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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 her inaugural lecture, Prof Helene Strauss explores symbols that reflect our history
2014-02-18

 

Prof Helene Strauss
The burning tyre – image of promise and disappointment
Photo: Stephen Collett

Prof Helene Strauss did not disappoint in her highly-anticipated inaugural lecture “The Spectacles of Promise and Disappointment: Political Emotion and Quotidian Aesthetics in Post-transitional South Africa”. She posed some very challenging ideas on the promises and disappointments that arouse from apartheid. Prof Strauss pointed to the fact that “… a promise must promise to be kept; that is, not to remain spiritual or abstract, but to produce events, new effective forms of action, practice, organisation, and so forth.”

She underscored the message of her lecture by making use of the image of a burning tyre – a symbol commonly associated with apartheid. This act of ‘necklacing’ is closely connected to the violence and protests of that era. Prof Strauss used this image to represent an array of social concerns: global mass protest, modernity and mobility, waste economies and waste management, environmental destruction, as well as poverty and resistance in varied formats.

Some of South Africa’s greatest artists have used the burning tyre in their work, particularlyBerni Searle and Zanele Muhloi. Not only does it trigger the shadow of the damaging past, but “more recently, it has come to figure also in the spectacles of promise and disappointment that have marked the country’s transitional and post-transitional periods,” Prof Strauss remarked.

Prof Strauss focuses her research on these symbolisms in our history because of “the questions that they raise about the emotional cultures produced in the aftermath of apartheid and for the unique contribution that they make to current debates on political and aesthetic activism.”Her passion for this subject comes from the “affective or emotional legacies of various forms of structural inequality, an interest that owes a sizeable debt to postcolonial, queer and feminist critical theory and creative work of the past hundred or so years.”

Prof Strauss accepted a position at the University of the Free Sate in 2011 and currently works in the Department of English. She is part of the Vice-Chancellor’s Prestige Scholars Programme and holds a PhD from the University of Western Ontario. Previously, she held the position of Assistant Professor in the Department of English and Cultural Studies at McMaster University in Canada, where she resided for 11 years.

Among the guests were Prof Jonathan Jansen, Profs Botes and Witthuhn, lecturers in the Department of English, members of the Faculty of the Humanities, students and some of Prof Strauss’ colleagues from Canada.

 

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