Budget Speech Commentary from Momentum Experts

Ian Scott: Head of Fixed Income, Momentum Investments

Bio: With more than 20 years’ experience in managing various fixed income mandates for clients, Ian is the Head of Fixed Income at Momentum Investments, where he acts as custodian of the interest rate views.

"Bond issuance - the fact that the funding requirement is now down to R547bn will be good for long dated bond yields, while the landbank bailout (R5bn in year 1 and R1bn in following two years) will contribute significantly to debt restructuring. Overall - a positive Budget, which will be good for the nominal bond outlook. However, implementation, as always, will be key.”

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Sonja Saunderson: CIO: Momentum Investments

Bio: Sonja is responsible for Momentum Investments’ Outcomes-based investment model and philosophy, as well as the management of portfolios of more than R315 billion.

"Throughout the 2021 Budget, Minister Mboweni rightfully reminded the viewer of the important role of the public and private partnership that is required for these plans to work. Thus we, as corporate SA, have an important role to play - and Momentum remains committed to rebuilding SA. Government is asking the investment industry to support infrastructure development and the private and public partnership is posing a lot of opportunities, not only for transformation support but also for investing in South Africa.

The increased focus on youth employment will support our unemployment and skills deficit, helping build a stronger economy. Transformation and inclusion are goals the SA asset management industry is working hard to support.

I was also grateful to see that support for lower income households and social relief for the vulnerable remain a core focus of the 2021 Budget. Markets are already reacting positively on the back of some of the plans mentioned - curbing government debt, infrastructure spend, focusing on pension fund reform, addressing corruption - these are all important messages to the market.

While much of what was covered in the 2021 Budget was anticipated, there is a general upbeat sense of us being in a better position than we initially expected, in order to be able to deliver on the plans.”

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Mike Adsetts: Deputy Chief Investments Officer: Momentum Investments

Bio: Mike is co-responsible for ensuring the outcome-based investing philosophy is embedded and represented in decision-making processes, research initiatives, governance and, ultimately, portfolios managed by the Momentum Investments team.

“Debt stabilisation is key but the big question is can the necessary tough measures be taken? I am hopeful that the Minister’s tough words result in action. The success of infrastructure investment requires crowding in private sector capital, which, in turn, requires a robust social compact and policy certainty. A lot of things remain unsaid in the Budget Speech and were only indirectly referenced. The issue of zero-based budgeting covers a lot of ground and how this delivers cost savings is key.”

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Hannes van den Berg, CEO: Momentum Consult

Bio: Hannes is the CEO of Momentum Consult, a financial planning and advisory group with an extensive national footprint and assets under advice in excess of R25 billion. Hannes holds a B.Compt.Hons degree and qualified as a Chartered Accountant (SA) in 2001.

"The increase in sin tax sounds like we are going to drink and smoke ourselves out of the budget deficit! But on a serious note, the fact that corporate income tax will be lowered from 28% to 27% for companies with years of assessment on or after 1 April 2022, is fantastic news for the private sector. The reality of debt levels was made clear and Minister Mboweni took a balanced approach given the matter of Covid-19 - there were no massive shocks in the system. From a wealth tax point of view, nothing was directly announced but the ending of Section 12J VCC tax benefits in June 2021and the additional measures put in place to carefully assess complex tax structures are indirect ways of addressing this segment.”

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Janine Horn: Financial adviser at Momentum Financial Planning

“It’s a tough period for SA due to the pandemic, which has taken its toll on consumers, business owners and entrepreneurs.

The economic downturn certainly means consumers are fragile and frustrated; however, the Minister’s budget is optimistic and positive.

Regarding personal tax - with a decrease one would expect household finances to improve - I would encourage households to assess their budgets and review their priority lists – sit with a SWOT analysis, decide on a strategy and stick to it.

If wealth tax is deployed as a resource to support and stimulate the economy and business, then that resource should be managed effectively - the biggest concern with these programmes and multi-zero numbers is the management of it on ground level.

Financial literacy at ground level needs to be improved and will allow opportunity to turn unemployment into entrepreneurship. Entrepreneurship is still alive and happening in the informal sector and this is a potential solution for youth. Business skills needs to be taught - one should make available free business training at youth centres.”

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Ernest Zamisa, Financial adviser: Momentum Financial Planning

Bio: Ernest is an experienced and qualified financial adviser, providing advice and solutions that help businesses and individuals on their journeys to success.

“It's a "people conscious" income tax budget under Covid-19, with a long term positive outlook towards public and private development sector opportunities. The speech is a consistent follow-on from previous budget speeches that have been focused on development, and are embracing technology, transformation and environmental consciousness.

The income tax relief is definitely a welcome relief for taxpayers, as it has been a difficult time for many.

The sin tax will also contribute positively towards curbing excessive over-indulgence, promoting healthier consumer behaviour.”

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ENDS