Tougher times ahead

    The world economy is in a worse position than it has been in several decades.

    According to a report by the International Labor Organization, more than 18 million
    people could lose their jobs this year and this figure could be even higher if the
    situation gets worse. All countries are affected by this slowdown. Economic
    information from many countries, including developed countries such as the United
    States, Britain and France, is concerning. South Africa is not as badly affected, and
    we want to keep it that way. In fact, we want to do better so that we can continue to
    provide for the needs of our people. We must also use the period ahead to try and
    deal with the many challenges facing us.

    Like the rest of the world, our economy is going to grow more slowly. We too are
    experiencing job losses and many people will struggle to cover their monthly
    household expenses. When the economy grows at a slower rate, governments
    collect less taxes. This means that government will have to borrow to meet some of
    its spending commitments.

    Government spending will continue to grow on services that help poor communities,
    and public works programs which will create more new jobs. Over R780 billion will
    be spent on large infrastructure projects over the next three years, including building
    more power stations, roads and railways, upgrading water and sanitation networks
    and providing more houses. We will also work with business and trade unions to
    ensure that job losses are kept to a minimum.

    Many countries are not able to respond to this situation as we can. South Africa can
    take these measures to protect our economy and the poor because in previous years
    we handled our finances with discipline. We saved money when our economy was
    doing well. As a result, we can increase spending on public services without hurting
    our economic recovery.

    The main areas in the budget that receive more money are:
    • R12 billion more for social grants
    • R45 billion more for provinces to improve education, health and roads and to
    spend more on rural development
    • R10.9 billion more for housing, water, sanitation and municipal services
    • R5.4 billion more for improving the criminal justice sector
    • R6.4 billion more for public transport, national roads and rail infrastructure

    Despite government’s best efforts, meeting the needs of all South Africans will be
    tougher over the period ahead. Government officials must remain mindful of the fact
    that our resources belong to all South Africans. We all have a role to play in making
    sure money is not wasted by any of our civil servants. We must combine our efforts in
    working together toward our economic recovery.

    Government aims to increase the number of full time equivalent jobs to 400 000 a
    year by 2014, helping to bring down poverty and unemployment

    Government is working to create more jobs for unemployed South Africans.

    The expanded public works programme began in 2004/05.

    In its first five years, the programme created over 70 000 full time equivalent jobs
    a year for unskilled and unemployed people. These jobs were created by
    increasing the number of workers used in government’s infrastructure projects
    and in the delivery of public services.

    Many of these jobs have been short-term or part-time positions and provided
    some gainful employment and skills transfer.

    From 2009, government kicks off a new phase of the expanded public works

    More than R4.1 billion will be invested in this programme to create even more jobs
    over the next five years. These jobs will be created in:
    • Home-based care and community health services
    • Construction, maintenance and environmental protection projects
    • New programmes run by non-profit, religious and community-based

    Government aims to increase the number of full time equivalent jobs to 400 000 a
    year by 2014, helping to bring down poverty and unemployment.

    Social grants
    Government provides social grants to more than 13 million South Africans.
    The state also provides benefits such as free schooling to the poor, free primary
    health care, and free water and electricity to poor households.

    All children up to the age of 15 whose parents earn less that R2 300 a month are
    eligible for the child support grant. Men above the age of 63 and women older than
    60 can access the old age pension if they earn less than a certain amount.

    The age limit for men to receive the old age grant will be reduced to 61 in April
    2009 and 60 in April 2010. Social grants increase from 1 April 2009 as follows:

    • The old age pension, disability and care dependency grants increase by R50 to
    R1 010 a month
    • The child support grant increases by R10 to R240 a month
    • The foster care grant increases by R30 to R680 a month In 2009/10, spending on
    grants will increase to R80 billion, which is 12% of total government spending.

    This makes South Africa one of the world’s biggest spenders on social grants.


    One of the legacies of apartheid is the poor design of our cities, forcing workers to
    live far from their places of work. To fix this, government is investing billions of
    rands in public transport.

    These investments are going to build new railway lines, buy new trains, put more
    buses on the road, subsidise bus and rail transport, and get unsafe taxis off the
    road. Over the next three years, government will provide R25 billion to the Rail
    Commuter Corporation to invest in new trains and introduce new routes.
    Government is also increasing the budget for rail safety inspectors to reduce
    accidents and delays. The R25 billion Gautrain project is nearing completion, and
    the line from OR Tambo International Airport to Sandton should be in operation by
    early 2010. Government is providing large cities with R12 billionmover the next
    three years for the construction of rapid bus transit systems.

    Progress is most advanced in Johannesburg, which is planning to spend R1.2
    billion on its bus rapid transit system by June 2009. Cape Town has recently
    issued a tender for R600 million for infrastructure related to its planned system.

    Existing subsidized bus services also receive more money to provide for
    increases in costs and higher passenger numbers. To make public transport
    safer, an extra R350 million is provided to pay taxi owners to scrap unsafe

    Over the next three years, it is expected that about 17 000 taxis will be removed
    from the roads.

    Funding for a rural transport strategy is also provided for in the Budget:

    • Home-based care and community health services
    • Construction, maintenance and environmental protection projects
    • New programmes run by non-profit, religious and community-based

    A People’s Guide... in South Africa
    BUDGET 2009
    What is the National Budget?

    In February of each year, the Minister of Finance announces government’s spending,
    tax and borrowing plans for the next three years. This is called the NATIONAL

    It describes how government will raise money and how it will be spent. The national
    budget divides money between national departments, provinces and municipalities.
Public works will put more people to work
Investing in a bigger, safer transport system
Government expands social grants to help the poor
CPI The Lebanese Center for Public Information

18. South Africa 2