South African Businesses Face Uncertainty After Budget Delay

South African businesses are grappling with uncertainty after Finance Minister Enoch Godongwana postponed the national budget speech to March 12, 2025—an unprecedented move triggered by coalition disputes over a proposed VAT increase from 15% to 17%.

With South Africa’s new tax year beginning on March 1, companies are left without clarity on the government’s economic strategy. The delay has raised concerns over policy stability, governance, and investor confidence in Africa’s most industrialized economy.

Coalition Politics and the VAT Dispute

The delay stems from opposition within the coalition government, particularly from the Democratic Alliance (DA), which objected to increasing value-added tax (VAT) as a solution to the country’s budget deficit.

South Africa’s public debt now stands at 75% of GDP, a sharp rise from 27% in 2008. The government is attempting to stimulate growth without excessive borrowing, but VAT hikes remain highly controversial—especially as it has only been increased once in 30 years.

DA leader John Steenhuisen called the postponement a “victory for the people of South Africa”, arguing that raising VAT would cripple consumers and businesses alike.

In a prepared but undelivered speech, Godongwana defended the need for fiscal discipline, warning that increased borrowing could push South Africa’s credit rating further into junk status and worsen interest payment obligations.

Impact on Businesses and Investor Confidence

The delayed budget has disrupted financial planning for businesses, which now lack clarity on tax structures and fiscal policies.

Khulekani Mathe, CEO of Business Unity South Africa, emphasized that uncertainty is harmful to the economy, stating that the delay casts doubt on the coalition’s ability to govern effectively.

Market analysts warn that the incident exposes deep policy divisions within the Government of National Unity (GNU), formed after the ANC lost its parliamentary majority in 2024—a first since the end of apartheid.

Stephen Grootes, writing for the Daily Maverick, argued that “the last remaining genie of stability is out the bottle”, stressing that budgets are critical to maintaining economic confidence.

Political Fallout and Governance Challenges

The dramatic events surrounding the budget delay also revealed internal tensions within government institutions.

In an off-mic moment, Godongwana was heard venting frustration at Edward Kieswetter, Commissioner of the South African Revenue Service (SARS), who publicly opposed tax increases on budget day.

With South Africa currently hosting G20 finance ministers, the political discord has put a spotlight on governance risks at a crucial time for the country’s international economic engagements.

What’s Next?

Godongwana now faces the difficult task of redrafting the budget in a way that satisfies both the ANC and coalition partners while avoiding a market backlash.

Standard Bank’s Chief Economist Goolam Ballim remains optimistic, stating that the coalition itself is not at risk, but the need for compromise and negotiation has become clearer than ever.

The budget delay signals deeper political and fiscal challenges in South Africa. With businesses struggling to plan and investor confidence shaken, the stakes are high for the revised budget announcement on March 12.

Will the government find common ground? Or will political divisions continue to disrupt economic stability? All eyes are on South Africa’s leadership in the weeks ahead.

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