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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

Media: ANC can learn a lesson from Moshoeshoe
2006-05-20


27/05/2006 20:32 - (SA) 
ANC can learn a lesson from Moshoeshoe
ON 2004, the University of the Free State turned 100 years old. As part of its centenary celebrations, the idea of the Moshoeshoe Memorial Lecture was mooted as part of another idea: to promote the study of the meaning of Moshoeshoe.

This lecture comes at a critical point in South Africa's still-new democracy. There are indications that the value of public engagement that Moshoeshoe prized highly through his lipitso [community gatherings], and now also a prized feature in our democracy, may be under serious threat. It is for this reason that I would like to dedicate this lecture to all those in our country and elsewhere who daily or weekly, or however frequently, have had the courage to express their considered opinions on pressing matters facing our society. They may be columnists, editors, commentators, artists of all kinds, academics and writers of letters to the editor, non-violent protesters with their placards and cartoonists who put a mirror in front of our eyes.

There is a remarkable story of how Moshoeshoe dealt with Mzilikazi, the aggressor who attacked Thaba Bosiu and failed. So when Mzilikazi retreated from Thaba Bosiu with a bruised ego after failing to take over the mountain, Moshoeshoe, in an unexpected turn of events, sent him cattle to return home bruised but grateful for the generosity of a victorious target of his aggression. At least he would not starve along the way. It was a devastating act of magnanimity which signalled a phenomenal role change.

"If only you had asked," Moshoeshoe seemed to be saying, "I could have given you some cattle. Have them anyway."

It was impossible for Mzilikazi not to have felt ashamed. At the same time, he could still present himself to his people as one who was so feared that even in defeat he was given cattle. At any rate, he never returned.

I look at our situation in South Africa and find that the wisdom of Moshoeshoe's method produced one of the defining moments that led to South Africa's momentous transition to democracy. Part of Nelson Mandela's legacy is precisely this: what I have called counter-intuitive leadership and the immense possibilities it offers for re-imagining whole societies.

A number of events in the past 12 months have made me wonder whether we are faced with a new situation that may have arisen. An increasing number of highly intelligent, sensitive and highly committed South Africans across the class, racial and cultural spectrum confess to feeling uncertain and vulnerable as never before since 1994. When indomitable optimists confess to having a sense of things unhinging, the misery of anxiety spreads. It must have something to do with an accumulation of events that convey the sense of impending implosion. It is the sense that events are spiralling out of control and no one among the leadership of the country seems to have a handle on things.

I should mention the one event that has dominated the national scene continuously for many months now. It is, of course, the trying events around the recent trial and acquittal of Jacob Zuma. The aftermath continues to dominate the news and public discourse. What, really, have we learnt or are learning from it all? It is probably too early to tell. Yet the drama seems far from over, promising to keep us all without relief, and in a state of anguish. It seems poised to reveal more faultlines in our national life than answers and solutions.

We need a mechanism that will affirm the different positions of the contestants validating their honesty in a way that will give the public confidence that real solutions are possible. It is this kind of openness, which never comes easily, that leads to breakthrough solutions, of the kind Moshoeshoe's wisdom symbolises.

Who will take this courageous step? What is clear is that a complex democracy like South Africa's cannot survive a single authority. Only multiple authorities within a constitutional framework have a real chance. I want to press this matter further.

Could it be that part of the problem is that we are unable to deal with the notion of "opposition". We are horrified that any of us could become "the opposition". In reality, it is time we began to anticipate the arrival of a moment when there was no longer a single [overwhelmingly] dominant political force as is currently the case. Such is the course of change. The measure of the maturity of the current political environment will be in how it can create conditions that anticipate that moment rather than ones that seek to prevent it. This is the formidable challenge of a popular post-apartheid political movement.

Can it conceptually anticipate a future when it is no longer overwhelmingly in control, in the form in which it currently is and resist, counter-intuitively, the temptation to prevent such an eventuality? Successfully resisting such an option would enable its current vision and its ultimate legacy to our country to manifest itself in different articulations of itself, which then contend for social influence.

In this way, the vision never really dies, it simply evolves into higher, more complex forms of itself. If the resulting versions are what is called "the opposition" that should not be such a bad thing - unless we want to invent another name for it. The image of flying ants going off to start other similar settlements is not so inappropriate.

I do not wish to suggest that the nuptial flights of the alliance partners are about to occur: only that it is a mark of leadership foresight to anticipate them conceptually. Any political movement that has visions of itself as a perpetual entity should look at the compelling evidence of history. Few have survived those defining moments when they should have been more elastic, and that because they were not, did not live to see the next day.

I believe we may have reached a moment not fundamentally different from the sobering, yet uplifting and vision-making, nation-building realities that led to Kempton Park in the early 1990s. The difference between then and now is that the black majority is not facing white compatriots across the negotiating table. Rather, it is facing itself: perhaps really for the first time since 1994. It is not a time for repeating old platitudes. Could we apply to ourselves the same degree of inventiveness and rigorous negotiation we displayed up to the adoption or our Constitution?

Morena Moshoeshoe faced similarly formative challenges. He seems to have been a great listener. No problem was too insignificant that it could not be addressed. He seems to have networked actively across the spectrum of society. He seems to have kept a close eye on the world beyond Lesotho, forming strong friendships and alliances, weighing his options constantly. He seems to have had patience and forbearance. He had tons of data before him before he could propose the unexpected. He tells us across the years that moments of renewal demand no less.

  • This is an editied version of the inaugural Moshoeshoe Memorial Lecture presented by Univeristy of Cape Town vice-chancellor Professor Ndebele at the University of the Free State on Thursday. Perspectives on Leadership Challenges In South Africa

 

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