Unlocking fiscal potential: The missing links in SA’s economic engine

Every year, the national budget sets the economic direction for the country. However, in 2025, the process has proven far more complicated than usual.

The third iteration of the budget is now expected on 21 May, following delays driven largely by strong public and opposition party backlash against the proposed 0.5% value-added tax (Vat) increase. This highlights just how politically and socially sensitive tax levers have become.

Read: SA Budget 3.0 loading: Godongwana confirms 21 May

While the final budget allocations are still to be confirmed, we can expect the government to continue prioritising infrastructure, logistics, and economic development, as these areas have consistently featured on the national agenda.

Unfortunately, though, even the most progressive fiscal plans are likely to fall short of having the meaningful impact that is needed unless they are matched by coordinated efforts to strengthen the country’s structural enablers.

Logistics

South Africa’s hamstrung export competitiveness is a prime example.

Undermined for years by logistical challenges ranging from poor roads and border bottlenecks to collapsing rail networks, the resulting high cost of doing business and often lengthy delays in the movement of goods have set SA’s trade competitiveness back massively.

At border posts like Beitbridge, trucks are frequently delayed for days, and major ports such as Durban remain heavily congested.

Meanwhile, ports like Ngqura and Richards Bay, which could relieve the pressure, remain underused due to a lack of investment and support.

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Addressing this issue would make a real difference not only to competitiveness but also to overall economic efficiency. It would also deliver many short-term benefits in the form of job creation, especially for unemployed youth, and stimulation of local economies while building long-term national capacity.

Customs administration remains another significant pain point.

Delays, inconsistent enforcement, and outdated processes slow trade and frustrate businesses. Improving customs efficiency needs to be a national priority, but interventions need to be comprehensive.

These include retraining customs officials and updating their skills, as well as supporting businesses with clear, predictable guidance on cross-border compliance. Without this level of effort, even the best infrastructure won’t achieve its full potential.

Our initiative at SNG Grant Thornton, in partnership with the University of Johannesburg Business School, aims to confront these issues head-on. Together, we’re analysing trade and tax policy within the southern African context to understand how South Africa can adapt to a rapidly changing global environment. This work has become more urgent in light of Donald Trump’s return to the US presidency and the resulting tariff announcements that have reignited fears of trade wars and once again shifted the dynamics of global trade.

Listen/read: Trump, trade, and tensions: What’s at stake in Ramaphosa’s US visit?

Of course, global trade policy and local infrastructure investment are only two parts of a much more complicated equation. South Africa’s long-term economic strength depends massively on its people.

Education

Despite high levels of education spending, the country is failing to produce the skilled workforce that is needed to drive growth. Many young people who finish school cannot gain admission to university, and TVET [Technical and Vocational Education and Training] colleges remain largely underutilised. The system is not producing enough graduates in technical fields that align with industry needs.

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This is not only a crisis of access but also of relevance. Education must focus more on future-fit skills like digital literacy, AI, green technology, and data science and then link these skills more effectively to economic sectors like agriculture and manufacturing.

TVET colleges, for example, could be embedded within local development projects, giving students hands-on experience while supporting community production and even export initiatives.

Land ownership

There’s also immense scope to move beyond the tired, politically motivated arguments around land ownership and instead put the extensive land owned by government to good use by establishing cooperative farming and small-scale production hubs tied to local training and enterprise development.

Listen/read: Land expropriation: Why government should release its own land first

These types of practical, decentralised models would go a long way towards reducing inequality and building economic inclusion from the ground up.

Too often, economic planning assumes that people will move to where opportunity is, but sometimes, it’s necessary, and more effective, to bring opportunity to where people are.

Service delivery

Of course, even well-targeted investments can be undermined by weak delivery. Municipal capacity, poor oversight, and widespread inefficiencies continue to erode the impact of public spending. Addressing this is not just a matter of increasing funding; it requires better systems, greater accountability and a commitment to ensuring that budgetary allocations reach their intended destinations.

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The bottom line is that, as South Africa positions itself within broader trade frameworks like the African Continental Free Trade Area (AfCFTA), Brics, and SADC, we need to focus not only on securing agreements but also on building the capability to deliver on them.

Trade deals mean little without the infrastructure and systems to move goods efficiently, and skills to innovate and compete.

The budget, when it eventually lands in full, should be seen as a catalyst for such capacity development rather than a silver bullet solution on its own. True growth depends on alignment between fiscal intent, practical delivery, and long-term strategy.

If South Africa is ever to achieve its full economic potential, infrastructure, logistics, and human capital development must move from being budget line items to genuine national priorities.

Sipho Mhaga, customs and excise specialist at SNG Grant Thornton, and Khanyisa Cingo-Ngandu, head of tax at SNG Grant Thornton.

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