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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

Open letter from Prof Jonathan Jansen to all UFS students
2014-02-22

Dear Students of the University of the Free State

In the past four years there has emerged a new consensus on the three campuses of the University of the Free State (UFS) about the things that divide us – such as racism, sexism and homophobia. Students and campus leaders have worked hard to develop this new consensus in residences and in the open spaces on campus. There can be no doubt that new bonds of friendship have developed across the markers of race, ethnicity, class, religion and sexual orientation. I bear witness to these new solidarities every day on the campus.

You chose a white student to head up the transformation portfolio on the SRC. You chose a black captain to head up the university’s first team in rugby. You chose a white “prime” as head of residence to lead a predominantly black men’s residence. You chose a South African woman of Indian descent as Rag Queen and last week, a black student from Cape Town as the men’s Rag winner—choices not possible and never made before in our campus history. Many of you have intimate friends who come from different social or cultural or religious backgrounds. You learn together, share rooms together, pray together and party together. In other words, in the day to day workings of this university campus, you have demonstrated to campus, city and country that we can overcome the lingering effects of racism and other maladies in this new generation. You have helped create a university community inclusive of people of diverse religions, abilities, class and sexual orientation.

I have said this repeatedly that from time to time this new consensus will be tested – when a minority of students, and they are a small and dwindling minority, still act as if these are the days of apartheid. And when that consensus is tested as it was this week, and as it will be tested in the future, only then we will be able to assess the strength and durability of our progress in creating a new South African campus culture of human togetherness based on respect, dignity and embrace.

The real test of our leadership, including student leadership, is how we respond when our transformation drive is threatened.

Let me say this: I have absolute faith in you, as students of this great university, to stand together in your condemnation of these vile acts of violence and to move together in your determination to maintain the momentum for the Human Project of the University of the Free State. We have come too far to allow a few criminals to derail what you have built together in recent years.

There will, no doubt, be unscrupulous people on all sides of the political spectrum wanting to milk this tragedy for their own narrow purposes. There will be false information, rumours and exaggerations by those who wish to inflame a bad situation to gain mileage for their agendas. That is inevitable in a country that is still so divided.

I ask you, through all of this, to keep perspective. Two or ten or even twenty students behaving badly do not represent 30,000 students; a minority of violent and hateful persons do not represent the ideals, ambitions and commitments of the majority. At the same time, let us be realistic – anyone who thinks you can drive transformation without resistance clearly does not understand the difficult process of change.

The events of the week remind us, however, that we still have a long road to walk in deepening social and academic transformation at our university. Yes, we have invested hundreds of hours in training and mentorship; we have created new structures – such as the Institute for Reconciliation and Social Justice – to capture the energy and imagination of students driving transformation; we have created many opportunities for students to study and travel on this and other continents to enable cross-cultural learning; we have established formal and informal opportunities to dialogue about difficult issues on and off campus between students and their leaders; and we crafted new curricula to enable teaching and learning on the big questions of our times.

But this is clearly not enough, and so I have decided on the following immediate next steps:
  1. We will meet for several hours next week to think about how we can deepen the transformation of our university after this terrible incident.

  2. We will arrange a University Assembly on the events of the past week so that we speak with one voice on human wrongs and to re-commit to human rights and we will continue with open forum discussions during the months to come.

  3. We will review the entire spectrum of programmes, from orientation to residence life to the undergraduate curriculum, to determine how effective our interventions really are in reaching all students with respect to basic issues of human rights.

  4. We will review our media and communications strategy to determine how far and deep our messages on human rights travel across all sectors of the university community. In this regard it is important that the campus be blanketed on a regular basis with our condemnation of human wrongs and our commitment to human rights.

  5. We will commission the Institute for Reconciliation and Social Justice to review the events of the past week and make recommendations on how we can improve the campus environment so that all students are protected from harm inside residences, classrooms and in open spaces of the campus.

  6. We will take the questions raised during this week into the academic community and to the general staff of the university so that all personnel also engage with our own roles and responsibilities with respect to campus transformations.

  7. We undertake to make annual report-backs on transformation to all stakeholders in public forums so that students and staff and external communities can track the progress of the university on matters of human rights on campus.

I wish to thank my staff for acting firmly as soon as this tragic event came to our attention. We worked through the night to find and identify the perpetrators. We traced the two students and immediately handed them to the police. They were expelled. And throughout this process we offered counselling and support to the victim of this violent act.

The two former students were expelled and will now face justice in the criminal courts. It is hoped that in the course of time they will come to their senses and seek restoration and reconciliation with the student they so callously harmed. They are not part of the university community anymore.

That is the kind of university we are.

Jonathan D Jansen
Vice-Chancellor and Rector
University of the Free State
20 February 2014

 
Note: The use of the word ‘campus’ refers to all three campuses of the UFS, namely the Bloemfontein Campus, South Campus and Qwaqwa Campus.

 

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