Dawie Rood, Chief Economist at EFFICIENT GROUP, was invited to talk about his version of the budget speech which was presented by the Finance Minister P. Gordhan last week.

Rood mentioned that there is some new trends around the globe, mentioning Donald Trump. Trump seems to be the new “anti everything” and this mindset is the new trend for new politicians and gains a lot of followers. From his point even the Chinese Economy has changed as they are more focusses on their own market and not Globalisation.

Back to South Africa and the current political situation – by Dawie Rood

Rood predicted for 2017 the following events. Will President Zuma fire Gordhan? No! According to Rood Gordhan will keep his job for now but the recently sworn-in MP Brian Molefe might become the new Deputy Minister of Finance. Molefa shall succeed Mcebisi Jonas. Both, Jonas and Molefe have been mentioned in the State Capture Report.

What should Gordhan have done? The Chief Economist said that he wanted to hear in the Budget speech that the entire State (Ministers and Deputy Ministers) are too expensive and they will be fired. New Ministers will be appointed according to their skills and will be paid according to their performance. He also wished for “creating an excellent, international highly skilled education system” as the current system will fail. Rood said “the current students at the universities are not able to go to university, as the basic skills, taught in Grade 1 are missing.”

Will Jacob Zuma stay and who will succeed him? Dawie Rood was not sure if Zuma will stay but he assumes that Nkosazana Dlamini-Zuma might becomes the new president as she gains a lot of support from the ANC, ANCYL and ANCWL. If she is a blessing for this country? We don’t know yet.

Some Key Highlights in Rood’s Presentation

Gordhan reqeusted a budget of ZAR 1.5 Trillion (!) for the new financial year which will go mostly towards Education, Workers and the Unemployed. The state requested ZAR 500 Billion for government spendings such as procurement and services which will be outsourced (tenders).

High income earners will receive a 4% tax increase and through the Fuel Levy, Sin (Sugar) Tax, VAT and personal Tax the working or middle class will be the main revenue source for the state. This also revealed that the Company Tax will remain at a 28% low compared to 49% 30 years ago.

Dawie Rood spoke about the “White Capital Power” which are the TOP 600 companie sin South Africa which are responsible for close to 40% of the state’s revenue. Should only one of these big players pull out of South Africa the entire system will break down.

At the end, Rood highlighted, that Rating Agencies were satisfied with the outcome of the Budget Speech 2017 presented by Pravin Gordhan and will not downgrade South Africa – for now.


Editors note: The above text does not represent the views of the Austrian Business Chamber in South Africa and is simply a summary of Dawie Rood’s speech. Text by: MS

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Download a summary of Dawie Rood’s presentation here.