The Effectiveness of Governance Through Fiscal Policy Management in South Africa

Abstract

Fiscal Policy is an important instrument for managerial decision-making. Many countries in Africa have adopted this policy to ignite socio-economic development. In South Africa (SA), several fiscal policy strategies have been adopted and implemented since the country's transition to democracy in 1994 with the aim of stimulating economic growth. Fiscal Policy is the utmost significant tool of economic management that is used by government to achieve the growth of economic activities. It is a vital measure of economic policy that achieves the foremost objective of managing economic growth, accomplishing complete employment, preserving the stability of price, settlement of economic balance and attaining societal integrity. The objective of this paper revealed a positive relationship between fiscal policy and managerial decision making in South Africa. In addition, the findings suggests that government spending has proven unsustainable, and continued spending on some of these policies may exacerbate the country's economic situation, given the fact that its expenditure is largely dependent on income tax. Based on the findings, this paper recommends that, for the SA economy to perform better, resources should be diverted from government consumption (thereby reducing funding for some of the current fiscal policies) to investment spending (e.g., job creation, poverty alleviation and promotion of long-term economic growth through infrastructure development).