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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

In January 1, 2003, the Qwa-Qwa campus of the University of the North (Unin) was incorporated into the University of the Free State (UFS).
2003-02-07


FREDERICK FOURIE

IN January 1, 2003, the Qwa-Qwa campus of the University of the North (Unin) was incorporated into the University of the Free State (UFS).

While this is merely the beginning of a long and complex process, it does represent a major milestone in overcoming the apartheid legacy in education, realising the anti-apartheid goal of a single non-racial university serving the Free State.

The incorporation is also part of the minister's broader restructuring of the higher education landscape in South Africa - a process which aims to reshape the ideologically driven legacy of the past.

In contrast to the past educational and social engineering that took place, the current process of incorporating the Qwa-Qwa campus of Unin into the UFS is informed by three fundamentally progressive policy objectives, clearly outlined in the education white paper 3: (A framework for the transformation of higher education):

To meet the demands of social justice to address the social and structural inequalities that characterise higher education.

To address the challenges of globalisation, in particular the role of knowledge and information processing in driving social and economic development.

To ensure that limited resources are effectively and efficiently utilised, given the competing and equally pressing priorities in other social sectors.

Besides informing the way the UFS is managing the current incorporation, these policy objectives have also informed the transformation of the UFS as an institution over the past five years.

In 2001, former president Nelson Mandela lauded the success of the UFS in managing this transformation, by describing the campus as a model of multiculturalism and multilingualism. This was at his acceptance of an honorary doctorate from the UFS.

Indeed our vision for the Qwa-Qwa campus as a branch of the UFS is exactly the same as it is for the main UFS campus - a model of transformation, academic excellence, community engagement and financial sustainability, building on the histories and strengths of both the Qwa-Qwa campus and the UFS (Bloemfontein campus).

Realising this vision will be a giant leap forward in establishing a unified higher education landscape in the Free State.

In more concrete terms, the UFS is working towards this vision by focusing on the following areas of intervention: access and equity; academic renewal; investment in facilities; and sound financial management.

These interventions are being made not to preserve any vestiges of privilege or superiority, but precisely to increase access for students from poor backgrounds and to promote equity and representivity among all staff.

The current growth phase of the UFS has seen student enrolment almost double over the past five years, in particular black students, who now constitute approximately 55 percent of the student population of nearly 18 000 (including off-campus and online students).

But it has not just been a numbers game. Our approach has been to ensure access with success.

Our admissions policy, coupled with the academic support and "career preparation" programmes we offer, have resulted in significant successes for students who otherwise would not have been allowed to study at a university.

This will be continued at Qwa-Qwa as well.

Our academic offerings too have undergone dramatic change. We have become the first university in the country to offer a degree programme based on the recognition of prior learning (RPL).

This is not just a matter of academic renewal but of access as well, especially for working adults in our country who were previously denied a university education.

As for the sound financial management of the UFS (including the Qwa-Qwa campus), this is being done not for the sake of saving a few rands and cents, but for the greater value to our society that comes from having sustainable institutions.

It is sustainable universities that can make long-term investments to fund employment equity, provide information technology for students, upgrade laboratories, construct new buildings, develop research capacity, and provide a safe environment for students and staff, as is happening now at the UFS.

As a result of such management, a practical benefit for prospective students at the Qwa-Qwa campus of the UFS will be lower academic fees in some cases compared with the Unin fees.

As is the case with all these processes, there are concerns from staff and students at Qwa-Qwa and the broader community of the region that the Qwa-Qwa campus serves.

To get the campus viable and to ensure its continuation in the short term, tough choices had to be made by the minister of education regarding which programmes to offer and fund.

But we have been encouraged by the community's understanding that these concerns can be addresed over time as the campus becomes financially viable.

Meetings between the top mangement of the UFS and community representatives, staff and students at Qwa-Qwa have laid the basis for building a climate of trust in such a complex process.

We should not be captives of the past divisions but build this new unified higher education landscape that can meet our country's developmental needs.

It should be a higher education landscape that is based on broadening access, promoting equity and social justice, developing academic excellence, and the effective and efficient management of scarce resources. This should be our common common objective.

Professor Frederick Fourie the rector and vice-chancellor of the University of the Free State (UFS)

 

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