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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

Heart diseases a time bomb in Africa, says UFS expert
2010-05-17

 Prof. Francis Smit

There are a lot of cardiac problems in Africa. Sub-Saharan Africa is home to the largest population of rheumatic heart disease patients in the world and therefore hosts the largest rheumatic heart valve population in the world. They are more than one million, compared to 33 000 in the whole of the industrialised world, says Prof. Francis Smit, Head of the Department of Cardiothoracic Surgery at the Faculty of Health Sciences at the University of the Free State (UFS).

He delivered an inaugural lecture on the topic Cardiothoracic Surgery: Complex simplicity, or simple complexity?

“We are also sitting on a time bomb of ischemic heart disease with the WHO (World Health Organisation) estimating that CAD (coronary artery disease) will become the number-one killer in our region by 2020. HIV/Aids is expected to go down to number 7.”

Very little is done about it. There is neither a clear nor coordinated programme to address this expected epidemic and CAD is regarded as an expensive disease, confined to Caucasians in the industrialised world. “We are ignoring alarming statistics about incidences of adult obesity, diabetes and endemic hypertension in our black population and a rising incidence of coronary artery interventions and incidents in our indigenous population,” Prof. Smit says.

Outside South Africa – with 44 units – very few units (about seven) perform low volumes of basic cardiac surgery. The South African units at all academic institutions are under severe threat and about 70% of cardiac procedures are performed in the private sector.

He says the main challenge in Africa has become sustainability, which needs to be addressed through education. Cardiothoracic surgery must become part of everyday surgery in Africa through alternative education programmes. That will make this specialty relevant at all levels of healthcare and it must be involved in resource allocation to medicine in general and cardiothoracic surgery specifically.

The African surgeon should make the maximum impact at the lowest possible cost to as many people in a society as possible. “Our training in fields like intensive care and insight into pulmonology, gastroenterology and cardiology give us the possibility of expanding our roles in African medicine. We must also remember that we are trained physicians as well.

“Should people die or suffer tremendously while we can train a group of surgical specialists or retraining general surgeons to expand our impact on cardiothoracic disease in Africa using available technology maybe more creatively? We have made great progress in establishing an African School for Cardiothoracic Surgery.”

Prof. Smit also highlighted the role of the annual Hannes Meyer National Registrar Symposium that culminated in having an eight-strong international panel sponsored by the ICC of EACTS to present a scientific course as well as advanced surgical techniques in conjunction with the Hannes Meyer Symposium in 2010.

Prof. Smit says South Africa is fast becoming the driving force in cardiothoracic surgery in Africa. South Africa is the only country that has the knowledge, technology and skills base to act as the springboard for the development of cardiothoracic surgery in Africa.

South Africa, however, is experiencing its own problems. Mortality has doubled in the years from 1997 to 2005 and half the population in the Free State dies between 40 to 44 years of age.

“If we do not need health professionals to determine the quality and quantity of service delivery to the population and do not want to involve them in this process, we can get rid of them, but then the political leaders making that decision must accept responsibility for the clinical outcomes and life expectancies of their fellow citizens.

“We surely cannot expect to impose the same medical legal principles on professionals working in unsafe hospitals and who have complained and made authorities aware of these conditions than upon those working in functional institutions. Either fixes the institutions or indemnifies medical personnel working in these conditions and defends the decision publicly.

“Why do I have to choose the three out of four patients that cannot have a lifesaving operation and will have to die on their own while the system pretends to deliver treatment to all?”

Prof. Smit says developing a service package with guidelines in the public domain will go a long way towards addressing this issue. It is also about time that we have to admit that things are simply not the same. Standards are deteriorating and training outcomes are or will be affected.

The people who make decisions that affect healthcare service delivery and outcomes, the quality of training platforms and research, in a word, the future of South African medicine, firstly need rules and boundaries. He also suggested that maybe the government should develop health policy in the public domain and then outsource healthcare delivery to people who can actually deliver including thousands of experts employed but ignored by the State at present.

“It is time that we all have to accept our responsibilities at all levels… and act decisively on matters that will determine the quality and quantity of medical care for this and future generations in South Africa and Africa. Time is running out,” Prof. Smit says.
 

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