As the Minister of Finance prepares to table his Budget for 2022/23, the Institute for Economic Justice (IEJ), along with civil society, continues to advocate for a human-centered budget. We believe that the budget, and budget processes, are critical to the advancement and protection of human rights.
In this year’s budget, the Minister should concentrate on the importance of the complementarity between job creation and retention, maintaining and expanding income support, and sustaining and improving public services. The three elements collectively should serve as the foundation for a comprehensive development strategy that is inclusive and sustainable; balancing dignity and wellbeing with a robust fiscal position.
In line with the abovementioned foci, our expectations for Budget 2022/23 is as follows:
The Social Relief of Distress grant and pathways towards a Universal Basic Income Guarantee
The IEJ welcomes the extension of the SRD grant. However, in its current form, the grant is insufficient to alleviate the scale of the crisis of deprivation we face. We need greater clarity on its improvement from this financial year’s Budget announcement to ensure that it will effectively reduce poverty. For instance, a flat R350 does not include even an adjustment for inflation but, more importantly, is not linked to any objective measure of poverty. This is why we have recommended to the government that the SRD be transitioned from the temporary legal framework of the State of Disaster to become a permanent provision set at the Food Poverty Line of R624 and progressively increased to the Upper Bound Poverty Line of R1 335.
It will also be important to understand how the SRD grant extension will be financed. The latest National Treasury data show that there is R200 billion higher than expected revenue windfall driven by commodities. This means that the extension of the grant even at the Food Poverty Line can be absorbed by this increased revenue. The IEJ’s UBIG pathways demonstrate that the SRD grant can be progressively financed without impacting spending on public services or hampering job creation. Importantly, the IEJ is against the increase of Value Added Tax as a financing measure as this will have a negative impact on disposable income for everyone; especially low-income households.
The Minister of Finance must also commit to the expansion of the SRD grant into a Universal Basic Income Guarantee urgently and engage civil society on the pathways towards a UBIG. This should include reviewing evidence on UBIG, its’ design, and consideration of new forms of tax to raise and redistribute revenue for financing it. The IEJ’s financing proposals for the UBIG show that fiscal space can be created for its implementation.
Jobs, industrial support, and support to small-medium and micro-enterprises
With phases one and two of the Presidential Employment Stimulus (PES) having reached over 800 000 beneficiaries, we are expecting an update on its allocation for 2022/23. While the magnitude of jobs created is an achievement; the quality of jobs and career pathways of the PES has been criticised. Participants in the programme’s largest component, the Basic Education Employment Initiative (BEEI), have complained about a lack of transfer of skills, the short-term nature of the jobs, and a lack of pathways into secure employment. This programme must be scaled up and the rollout improved in order to make real headway in alleviating the unemployment crisis.
In his State of the Nation Address on the 11th of February, the President stated the Loan Guarantee Scheme will be reintroduced. This scheme was a failure in the initial phase, with poor uptake by small businesses. Small businesses play an important role in employment and an improved scheme may aid their recovery from COVID-19 and lead to job retention. The type of finances made available to businesses and the criteria will be important in improving uptake and we are looking forward to more details on this from the Minister of Finance.
Recognising the role that small businesses play in employment, the President stated that the Youth Employment Incentive will be reformed to include small businesses. However, there is currently no evidence to suggest the ETI works in alleviating unemployment in its current form. Rather, youth unemployment is currently over 70% for those between the ages of 18-24. In a 2014 study by the United Nations University World Institute for Development Economics Research, it was found that the impact of ETI on youth unemployment was statistically insignificant. More recently, it has been found that support for the policy was based on false evidence, which was not peer reviewed. The result has been a policy that, instead of alleviating youth unemployment, has effectively subsidised businesses, instead of using these resources to support policy supported by evidence. This is why the IEJ has proposed the cancellation of this incentive and has shown that this can raise up to R4.9 billion in revenue to finance a UBIG. A thorough review of the incentive’s impact has to be undertaken before it can be expanded and more resources are redirected towards it.
The President also underlined the importance of industrialisation. Despite this acknowledgment, industrial policy support has been on a decline. In this budget, we call for increased allocations for sector-specific industrial policy, including Master Plans, that place emphasis on the protection and creation of quality jobs. This remains vital to ensure a just recovery and a reversal of the deindustrialisation trend. Increased funding must be directed towards Master Plans as this is essential in supporting greater localising of production inputs, which will in turn boost manufacturing revenue and support job creation.
Public services
The IEJ and broader civil society have emphasised the overall importance of well-resourced public services, alongside grants and job creation, to a sustainable development strategy. There can be no dignity and improvement in the standard of living without access to quality public services.
The Medium-Term Budget Policy Statement proposed cuts on government programmes (consolidated non-interest expenditure, that is, total spend excluding debt servicing costs) by 3.3% in real terms on an annual basis over the medium term. We see that, in the midst of a severe economic and social crisis, real per person expenditure falls from R26,140 in 2020/21 to R25,117 in 2024/25.
Public services have been deteriorating due to budget cuts and this will only deepen poverty, unemployment, and inequality. By way of example, there are not enough ambulances to take people to the hospital in the Eastern Cape, schools still have dire infrastructure and pit toilets despite court orders to eliminate these, and informal settlement upgrading necessary to ensure people live in dignity is proceeding at a snail’s pace, while public infrastructure from roads government buildings such as hospitals are suffering from a lack of budgeting for maintenance. Given the improved revenue, we hope that the proposed budget cuts from the Medium-Term Budget Policy Statement (MTBPS) are reversed.
The abovementioned focus areas are not exhaustive of all important issues to be considered ahead of the budget, however, it focuses on a few strategic approaches and priority areas that the Institute for Economic Justice assesses as crucial to South Africa’s social and economic recovery from the pandemic.
For enquiries, contact:
Dalli Weyers, Advocacy and Communications Lead, 082 460 2093 | dalli.weyers@iej.org.za
Download the media statement below.
Amaarah is a Junior Programme Officer in the Rethinking Economics for Africa project. She is currently studying towards her Masters in Applied Development Economics at Wits University. 
Dr James Musonda is the Senior Researcher on the Just Energy Transition at the IEJ. He is also the Principal Investigator for the Just Energy Transition: Localisation, Decent Work, SMMEs, and Sustainable Livelihoods project, covering South Africa, Ghana, and Kenya.
Dr Basani Baloyi is a Co-Programme Director at the IEJ. She is a feminist, development economist and activist. She gained her research experience while working on industrial policy issues in academia, at the Centre For Competition, Regulation and Economic Development (CCRED) and Corporate Strategy and Industrial Development (CSID) Unit.
Dr Andrew Bennie is Senior Researcher in Climate Policy and Food Systems at the IEJ. He has extensive background in academic and civil society research, organising, and activism. Andrew has an MA in Development and Environmental Sociology, and a PhD in Sociology on food politics, the agrarian question, and collective action in South Africa, both from the University of the Witwatersrand.
Juhi holds a Bachelor of Arts degree in International Relations and Sociology from Wits University and an Honours degree in Development Studies from the University of Cape Town. Her current research focus is on social care regimes in the South African context, with a particular focus on state responses to Early Childhood Development and Long-Term Care for older persons during the COVID-19 pandemic. Her other research areas include feminist economics, worlds of work and the care economy.
Bandile Ngidi is the Programme Officer for Rethinking Economics for Africa. Bandile has previously worked at the National Minimum Wage Research Initiative and Oxfam South Africa. He holds a Masters in Development Theory and Policy from Wits University. He joined the IEJ in August 2018. Bandile is currently working on incubating the Rethinking Economics for Africa movement (working with students, academics and broader civil society). 
Liso Mdutyana has a BCom in Philosophy and Economics, an Honours in Applied Development Economics, and a Masters in Applied Development Economics from Wits University. His areas of interest include political economy, labour markets, technology and work, and industrial policy. Through his work Liso aims to show the possibility and necessity of economic development that prioritises human wellbeing for everyone.
Joan Stott holds a Bachelor of Business Science in Economics and a Master’s in Economics from Rhodes University. She brings to the IEJ a wealth of experience in public finance management, policy development, institutional capacity-building, and advancing socioeconomic and fiscal justice.
Siyanda Baduza is a Junior Basic Income Researcher at IEJ. He holds a BSc in Economics and Mathematics, an Honours degree in Applied Development Economics, and is currently completing a Master’s degree in Applied Development Economics at the University of the Witwatersrand. Siyanda’s research focuses on the impacts of social grants on wellbeing, with a particular focus on the gendered dynamics of this impact. His interests include applied micro-economics, policy impact evaluation, labour markets, gender economics, and political economy. He is passionate about translating economic research into impactful policy.
Shikwane is a Junior Programme Officer at IEJ focusing on civil society support and global governance in the G20. He has a background in legal compliance, IT contracting and student activism. He holds degrees in Political Studies and International Relations, as well as an LLB, from the University of the Witwatersrand.
Dr Tsega is a Senior Researcher focusing on Women’s Economic Empowerment within the G20. She examines gender equity in economic policy, with expertise in food systems and small enterprise development. She holds a PhD in development studies from the University of the Western Cape, an MA in Development Economics, and degrees in Development Studies and Economics from UNISA and Addis Ababa University.
Nerissa is a G20 Junior Researcher at IEJ, focusing on advancing civil society priorities within the G20 framework. She bridges data, research, and policy to advance inclusive economic frameworks. She is completing a Master’s in Data Science (e-Science) at the University of the Witwatersrand, and holds Honours and Bachelor’s Degrees in International Relations with distinction. She has worked as a Research Fellow at SAIIA and a Visiting Research Fellow at Ipea in Brazil.
Dr Mzwanele is a Senior Researcher supporting South Africa’s G20 Sherpa with policy research. He holds a PhD in Economics from the University of Birmingham and an MSc from the University of the Witwatersrand. His work covers open macroeconomics, trade, finance, and higher education policy, and he has published widely on inequality, unemployment, household debt and higher education curriculum reform.
Kamal is the Project Lead for IEJ’s G20 work, focusing on sovereign debt and development finance. He holds a BComm (Hons) in Applied Development Economics from the University of the Witwatersrand and an Erasmus Mundus Joint Masters in Economic Policies for the Global Transition. He has worked with SCIS, UNCTAD and co-founded Rethinking Economics for Africa.