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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

Sport results: Tennis, Netball, badminton, athletics
2009-05-05

During the Mega-intervarsity Tournament held at Sun City last week, both the University of the Free State’s (UFS) men’s and women’s tennis teams beat their opponents. The Kovsies women’s team beat the Pukke 15-0, Tukkies 15-1 and Maties 12-5.

The Kovsies men’s team beat their respective opponents as follows: Maties A 12-6, Maties B 15-0, Pukke A 9-7, Tukkies A 14-1 and Pukke B 15-0.

Janine de Kock from KovsieSport said that she was satisfied with these achievements. “For the past two years the women have won the University Sports South Africa (USSA) tournament and now again this tournament. What makes this achievement special is the fact that it was the first tournament that four of the women’s team members played for the UFS.”

“I am also very satisfied with the achievements of the men’s team. They ended sixth in last year’s USSA tournament. This year, at a tournament where the top four universities in terms of tennis were present, they won,” said Janine.
Rensia Henning in action during the Mega-intervarsity Tournament that took place at Sun City last week.
Photos: Jeanine de Kok
 
Netball: Hard work gets rewarded - (April 2009)

Three Kovsies were selected from the South African National Netball team to the Senior Top 12 Team that will represent South Africa at the SPAR Challenge, a three nation’s test series against Botswana and Fiji. These matches will take place towards the end of May in Pretoria.

The three students are Elzet Engelbrecht, Maryka Holtzhausen, en Adele Niemand.


Kovsie students compete at badminton championships

One former student from the University of the Free State (UFS) Chris Dednam, and one current Kovsie student Annari Viljoen are included in the National Badminton Team that represented South Africa from 17 to 24 April 2009 at the All Africa Badminton Championships in Nairobi, Kenya. They also participated in the Kenya International Championships from 25 to 27 April 2009.

Chris Dednam and Annari Viljoen and with them Roelof Dednam, also a former Kovsie student, were included in the team that will participate at the Sudirman Cup in Guangzhou, China. The Sudirman Cup that will take place from 10 to 17 May 2009 is the world mixed team badminton championship and takes place every two years.

Kovsie athletes win medals

Kovsie athletes excelled at the South African Students Athletics Championships (USSA) that was held in Stellenbosch by winning a total of 15 medals.

The medal winners are:
Gold: Thuso Mpuang for the 200m, Johan Cronjè for the 1 500m, Maryna Swanepoel for the half marathon and Marizette Badenhorst for hammer throw.
Silver: Thuso Mpuang for the 100m, Johan Cronjè for the 5 000m, Charles le Roux for triple jump, Ronè Reynecke for the 800m, and Abongile Lerotholi for 1 500m.
Bronze: Kagisho Kumbane for 100m and 200m, Boy Soke for half marathon, Charles le Roux for long jump, Thandi Malindi for the 3 000m steeple chase, and Marike Steyn for triple jump.

In the team competition the Kovsie men’s team received third place and the women’s team fourth place.
 

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