Latest News Archive

Please select Category, Year, and then Month to display items

2020 supplementary budget: The road map to the revival of the economy

29 June 2020 | Story Edward Kagiso Molefe and Dr Nico Keyser

Molefe and Kesyer_web read more — 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

UFS involved in project to light up the townships

2006-06-06

The parties involved with the project are from the left: Prof Hendrik Swart (Departmental Chairperson of the UFS Department of Physics), Dr Thembela Hillie (CSIR), Prof Neerich Revaprasadu (Department of Chemistry at the University of Zululand) and Dr Wynand Steyn (CSIR).

UFS involved in project that could light up the townships

The University of the Free State’s (UFS) Department of Physics is involved with a project that could make life easier in the townships through the use of artificial light.

“The project is based on the use of sunlight to activate nano material in for example cement and paint during the day. At night the cement or paint can then radiate light,” said Prof Hendrik Swart, Departmental Chairperson of the UFS Department of Physics.

According to Prof Swart an amount of R3,9 million has been made available by the Council for Scientific and Industrial Research (CSIR) for the further development of the project.

Prof Swart visited the University of Florida in America in 1995 for a year where he researched luminescent phosphor material that is suitable for flat panel television screens. The red, green and blue spots on the television screens originate from these kinds of phosphor materials. “At that stage plasma television screens were only a dream. Today it is sold everywhere,” said Prof Swart.

“Upon my return I started a research group at the UFS which investigated the degrading of phosphor material. We also started to concentrate on the effectiveness of nano phosphors. In the mean time our cooperation with the Americans was strengthened with follow-up visits to America of my colleagues, Prof Koos Terblans and Mr Martin Ntwaeaborwa,” said Prof Swart.

“Nano phosphors are basically luminescent powders that consist of particles that are 1 millionth of a millimetre. These particles can provide light as soon as they are illuminated with, for instance, sunlight. The amount of time these particles can provide light, is determined by the impurities in the material,” said Prof Swart.

According to Prof Swart nano particles are developed and linked to infrastructure materials in order for these materials to be excited during the day by sunlight and then it emits light during night time.

“The nano material is of such a nature that it can be mixed with materials, such as paint or cement. The yellow lines of roads can for example emit light in a natural way during night time,” said Prof Swart.

About a year ago Prof Swart and Dr Thembela Hillie, a former Ph D-student of the UFS Department of Physics, had discussions with Prof Neerich Revaprasadu from the University of Zululand and the CSIR about the possibility of mixing these nano phosphor particles with other materials that can be used as light sources in the building of roads and houses.

“Prof Revaprasadu is also actively involved in the research of nano materials. Our efforts resulted in the CSIR approving the further extension of the project,” said Prof Swart.

“The UFS and the University of Zululand are currently busy investigating ways to extend the light emitting time,” said Prof Swart.

“There are eight M Sc and Ph D-students from the UFS and about five students from the University of Zululand working on this research project. The Department of Physics at the Qwaqwa Campus of the UFS, with Francis Dejene as subject head, is also involved with the project,” said Prof Swart.

According to Prof Swart the further applications of nano materials are unlimited. “Children whose parents cannot afford electricity can for instance leave any object such as a lamp, that is covered with these phosphor particles, in the sun during the day and use it at night as a light for study purposes,” said Prof Swart.

According to Prof Swart the further extension of the project will take about two years. “During this time we want to determine how the effectiveness of the phosphors can be increased. Discussions with the government and other role players for the possible implementation of the project are also part of our planning,” said Prof Swart.

Media release
Issued by: Lacea Loader
Media Representative
Tel: (051) 401-2584
Cell: 083 645 2454
E-mail: loaderl.stg@mail.uovs.ac.za
6 June 2006

Back

Economic and Management Sciences

Education

Health Sciences

The Humanities

Law

Natural and Agricultural Sciences

Theology and Religion

Open Distance Learning

Business School

We use cookies to make interactions with our websites and services easy and meaningful. To better understand how they are used, read more about the UFS cookie policy. By continuing to use this site you are giving us your consent to do this.

Accept