The South African Institute of Black Property Practitioners applauds Minister of Finance Tito Mboweni and the National Treasury team for delivering a sober budget.
The Budget acknowledges many of the pressing economic challenges and pressures faced by taxpayers and citizens alike while acknowledging the need for long term financial planning.
In the budget speech, there are several key areas which we have noted:
In terms of economic growth, we welcome the tax relief initiatives that have been afforded to individuals.
Regarding bail outs afforded to state-owned enterprises (SOEs), we note that these are some of the largest owners of immoveable property and land which is in many cases under-utilised and not leveraged to generate revenue.
We call for the urgent release of under-utilised prime land for development via mechanisms such as lease and development Public Private Partnerships (PPPs) with the private sector.
Catalysing property development and infrastructure development is one of the many ways in which government can ensure that the desired developmental objectives of transformation and growth are achieved. On land reform, it was noted in our previous response to President Cyril Ramaphosa SONA that, while important, the disproportional emphasis on land use for agricultural purposes must be addressed.
Land must be released for property development in order to drive investment and transformation which can be achieved by having a focus on the release of this land to black developers that are able to present commercially viable and bankable developments.
On access to funding, we support the increased budget allocation towards small, medium and micro enterprises (SMME) development and the increased capitalisation of SMME focussed development finance institutions such as the Small Enterprise Finance Agency (SEFA).
Although there remains much to be done to support and drive procurement from and growth of SMMEs, this will go a long way in driving the growth of black businesses. We also welcome the allocations made for education both in the feasibility studies for the establishment of a new university as well as to the continuing programme of the eradication of schools made out of inappropriate materials.
As referenced in our response to the president’s SONA, the formation of the State Bank and Consolidation of Development Finance Institutions (DFIs) is welcomed. However, we feel that the state bank should have a developmental mandate and cannot function purely as a profit-making retail bank. In this instance, we want to know what the developmental mandate will be and how this will be balanced with the Credit Act.
We do not need ANOTHER retail bank that will subject our people to discriminatory lending rights and requirements that are impossible to meet. This bank must be developmental in nature and serve the needs of the previously marginalised.
Furthermore, the continued silence on the status of the Human Settlements Development Bank (HSDB) continues to be a concern. How will this now be affected by the announcement of the state bank? What is the status of the formation of the HSDB?
Regarding ownership we note the increased threshold for transfer duties which will assist in making home ownership more accessible. We are concerned however that other costs related to home ownership are still very prohibitive such as bond registration costs, attorney’s fees, etc. which we have seen as the biggest barriers to entry in this endeavour.
The first time home owners subsidy needs to be more robust. In the 2019 budget, the Minister disclosed the allocation to be R950m over three years. Given the dire housing backlog that we are faced with and the growing youth population, this will hardly be enough.
On urban spatial integration, we welcome the prioritisation of local economic development. It is indeed true that local government is the heartbeat of any state/economy. However, investment must be channelled towards townships and inner city development where most of our people live.
This can be achieved through a focus on local government support as well as infrastructure investment and development which has an impact in bettering the lives of our people.
We do however note the allocation that has been made for the refurbishment of 27 industrial parks in townships and rural economies which we feel will assist in the upliftment of our townships. The current economic challenges are not insurmountable, implementation is key.
The members of SAIBPP look forward to engaging with national and local government to assist with providing intellectual and physical capacity in making the implementation of these plans a reality.