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South Africa plans tax measures to drive revenue amid rising debt

Published

1 year ago

November 1, 2023

South Africa’s finance minister, during a mid-term budget review on Wednesday, revealed plans to drive revenue inflow through increased taxes next year.

The revelation comes as the National Treasury projects wider budget deficits and higher debt over the next three years.

Compared to the 4.0% deficit observed in February, a consolidated budget deficit of 4.9% of GDP is anticipated in 2023–2024. The Treasury projects a 4.6% and 4.2% GDP deficit in the upcoming years.

It is anticipated that South Africa’s gross debt will increase from 5.24 trillion rand in 2023–2024 to 6.52 trillion rand in 2026–2027. Its gross debt is also predicted to stabilise at 77.7% of GDP in 2025–2026, as opposed to 73.6% of GDP in February of the same year.

A major constraint on South Africa’s economic growth potential in the last decade has been rolling power cuts as utility Eskom struggles with breakdowns at its coal-fired power plants. The country is one of Africa’s most industrialised economies, and the power outages have threatened businesses and the general economy. Growth has also been hampered by Transnet, a state-owned logistics company that is also currently performing poorly.

According to the Treasury, the development has led to a decrease in tax receipts, along with a notable decline in mining revenue as commodity prices decline. The projected revenue collections for the current fiscal year, 2023–2024, were $3.04 billion, or 56.8 billion rand, less than what was estimated in the main budget for February.

The official, however, maintained that reductions in spending, modest tax revenue measures, and government-wide efficiency measures—such as reorganising the government through the merger or closure of public entities—were part of the efforts to stabilize the country’s public finances.

“Given the extent of fiscal consolidation required, the Minister of Finance will propose tax measures to raise additional revenue of 15 billion rand in 2024/25 in the 2024 budget,” the Treasury said.

Finance Minister, Enoch Godongwana stated in his budget speech that “our most effective way of funding government is through an efficient tax administration and by broadening the tax base.” The Treasury did not go into detail about the specific measures.

Related Topics:budget Featured South Africa

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Food prices drive second straight monthly hike in Nigeria’s inflation

Published

2 days ago

November 17, 2024

Ifeoluwa Dada

According to official statistics released on Friday, Nigeria’s inflation rate increased for the second consecutive month in October, rising to 33.88% in annual terms from 32.70% in September, mostly as a result of increasing food costs.

In an attempt to boost economic development and strengthen public finances, President Bola Tinubu devalued the naira and reduced subsidies, which caused inflation to spike in the second half of last year.

As the effects of the naira devaluation started to lessen in July of this year, a slew of hikes in the price of petroleum and devastating floods that destroyed crops once again exacerbated pricing pressures, making the greatest cost-of-living crisis in decades worse in Africa’s most populous country.

According to the National Bureau of Statistics, price increases for basics such as rice, maize, bread, potatoes, and cooking oil prompted food inflation to surge from 37.77% in October to 39.16% year over year.

This year, more than 1.5 million hectares of agriculture have been damaged by torrential rain and floods in 29 of Nigeria’s 36 states, leaving millions hungry and displacing large numbers of people.

In an effort to curb inflation, the central bank has raised interest rates five times this year. On November 26, it is expected to make its final rate decision of the year.

VenturesNow

MTN financial report reveals drop in group service revenue

Published

2 days ago

November 17, 2024

Ifeoluwa Dada

Due to operational difficulties in Sudan and the depreciation of the Nigerian naira, MTN Group, Africa’s largest telecom provider, announced on Thursday an 18.5% decline in service revenue for the third quarter that concluded on September 30.

With 288 million users in 17 African regions, MTN said that its group service revenue dropped from 156.3 billion rand ($6.99 billion) in the same quarter of the previous year to 127.4 billion rand.

Despite stating that “the naira was less volatile on a sequential basis in Q3 than in preceding quarters,” the business reported a 48.7% decline in MTN Nigeria’s income due to the currency’s depreciation.

Due to a stronger Ugandan shilling than the previous year, Uganda’s largest contributor, MTN South Africa (MTN SA), expanded by a meagre 3.3%.

Due to “subscriber registration regulations in Nigeria and a decline in users in Sudan, where the conflict has displaced millions of people,” the business reported that its subscriber base increased by 1.6% to 288 million.

Given the higher demand in Nigeria despite the legal obstacles, MTN plans to increase its capital expenditures, which it expects would total between 28 and 33 billion rand for the entire year.