The 2021 Budget is set against a crisis context of some of the sharpest declines in the world economy in eight decades. The dual impact of the COVID-19 pandemic and the oil shocks of early 2020 has placed this country, like many others in a very precarious position. The measures to protect against the health crisis as well as the global fallout, has caused declines in employment, incomes, challenged business revenues and expanded the vulnerable in society.
However, in the midst of this crisis, there lies great opportunity. The opportunity rests on the possibility to reorient our economy to make it more resilient, to provide new sources of earning for our citizens and plant the seeds of new industries, that will take us forward in a forever changed global environment. In this regard, the 2021 budget has succeeded in confronting these issues head on and has laid a framework for the way forward to navigate this crisis.
The focus on food security with a $500 million investment programme is on point and will mitigate these risks for us as a nation as well as tackle the food import bill. This venture, with a focus on technologically intensive farming techniques will also provide much needed incomes for many who may be struggling during this time.
Essential to implementing this programme will be the ease of access to these incentives as well as the willingness of the population to be motivated into these ventures.
The focus in construction, in particular home construction, has the potential to add a $1 billion stimulus and directly put money into the pockets of small contractors, skilled, semi-skilled and unskilled labour. It can get people back to work again and what economists call the multiplier effect, will create ripples across the economy. Incomes from construction will be spent in supermarkets, farmer’s markets, restaurants and other smaller businesses to reverberate the impact. A dollar spent in construction will not just touch the contractor or employees but will flow to many. This is also true of the other $4 billion in capital projects envisioned.
Commensurate with the stimulus is the move to the digital economy which is already underway. Government is leading the pack as the digitisation of all government services has commenced. The pandemic and need for social distancing has heightened the need for digitisation to keep distance and smooth the flow of doing business. This direction has the transformative potential of improving our ease of doing business, which is our biggest impediment to business creation, investment and growth. Further, new technologies will allow us as a nation and economy to be able to, not only do new things but do the same things differently. This, if done correctly should spur new industries, create new efficiencies and allow for greater innovation in the economy.
Government and private sector investment is necessary to lay the foundations for diversification. The right industries have been identified and the appropriate stimulus must be focused in a consistent manner with long term focus to achieve the results. This entire trajectory of the global economy has changed and with it comes new opportunities. The budget has prioritised industries where we have potential or some type of advantage, to be globally competitive.
Key to this is the entrepreneurial spirit, financed with innovative methods. The risk averse nature of financial players must be tackled and the power of venture capital, angel investors and full utilisation of our stock exchange are critical. This budget has tackled these issues and continuous effort is needed here.
Together with these few items from the budget I have identified, there is the strong component of protecting the vulnerable. This pandemic has exposed the vulnerable groups in this country and they cannot be left behind. It has also put more money in the pockets of citizens through income tax changes while further stimulating economic activity through its various investments. Youth has a role to play in the digitisation opportunities as they are best poised to adopt these new methods. Lastly at this inflection point in our history, the opportunity exists to lay the foundations for meaningful diversification.
This budget is well measured and calculated to deal with the challenges that are in front of us. It seeks to stimulate and expand activity in the economy in the short to medium term while planting the seeds of development of new industries and modernising our economy. I congratulate the government in its foresight, as it has identified and moved towards the opportunities this crisis has provided.