Nhlanhla Nene warns of coalition budgeting risks to South Africa's fiscal and political stability

2 Apr 2025

While many have claimed the current Budget fracas is ‘good for democracy’, the opposite is almost certainly true. Former finance minister Nhlanhla Nene says this entire process might undermine both the economic and political stability of the country.

It may be difficult to remember now but there was a time when the name “Nhlanhla Nene” loomed over our politics. It was not because of anything he had done, but because of what he had refused to do.

When he refused to implement former president Jacob Zuma’s State Capture agenda, he was fired.

He became the lynchpin to the moment that eventually led to President Cyril Ramaphosa beating the Zuma faction in 2017, and Zuma’s eventual defenestration.

While Nene did, eventually, take office again, it was short lived. He resigned after realising he had been mistaken to say he had not met members of the Gupta family. There was no quibble or debate or argument about whether he should stay or go.

He simply left.

This backstory gives him a certain moral heft, which is rare in our politics. And his experience both as finance minister and leader of our society is invaluable.

Read more: Budget deadlock — is ActionSA the ANC’s saviour and what does it mean for the GNU?

During his time, and up until last year, the Budget was crafted by a group of well-qualified experts overseen by a democratically elected finance minister. The process was generally kept secret. And the National Treasury, through the minister, would only discuss tax issues during the Budget process.

Now, the genie has been uncorked, and there will be many more actors involved in drawing up a Budget.

For Nene, the risk is stark.

He has told The Money Show that creating a Budget in this way, where it is about power and patronage, “might result in undermining the fiscal stability itself. Not only fiscal stability, but the economic stability of the country and an impact on the political stability of the country.”

He also says that if we continue to create Budgets like this, “It’s going to be tainted in populism and a lot of unworkable solutions… I would have imagined that some of the people who are today in the Government of National Unity (GNU) would be alive to the fact that they have been calling for a leaner government, and here we are today, that argument has disappeared because they are in government as well.”

Essentially, allowing a Budget to be drawn up like this could literally be the end of South Africa.

It is not hard to see how this would happen.

Parties and individuals would not focus on the entire picture, but only on their own constituencies. The net result would be that no one focuses on the real needs of all South Africans.

No one will focus on whether a learner in Umlazi receives her social grant, her school meals, and a properly resourced education.

The net result would be a continued decline in government services. With all of the consequences for our social fabric.

This is already happening now.

Power, politics and ego

The behaviour of some of the parties reveals their short-term agendas.

The DA is trying to show its constituency that it has power over the ANC; ActionSA appears to be trying to get into the national coalition (and to do anything it can to hurt the DA); the EFF is making as much noise as usual and the ANC is simply trying to survive in government.

While the public fights are all about percentage points, power and parliamentary numbers, the actual point of the Budget is being completely missed.

For the moment, no one appears to be focused on making sure the numbers add up, and that government money will be properly spent. Instead, as is often the way of our politics, leaders are posturing about power.

One of the reasons for this is that this is the first time this situation has occurred. It’s the first Budget of the coalition, and the coalition partners are still finding each other.

Read more: Big Budget Bust-Up — here’s why DA might be overplaying its hand

Unfortunately, if any of the parties feel that they were able to “win” something in this process, they will do exactly the same thing next year. And this will set a pattern.

It is also likely that there are now going to be many voices that will call for more transparency in the Budget process. While some of these voices may have noble reasons for this, trying to draw up a Budget in our society in this way would be impossible.

The nature of the trade-offs would set different groups against each other. With the highest (racialised) inequality in the world, this is incredibly dangerous. It would turn into Budget-by-protest, where groups would camp outside the National Treasury demanding that their issues receive more funding than other people.

As Nene put the problem: “At the end of the day, we are burdening the very same eight million taxpayers who are carrying the rest of the 60 million South Africans. Are we trying to concentrate it in that group while there are so many other things that are concessions and are intended to protect the poor from their burden?”

This gets to the heart of the issue, and reveals how difficult some of these problems are.

To throw political ego into it would be incredibly foolish.

Budgeting in a time of coalitions

There are measures that could prevent all of this from happening again.

The most obvious would be the institution of a comprehensive and public coalition agreement between the parties that are now in government. This would include provisions about how Budgets would be created.

This would require cool heads in a cool time. That time is not now, but perhaps several weeks after this Budget crisis is resolved.

This would require deft leadership, particularly from the bigger parties and the ANC. It will not happen if parties are still trying to score points off each other or to simply position themselves.

That said, there is at least one important point of agreement between them.

There has been no discussion at all from any of the parties about resolving all of the funding problems by simply increasing the government’s debt levels.

This is the one positive to take from this entire sorry saga.

For the moment, this Budget process appears poised to create winners and losers. As Nene warns, that could ultimately undermine our political stability. DM

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South Africa

Power, politics and ego

Budgeting in a time of coalitions