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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

CR Swart Memorial Lecture: Mr Cecil le Fleur
2006-08-08

Khoe and San call for government to speed up policy dialogue with indigenous communities  

 Mr Cecil le Fleur, leader of the National Khoe-San Consultative Conference and member of the executive management of the National Khoe-San Council, has called for a national policy on indigenous peoples to protect the human rights and special needs of indigenous people in South Africa.

 Mr Le Fleur delivered the 38th CR Swart Memorial Lecture on the Khoe and San at the University of the Free State (UFS).  He commended the UFS for its serious approach to the Khoe and San and for initiating initiatives such as a research project on the Griqua in which various aspects linked to language, -culture, -history, - leadership, their role in the South African community (past and present) and the conservation of their historical cultural heritages will be covered.   

 “The policy dialogue with indigenous communities initiated by government in 1999 and supported by the International Labour Organisation (ILO), has been exceedingly slow, owing to political and bureaucratic problems,” said Mr Le Fleur.

 According to Mr Le Fleur the slow pace is also impacting negatively on the United Nations’ efforts to expand the international standards and mechanisms for human rights so as to include the special needs of indigenous peoples.

 “The successful adoption of a South African policy would probably have a major impact on the human rights culture of Africa and, more specifically, on the UN system,” he said.

 “South Africa has a powerful moral authority internationally and is willing to use this authority in multilateral forums. At this stage, however, South Africa’s Department of Foreign Affairs (DFA) may not take an official position on UN instruments and declarations pertaining to indigenous issues, until the Cabinet has resolved its own domestic policy position,” he said. 

 According to Mr le Fleur it therefore came as a great surprise when the DFA brought out a positive vote in the UN for the adoption of the "Draft Declaration on the Rights of indigenous Peoples" in June this year, even before the completion of the policy process. 

 Policy consolidation in South Africa is the primary key to creating a new policy climate in Africa in order to protect the rights of indigenous peoples.  “The existing constitution of the Republic of South Africa is one of the most liberal on the continent, and embraces the concept of redress of past discrimination.  It already includes a clause (Section 6) making provision for the protection of language rights for Khoe and San peoples - the fist peoples of southern Africa,” he said. 

 “If South Africa can effectively integrate this ‘third generation’ of collective rights within an existing democratic constitution, this will send a clear message to Africa and the world that indigenous rights are a necessary component of human and civil rights in modern democracies,” he said.

 Mr Le Fleur proposed an institutional framework based on set principles that would satisfy the needs and aspirations of the Griqua and other first indigenous peoples in South Africa.  “The proposed framework was based on the notion of vulnerability as a result of colonialism and apartheid, which stripped us of our indigenous identity, cultural identity and pride as people.  This injustice can hardly be addressed within the existing mechanisms provided by the current text of the Constitution,” he said.

 Mr Le Fleur also proposed that the principles of unique first-nation status, as recognised in international law, should be applied in the construction of the framework of the constitutional accommodation for the Khoe and San. 

 Mr Le Fleur further proposed that the Khoe and San’s indigenous status in constitutional terms must be separate from the constitutional acknowledgement of their status as a cultural community, as envisaged in sections 185 and 186 of the Constitution of 1996.

 According to Mr Le Fleur, the suggested mechanism should make provision for structures such as:

  •  A statutory representative council for First Indigenous Peoples of South Africa at a national level;
  • a separate Joint Standing Committee on Indigenous and Traditional Affairs, in both the National Assembly and the National Council of Provinces on which the Khoe and San can be represented;
  • a representative structure for the Khoe and San in the legislature of each relevant province; and
  • ex officio membership in the relevant structures of local government.

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


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