Economist Duma Gqubule argues that persistent weak growth reflects flawed fiscal assumptions.
Finance Minister Enoch Godongwana and National Treasury had been over-optimistic about the economy for a long time but their forecast for the economy had been off the mark all along for years, says economist Duma Gqubule.
He said the economy stagnated because there was no spending power and Treasury has not used the budget to create jobs.
Call for finance minister to step aside
Gqubule called on Godongwana to step aside to allow for someone else to be appointed to do the job, grow the economy and intervene to ensure jobs are created.
Gqubule, who is founder of the Centre for Economic Development and Transformation, said the country experienced two decades of economic decline with average GDP growth of 1.2% between 2009 and 2025, with lower GDP per capita, while the unemployment rate remained the second highest in the world.
There was nothing truly transformative in Godongwana’s speech and it had “lots of details about nothing”.
‘I see nothing positive in this budget’
Gqubule was participating in a panel discussion with Xhanti Payi, an economist and director of Inani Strategies in a post-budget webinar hosted by the North-West University Business School under its Pitso programme.
“I see nothing positive in this budget,” Gqubule said.
He criticised Treasury’s statement that the country had turned the corner – when growth would be 1.6% per year – saying Treasury had exaggerated when it initially put the growth at 1.9% for last year, which was impossible in the current economic climate.
“As you all know, the Treasury forecasts are wrong every single year for the past 15 years. They are over-optimistic,” Gqubule said.
Despite the fact Operation Vulindlela, touted as a winning formula, had been in existence since October 2020, South Africa experienced two consecutive years of declining investment at 3.9% in 2024, and 2% last year.
Citing a research report by Equal Education, Gqubule lambasted the government for canning the basic education employment initiative that was the largest presidential job creation project and unemployment-combating initiative.
The initiative was cancelled in spite of the fact that the teacher assistance programme was the best job creation project which had been undertaken by the government and created about 1.3 million jobs.
Optimism versus realism in growth estimates
Gqubule said Godongwana must step aside and the government must get someone else to do the job if his budget is not focused on job creation.
Payi said there was a question about whether Treasury’s estimates were realistic, but his overall impression was to be optimistic and impress, as it seemed it was a strategic-oriented budget.
“The minister had been optimistic about something that had not happened in a long while. It is important to see what those growth estimates were telling or trying to communicate to the public.”
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