BUSA Backs 2026 Budget but Urges Faster Growth, Municipal Reform

Business Unity South Africa (BUSA) has welcomed the 2026 National Budget, praising its commitment to fiscal discipline and reform, while warning that economic growth remains too weak to meaningfully tackle unemployment.

Reacting to Finance Minister Enoch Godongwana's Budget Speech, BUSA said the document correctly identifies South Africa's central economic challenge: insufficient growth that continues to entrench unemployment and inequality.

Fiscal Milestones Restore Confidence

BUSA CEO Khulekani Mathe highlighted several major achievements over the past year, including:

• South Africa's removal from the Financial Action Task Force (FATF) grey list

• A credit rating upgrade

• Stabilisation of public debt

• A narrowing budget deficit

• Easing borrowing costs

"These developments are worthy of recognition because they demonstrate what is achievable when the country concentrates on the right priorities and works together," Mathe said.

He noted that the exit from the FATF grey list required coordinated efforts across government departments, agencies and the private sector.

Debt is stabilising and fiscal consolidation has begun to restore market confidence, BUSA said, describing these as foundational steps toward rebuilding investor trust.

Growth Still Too Modest

The Budget projects GDP growth of 1.6% in 2026, rising to 2.0% by 2028.

While BUSA acknowledged the upward trajectory as a positive signal, it cautioned that such growth levels remain insufficient to address unemployment at scale.

"Building on these positive developments to raise the growth rate must now be the focus of all our efforts," Mathe said.

Sustained higher growth, he added, is essential to unlock job creation and long-term investment.

No Surprises on Tax, Gap Closed Without Hikes

BUSA commended the Budget for providing policy certainty, particularly on tax.

Improved tax administration and expenditure reviews have generated sufficient savings to close a projected R20 billion funding gap in 2026/27 without additional tax increases.

The organisation welcomed targeted relief measures, including:

• Adjustments to personal income tax brackets

• An increase in the VAT registration threshold

• Higher capital gains tax exemption for small business sales

These measures, BUSA said, ease financial pressure on households and entrepreneurs while supporting growth.

Fiscal Strategy Showing Results

Mathe said Treasury's fiscal strategy is delivering measurable progress through:

• Supporting economic growth

• Improving public spending efficiency

• Containing the public sector wage bill

• Increasing capital investment

• Anchoring fiscal sustainability through principles-based discipline

Municipal Failures a Major Constraint

Despite the positive fiscal outlook, BUSA warned that deteriorating local government performance threatens to undermine recovery.

"Dry taps, potholes, sewage running through the streets and non-functional traffic lights have become daily occurrences that erode confidence," Mathe said.

He argued that the measures announced do not go far enough to address municipal dysfunction, which imposes direct costs on households and businesses.

Alignment with SONA Priorities

BUSA noted that budget allocations align with priorities outlined in the President's State of the Nation Address (SONA), including:

• Increased funding for early childhood development

• Deployment of the army to combat organised crime

• Hiring additional doctors

• Expanded infrastructure investment

This alignment, the organisation said, reflects improved coordination within government — but stressed that delivery must now follow commitment.

Structural Reform and Private Sector Role

BUSA acknowledged progress under Operation Vulindlela, particularly in energy, transport and logistics reforms.

"Private-sector participation, coupled with public-private partnerships currently under development, is essential to unlocking the growth potential of the South African economy," Mathe said.

He reaffirmed that business stands ready to partner with government to boost investment, accelerate structural reform and create jobs.

While welcoming the 2026 Budget as credible and stabilising, BUSA's message was clear: fiscal repair is underway, but faster growth and stronger local governance will determine whether recovery translates into broad-based prosperity.