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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

During 2011: Prestige Scholars Programme (PSP)
2011-12-01

The University has designed the Vice-Chancellor’s Prestige Scholars Programme (PSP) to promote and support the intellectual breadth and depth required of young scholars to pose questions and generate knowledge in their disciplines and hence to occupy the vanguards of contemporary intellectual enquiry. The programme specifically targets members of the academic staff who are near completion, or have newly completed, their doctoral studies.

The goal is to select no more than 100 of the most promising young scholars and to make substantial investments in their development towards becoming full professors. A tailored, intensive programme of support is designated that combines international placement working alongside leading scholars in the discipline of the prestige scholar, with intensive mentorship and support from within the university.

 Description: 2011 PSP_Thuthuka  Tags: 2011 PSP_Thuthuka

Elite young scholars on the Vice-Chancellor’s Prestige Scholars Programme generated R1,2 million in National Research Foundation Thuthuka and Blue Skies funding in 2011 alone. Dr Katinka de Wet in the Department of Sociology was awarded Blue Skies funding for her work on the Hybrid Identity of the HIV/Aids patient. Thuthuka Grant holders Drs Cilliers van den Berg, Olihile Sebolai, Dirk Opperman and Diaan van der Westhuizen work in the fields of German and Afrikaans trauma literature, microbiology, structural and evolutionary biology, and architecture, respectively. This broad disciplinary range typifies the depth and extraordinary range of scholarship present among junior academics at the UFS.


 Description: 2011 PSP_Liza Coetsee Tags: 2011 PSP_Liza Coetsee

Dr Liza Coetsee, a Y2-rated physicist, is the first of the Vice-Chancellor’s elite cohort of Prestige Scholars to submit for National Research Foundation rating. Dr Coetsee works on the latest of the Nanotechnology Surface Science systems housed in our Department of Physics. As Prestige Scholar, Dr Coetsee conducts research on phosphor solar cells. Her aim is to establish a new Phosphor Solar Cell field at the University of the Free State with Proff. Hendrik Swart and Koos Terblans. As a member of the Prestige Scholar Programme, Dr Coetsee will work in collaboration both with colleagues from the Nelson Mandela Metropolitan University and Prof. Eray Aydil from the University of Minnesota and Editor-in-Chief of the Journal of Vacuum Science & Technology.


 Description: 2011 PSP_Olihile Sebolai Tags: 2011 PSP_Olihile Sebolai

Dr Olihile Sebolai is one of the 2 Vice-Chancellor’s elite Prestige Scholars and a microbiologist. In 2011, Dr Sebolai was awarded a Thuthuka Grant for his research on the yeast pathogen Cryptococcus neoformans, the cause of life-threatening Aids-defining illnesses such as meningitis. Dr Sebolai considers how cryptococcal lipids mediate infectious processes leading to illness. An understanding of these cellular processes will offer hope for future drug development to combat the scourge of cryptococcal meningitis, annually causing the death of over half a million people in Sub-Saharan Africa. Dr Sebolai is also interested in mapping the prevalence and distribution pattern of cryptococcal meningitis in the Free State. This, in turn, will assist health authorities to manage current infections and plan appropriately for potential outbreaks. The Prestige Scholars Programme, with the assistance of the National Research Foundation, will afford Dr Sebolai the opportunity to pursue his research in laboratories in the United States and India in 2012 and 2013.


 Description: 2011 PSP_Louis Holtzhausen Tags: 2011 PSP_Louis Holtzhausen

Dr Louis Holtzhausen, member of the Vice-Chancellor’s Prestige Scholars Programme, has been named by the South African Sports Confederation and Olympic Committee (SASCOC) as team doctor for Team South Africa during the All Africa Games, the largest sports event in Africa. National teams from African countries participated in 23 sports events. As an esteemed South African academic in sports medicine Dr Holtzhausens’ participation was an extension of the work already being done under his supervision at the UFS’s Sports Performance Unit. Many of the athletes who prepared at the Unit were also part of the team. Elite athletes’ illness and injury profiles are one of Dr Holtzhausens’ research focus areas. The exposure to this group in competition was of great value in the identification and development of research niche areas.


 Description: 2011 PSP_ Chantel Swart Tags: 2011 PSP_ Chantel Swart

The South African Society for Microbiology awarded Dr Chantel Swart-Pistor, a Prestige Scholar on the Vice-Chancellor’s elite programme, the top prize for her PhD during a recent gala dinner in Cape Town. Dr Swart-Pistor accomplished a breakthrough in the field of nanotechnology with The influence of mitochondrial inhibitors on zoospore and ascospore development. Her supervisor, Prof. Lodewyk Kock and co-supervisors, Dr Carolina Pohl and Prof. Pieter van Wyk, also stressed the important collaboration with Proff. Hendrik Swart (Physics) and Pieter van Wyk (Centre for Microscopy), which made Dr Swart-Pistor’s work possible. She has presented her work in Beijing (Medichem 2011) and Philadelphia (Biotechnology-2011). She has been invited to return to China in 2012.


 Description: 2011 PSP_ Lizette Erasmus Tags: 2011 PSP_ Lizette Erasmus

Dr Lizette Erasmus, scientific chemist and one of the Vice-Chancellor’s Prestige Scholars, has just returned from a three-month-long research visit to Prof. Hans Niemantsverdriet at the Technical University of Eindhoven in The Netherlands and the University of California, Davis. Dr Erasmus specialises in heterogeneous catalysis. Her visit to Prof. Niemantsverdriet, one of the global experts in the field of surface science, served to round of existing research. In California, Dr Erasmus visited her mentor, Prof. Bruce C. Gates, as part of the objectives of the Rector’s programme for the internationalisation of young researchers. Prof. Gates, an expert in catalysis, could contribute to Dr Erasmus’ research on the characterisation of heterogeneous catalysis and catalytic reactions. In exchange, her expertise in organometallic synthesis added value to Prof. Gates’ existing research. Their continued collaboration gave availed them of the opportunity for interdisciplinary interaction between engineering (Prof. Gates’ speciality) and chemistry, and promises to contribute to increased collaboration between the two universities in future.


 Description: 2011 PSP_Dirk Opperman Tags: 2011 PSP_Dirk Opperman

Dr Dirk Opperman, specialist in structural and evolutionary biology and National Research Foundation Thuthuka Grant holder, joined the Vice-Chancellor’s Prestige Scholars Programme after his postdoctoral work at the Max Planck Institute (KOFO) in Germany. Dr Opperman is the recipient of institutional seed funding to establish a protein crystallisation unit, which in turn led to the donation in 2011 of a multi-million Rand X-ray diffractometer¬ from the University of the Western Cape to complement his existing access to international synchrotrons. Dr Opperman is spending part of 2011 at the University of Exeter (UK) to further his research into the three-dimensional structures of specific enzymes and their trajectories of evolution to specific functions.


 Description: 2011 PSP_Abiodun Ogundeji Tags: 2011 PSP_Abiodun Ogundeji

Abiodun Ogundeji is a member of the Vice-Chancellor's Prestige Scholars Programme. Abiodun's work was recently recognised when he and his co-authors received an award for the best contributed paper at the 49th annual conference of the Agricultural Economics Association of South Africa on the topic, Impact of climate change on planning and dealing with flood disasters in South Africa: A case study of Soweto on Sea. The paper was co-authored by Prof. Giel Viljoen from our Department of Agricultural Economics and Herman Booysen, as well as Gawie du T. de Villiers, Research Associates in the Department of Geography. Abiodun is currently conducting invaluable research on the quantification of the economic value of climate change impacts and the benefits and costs of adaptation in South Africa.

 

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