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29 June 2020 | Story Edward Kagiso Molefe and Dr Nico Keyser
Edward Kagiso Molefe, left, and Dr Nico Keyser.

The 2020 supplementary budget comes at a time when the ongoing COVID-19 pandemic is causing widespread disruption in the world’s economy and continues to affect it negatively. Even though the precise economic and social consequences of the pandemic still remain uncertain, there is prevalent agreement between economists and policy makers that it will leave the world overwrought with the uncertainties of the future. According to the International Monetary Fund, the world economy is expected to contract sharply by 5,2% this year, due to the huge lockdown to curtail the spread of the COVID-19 pandemic. The South African economy is also expected to contract by 7,2% in 2020, and according to the Minister of Finance, Tito Mboweni, this is the largest contraction in almost 90 years. Therefore, the South African government currently finds itself in an unfortunate and restricted fiscal position. Minister Mboweni does not have much room to move within his emergency budget and therefore calls for a pragmatic approach, the reprioritisation of expenditure, and the implementation of austerity measures within the public sector and its state-owned enterprises (SOE).

Zero-based budgeting
However, the country should be applauded for responding to this economic shock with a set of unmatched measures. The Minister further highlighted that, for the first time in history, all stakeholders – including the private sector, labour, communities, and the central bank – participated in responding to the storm that came without an early warning system. This has proven the validity of the long-sung gospel that by working together, we can do more. R500 billion of government’s COVID‐19 economic support package was directed straight at the problem. Against the background of ongoing measures to address the pandemic in South Africa, the Minister’s supplementary budget of 2020 stressed several key aspects:

The first burning issue addressed in the supplementary budget was the mounting debt-to-GDP ratio, which is envisaged to reach 80,5% in this fiscal year, as compared to a projection of 65,6% in February. Although the Minister has confirmed strategies to curtail the debt and widening deficit, no sign of stabilisation was presented. South Africa continues to experience contracting revenue and is relying extensively on loans from international sources, since savings is a non-starter. The Minister has also called for zero-based budgeting as one of the strategies in building a bridge to recover, and to close the mouth of the ‘hippopotamus’, which is eating our children’s inheritance. The zero-based budgeting is a big step in the right direction; it will make all role players in government understand the economic crisis we are facing. 

Prioritising infrastructure development
The other positive part of the supplementary budget was the prioritisation of infrastructure development. The South African government has already considered almost 177 infrastructure projects that will assist in boosting the economy and curtailing unemployment. The Sustainable Infrastructure Symposium, hosted by President Cyril Ramaphosa, announced 55 projects that are ready to be rolled out in due course. Government needs to further stimulate its partnership with the private sector to ensure more infrastructure development and job creation. Infrastructure development will also ensure jobs for the unskilled labour force, which makes up the largest part of our unemployment. 
In terms of job creation, an economic support package of R100 billion has been set aside for a multi-year, comprehensive response to our job emergency. Moreover, the President’s job creation and protection initiative will be rolled out over the medium term. This will include a repurposed public employment programme and a Presidential Youth Employment Intervention. The country is looking forward to further details regarding this presidential initiative, particularly with regard to the Presidential Youth Employment Intervention, as the youth is the future of this country.
Despite the envisaged revenue adjustment of R1,43 trillion to R1,12 trillion, the country is expected to continue spending. An additional R21 billion is allocated for COVID‐19‐related health-care spending. The supplementary budget has also proposed a R12,6 billion allocation to front-line services. An additional R11 billion is set aside towards improved water and sanitation, and an additional R6,1 billion for youth employment ensures that the most vulnerable are supported. However, the effectiveness of this allocation in the supplementary budget is sorely dependent on the ability of our government apparatus to spend the money.   

Opening the economy
The only worrying issue that the minister did not dwell on much, was the public sector wage bill, which still remains a challenge. According to the Minister, nearly half of the consolidated revenue will go towards the compensation of public service employees. The compensation of employees continues to put much pressure on service delivery and is pushing government in the direction of borrowing. On the other hand, the government of South Africa is still under pressure to implement the 2020 salary adjustments. However, the question still remains why the South African government is not considering the same process as the private sector or finding an alternative way of setting salaries at an appropriate, affordable, and fair level. This could save government money to focus on other areas that require financing, such as debt-service costs.

What remains evident and feasible is that South Africa should continue opening the economy to revive sectors hit hard by the great lockdown. Allowing trade to take place, doing business, and markets to function would provide the ultimate boost to a struggling economy. A reduced role by government could pave the way for the private sector to play a larger role in the economy. Moreover, structural reforms are required to create a favourable environment for growth and to restore South African fiscal credibility. 

Opinion article by Edward Kagiso Molefe, Lecturer: Department of Economics and Finance, and Dr Nico Keyser, Head of Department:  Economics and Finance

News Archive

#Women'sMonth: Save the children
2017-08-10

Description: Trudi O'Neill Tags: : rotaviruses, young children, Dr Trudi O’Neill, Department of Microbial, Biochemical and Food Biotechnology, vaccine 

Dr Trudi O’Neill, Senior lecturer in the Department of
Microbial, Biochemical and Food Biotechnology.
Photo: Anja Aucamp

Dr Trudi O’Neill, Senior lecturer in the Department of Microbial, Biochemical and Food Biotechnology, is conducting research on rotavirus vaccines.

Dr O’Neill was inspired to conduct research on this issue through her fascination with the virus. “The biology of rotaviruses, especially the genome structure and the virus’ interaction with the host, is fascinating.”

“In fact, it is estimated that, globally, ALL children will be infected with rotavirus before the age of five, irrespective of their socio-economic standing. However, infants and young children in poor countries are more vulnerable due to inadequate healthcare. The WHO estimates that approximately 215 000 deaths occur each year. This roughly equates to eight Airbus A380 planes, the largest commercial carrier with a capacity of approximately 500 seats, filled with only children under the age of five, crashing each week of every year.”

Alternative to expensive medicines 
“Currently, there are two vaccines that have been licensed for global use. However, these vaccines are expensive and poor countries, where the need is the greatest, are struggling to introduce them sustainably. It is therefore appealing to study rotaviruses, as it is scientifically challenging, but could at the same time have an impact on child health,” Dr O’Neill said.

The main focus of Dr O’Neill’s research is to develop a more affordable vaccine that can promote child vaccination in countries/areas that cannot afford the current vaccines.

All about a different approach 

When asked about the most profound finding of her research, Dr O’Neill responded: “It is not so much a finding, but rather the approach. My rotavirus research group is making use of yeast as vehicle to produce a sub-unit vaccine. These microbes are attractive, as they are relatively easy to manipulate and cheap to cultivate. Downstream production costs can therefore be reduced. The system we use was developed by my colleagues, Profs Koos Albertyn and Martie Smit, and allows for the potential use of any yeast. This enables us to screen a vast number of yeasts in order to identify the best yeast producer.”

Vaccination recently acquired a bad name in the media for its adverse side effects. As researcher, Dr O’Neill has this to say: “Vaccines save lives. By vaccinating your child, you don’t just protect your own child from a potentially deadly infection, but also other children in your community that might be too young to be vaccinated or have pre-existing health problems that prevents vaccination.” 

A future without rotavirus vaccination?

Dr O’Neill believes a future without rotavirus vaccination will be a major step backwards, as the impact of rotavirus vaccines has been profound. “Studies in Mexico and Malawi actually show a reduction in deaths. A colleague in Mozambique has commented on the empty hospital beds that amazed both clinicians and scientists only one year after the introduction of the vaccine in that country. Although many parents, mostly in developed countries, don’t have to fear dehydrating diarrhoea and potential hospitalisation of their babies due to rotavirus infection anymore, such an infection could still be a death sentence in countries that have not been able to introduce the vaccine in their national vaccination programmes,” she said. 

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