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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

UFS committed to transformation
2005-02-23

UFS committed to transformation

The management of the University of the Free State (UFS) takes note that plans are being made to stage a student protest at the UFS main campus on Monday 28 February 2005 .

This is in line with a concerted national campaign to highlight the issue of transformation at higher education institutions.

At this stage the UFS management has not received any application from student formations to stage such a protest at the main campus in Bloemfontein .

The UFS upholds the right of all staff and students to hold legal, non-violent protests and in this spirit encourages the student formations to apply for permission to hold their protest. However, the UFS management has been - and always will be willing to discuss the important issue of transformation of the UFS with staff unions and student formations.

Again the UFS management appeals to student formations to make use of this open door policy and not to adopt a confrontational position. In fact the management and the Senate of the UFS have come out in support of a new phase of transformation at the UFS.

In his speech at the official opening of the UFS earlier this month (on 4 February 2005 ), the Rector and Vice-Chancellor, Prof Frederick Fourie, announced that a comprehensive transformation plan for would be drafted for the UFS.

This Transformation Plan would address issues such as:

  • a new institutional culture for the UFS
  • the need for representivity in the staffing of the UFS
  • ensuring relevance of curricula for the South African and African context
  • enhancing excellence in the overall academic life of the UFS
  • ensuring greater interaction among black and white students and staff
  • addressing outstanding issues in the incorporation of the Qwaqwa and Vista campuses, among others

Concerning some of the issues that are being put forward to motivate for a protest march, the UFS would like to highlight the following facts:

  1. The situation at the Qwaqwa campus
  • It is not true that the UFS has decided to close down the Qwaqwa campus. This is a complete falsehood. The campus was incorporated into the UFS in January 2003 and since then every effort is being made to ensure the viability of the Qwaqwa campus.
  • In fact the UFS has just upgraded residences at the Qwaqwa campus – to the tune of R6,8-million.
  • In addition, another R1,4-million has been set aside for the upgrading of other facilities on the Qwaqwa campus.
  • More staff has been appointed and the library is acquiring more books etc.
  • The management of the UFS wants to assure staff at the Qwaqwa campus once again that there has been no decision to close the campus.
  • We realise that the incorporation of the campus into the UFS has given rise to certain fears and concerns, but these are being addressed, including the question of reporting lines of staff and the further delegation of powers to the head of the Qwaqwa campus, Prof Peter Mbati.
  1. The situation at the Vista campus
  • A number of processes are currently under way to address outstanding issues following the formal incorporation of the Vista campus into the UFS in January 2004.
  • This includes the integration of former Vista staff into the UFS as well as the alignment of the conditions of service of the former Vista staff with the UFS conditions of service.
  • Indeed, over the last few weeks, a climate of trust has been developing and a number of meetings have taken place in contrast to the situation that obtained at the end of 2004.
  • Just last week, the Rector reassured the Vista Task Team representing the former Vista staff that these staff members are indeed part of the UFS staff complement.
  • When the Vista campus was incorporated into the UFS, it was agreed that no new first years would be registered there, so as to avoid duplication with the main campus which is only a few kilometers away.
  • Instead, those students who were registered as Vista students at the time of incorporation (January 2004) would be allowed to complete their studies.
  • In terms of this agreement another process of consultation with key stakeholders on and off campus would be initiated to determine how the physical facilities of Vista could be used to contribute to educational and skills provision in the region and the province.
  • This process is still in its early stages and no final decision has been made regarding the long term strategic reconfiguration of the Vista campus.
  • In any case, as stated by the Rector, former Vista staff do not have to fear about their work security as this is not dependent on the future use of Vista campus – the two issues are not related.
  1. Financial aid for students at the Qwaqwa campus
  • Concerning financial aid to students at Qwaqwa, the UFS has to date (that is up to 22 February 2005 ) made available R25 000 each to 705 students.
  • That amounts to R17,6 million.
  1. Financial aid for students at the Vista campus
  • Concerning financial aid to students at Vista , the UFS has to date (that is up to 22 February 2005 ) made available R14 500 each to 104 students.
  • That amounts to R1,5 million.
  1. Registration
  • The registration processes at both these campuses are not yet completed. So final figures are not yet available.
  • What we can say so far, is that 1339 students have registered at the Qwaqwa campus and that more are expected to register. At Vista , 545 students have registered so far, and more are expected to do so.
  • In an effort to assist students during the registration process, management has put in place a structure which is called the Monitoring Committee.
  • This Monitoring Committee provides counseling on courses of study but also sorts out problems relating to academic fees, etc.
  • This is how the UFS management in a concrete way gives expression to its commitment to broadening access for academically deserving students.
  1. Alleged racism
  • There have recently been unsubstantiated allegations of racism leveled at the UFS.
  • We would like to state unequivocally, that the UFS does not and will not tolerate racism in any way.
  • There are policies and procedures in place to deal with such allegations and those who feel aggrieved should bring this to the attention of the Director of Diversity, Mr Billyboy Ramahlele.
  • The UFS also has sensitisation programmes for staff and students to assist in bringing about a truly non-racial, non-sexist, inclusive, multicultural and multilingual campus.

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  1. Conclusion
  • The UFS management remains committed to the further transformation of the institution so that it can play its role in supporting the goal of a non-racial, democratic South Africa united in its diversity.
  • We are committed to the successful incorporation of the Vista and Qwaqwa campuses and to the speedy resolution of all outstanding issues facing staff and students on these campuses.
  • We appeal once again to staff and students on these campuses, who are indeed members of the broader UFS community, to play a constructive role in the debate about the strategic direction of the UFS and all its campuses.

 

Issued by: Mr Anton Fisher

Director: Strategic Communication

Cell: 072-207-8334

Tel: 051-401-2749

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