Africa to avoid falling over the edge of the fiscal cliff, where we have been tethering for far too long. Our debt-to-GDP ratio forecast remains a huge concern, with the potential to derail efforts to get our economy back on track.
"Although budget cuts in some areas were inevitable, we believe the R66-billion over three years earmarked for PRASA will help alleviate the economic disruption caused by disintegrating public transport networks. Provision of affordable and efficient public transport is fundamental to future economic growth".
Moolman also noted the timing of the budget, which coincided with a significant diplomatic engagement in Washington between President Cyril Ramaphosa and US President Donald Trump.
"The Cape Chamber is mindful that Wednesday’s budget coincides with a crucial diplomatic engagement in Washington involving President Cyril Ramaphosa and President Donald Trump. A positive outcome in Washington would go a long way towards quelling market jitters around economic ties with one of our biggest trading partners".
CEO at SolarAfrica David McDonald said the minister's budget was a breath of fresh air renewable energy sector.
"Today's Budget was a breath of fresh air for the renewable energy sector, with R219.2 billion allocated to strengthening South Africa’s electricity supply network - from generation to transmission and distribution.
"The explicit recognition that renewable energy projects are helping to stabilise power supply and reduce loadshedding affirms the role that Independent Power Producers (IPPs) like SolarAfrica play in building energy resilience,"