CAPE TOWN, WESTERN CAPE — As civil society organisations and trade unions marched to Parliament to protest the South Africa cost of living crisis ahead of Finance Minister Enoch Godongwana’s medium-term budget policy statement, advocates are demanding urgent and radical government intervention to ease the pressure on households.
Demonstrators are calling for a drastic shift in fiscal policy, arguing that the current macroeconomic strategy is failing to address the deepening socio-economic emergency. Andile Zulu, a spokesperson for the advocacy group Cry of the Xcluded, outlined the coalition’s stark assessment of the mini budget, highlighting the severe scale of the nation’s challenges. According to Zulu, South Africa is grappling with a 43.9% unemployment rate—representing approximately 12.5 million people—with half the population living in poverty and hunger crises reaching levels unseen in more than a decade.
Zulu argued that National Treasury’s strategic approach to spending, particularly its pursuit of a budget surplus to stabilise debt, will not alleviate the profound destructiveness of the crisis. While the strategy aims to create fiscal room for basic services and attract productive fixed investments, Zulu noted that this approach under previous finance ministers has resulted in stagnant economic growth and worsened unemployment.
In response to sentiments that the government cannot intervene in the unemployment and sluggish growth crisis through fiscal policy alone, Zulu pushed back against what he described as the conservative logic within National Treasury. He asserted that the state is not suffering from a lack of resources, pointing to trillions of rands sitting in financial reserves. Instead, he highlighted that billions of rands are lost annually through illicit financial flows, exacerbating the reality that South Africa remains the most unequal country in the world.
Zulu maintained that the state possesses the mandate, authority, and capacity to intervene in the economy, create jobs, and stimulate industrial development. He drew comparisons to developed nations in Europe, as well as parts of Southeast Asia and Latin America, which successfully utilised fiscal, monetary, and industrial policies to serve their people and mitigate crises.
Warning of the social consequences of inaction, Zulu noted that deep levels of hunger, crime, and joblessness gradually destroy society, driving desperate individuals toward looting and destructive behaviour. He pointed to recent waves of protests in France, Spain, and Italy—sparked by austerity policies and the cost of living—as evidence of the chaos that can unfold when governments fail to address public grievances.
To avoid a similar trajectory and unlock the country’s waiting wealth, Cry of the Xcluded proposed several urgent economic alternatives:
Re-industrialisation and Public Investment
Zulu called for a robust re-industrialisation path to recover the nearly 300,000 jobs lost in the manufacturing sector. This includes implementing industrial policies that tap into green critical minerals to locally produce technologies for transport and power generation, rather than merely exporting raw materials. Furthermore, he advocated for heavy investment in basic services, including capacitating the police force with more detectives, and hiring more doctors, nurses, and social workers.
Crucially, Zulu urged the government to reclaim and restore public entities like Eskom and Transnet, rejecting the push toward privatisation. He argued that instead of handing these entities over to the private sector, the state should utilise them to fix key economic infrastructure, expand the transmission network, repair wastewater treatment facilities, and maintain local municipal electricity distribution.
Funding the Solutions: A Wealth Tax and Curbing Illicit Flows
Addressing how to fund these interventions, Zulu highlighted a proposed moderate wealth tax on the top 1% of the population—approximately 350,000 of the wealthiest individuals. A tax rate between 3% and 7% could generate between R100 billion and R235 billion in revenue annually.
Additionally, he called for an end to illicit financial flows, urging the government to stop corporations from hiding money in tax havens like Sweden and Mauritius, underpaying workers, and shifting profits offshore. By capacitating the South African Revenue Service (SARS) to halt these activities, the state could recover an additional R100 billion a year. Zulu also recommended adjusting personal income tax brackets to ensure high-income earners pay their fair share.
Challenging the “Over-taxed” Narrative
Addressing the frequent argument that the South African tax base is already overly burdened, Zulu argued that budget cuts actively depress economic activity, preventing more people from earning wages that rise above the cost of living. He emphasised that every citizen paying VAT is a massive contributor to the tax base, and that indirect taxes place a much heavier proportional burden on the poorer half of the population.
Dismissing fears that a wealth tax or increased corporate income tax would trigger massive capital flight, Zulu cited empirical research from Europe and Latin America showing that moderate tax measures do not typically result in extensive capital flight. He concluded by calling on multinationals, the banking sector, mining, and agriculture to recognise that paying a fair share is essential for long-term societal sustainability and the future viability of doing business in South Africa.
