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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

Researchers international leaders in satellite tracking in the wildlife environment

2015-05-29

Ground-breaking research has attracted international media attention to Francois Deacon, lecturer and researcher in the Department Animal, Wildlife and Grassland Sciences at the UFS, and Prof Nico Smit, from the same department. They are the first researchers in the world to equip giraffes with GPS collars, and to conduct research on this initiative. Recently, they have been joined by Hennie Butler from the Department of Zoology as well as Free State Nature Conservation to further this research.

“Satellite tracking is proving to be extremely valuable in the wildlife environment. The unit is based on a mobile global two-way communication platform, utilising two-way data satellite communication, complete with GPS systems.

“It allows us to track animals day and night, while we monitor their movements remotely from the computer. These systems make possible the efficient control and monitoring of wildlife in all weather conditions and in near-to-real time. We can even communicate with the animals, calling up their positions or changing the tracking schedules.

“The satellite collar allows us to use the extremely accurate data to conduct research with the best technology available. The volume of data received allows us to publish the data in scientific journals and research-related articles.

“Scientific institutions and the public sector have both shown great interest in satellite tracking, which opens up new ground for scientific research for this university. Data management can be done, using Africa Wildlife Tracking (AWT) equipment where we can access our data personally, store it, and make visual presentations. The AWT system and software architecture provide the researcher with asset tracking, GPS location reports, geo-fencing, highly-detailed custom mapping, history reports and playback, polling on demand, history plotting on maps, and a range of reporting types and functions,” Francois said.

Data can be analysed to determine home range, dispersal, or habitat preference for any specific species.

Francois has been involved in multiple research projects over the last 12 years on wildlife species and domesticated animals, including the collaring of species such as Black-backed Jackal, Caracal, African Wild Dog, Hyena, Lion, Cheetah, Cattle, Kudu, Giraffe, and Black Rhino: “Giraffe definitely being the most challenging of all,” he said.

In 2010, he started working on his PhD, entitled The spatial ecology, habitat preferences and diet selection of giraffe (Giraffa camelopardalis giraffa) in the Kalahari region of South Africa.

Since then, his work has resulted not only in more research work (supervising four Masters students) but also in a number of national and international projects. These include work in the:

Kalahari region (e.g. Khamab Nature Reserve and Kgalagadi Transfrontier Park)
Kuruman region (Collared 18 cattle to identify spatial patterns in relation to the qualities of vegetation and soil-types available. This project took place in collaboration with Born University in Germany)
Woodland Hills Wildlife Estate and Kolomella Iron Ore – ecological monitoring
A number of Free State nature reserves (e.g. Distribution of herbivores (kudu and giraffe) and predators (camera traps)

Francois is also involved with species breeding programmes and management (giraffe, buffalo, sable, roan, and rhino) in Korrannaberg, Rustenburg, Hertzogville, Douglas, and Bethlehem as well as animal and ecological monitoring in Kolomella and Beesthoek iron ore.

Besides the collaring of giraffes, Francois and his colleagues are involved in national projects, where they collect milk from lactating giraffes and DNA material, blood samples, and ecto/endo parasites from giraffes in Southern Africa.

With international projects, Francois is working to collect DNA material for the classification of the nine sub-species of giraffe in Africa. He is also involved in projects focusing on the spatial ecology and adaptation of giraffe in Uganda (Murchison Falls), and to save the last 30 giraffe in the DRC- Garamba National Park.

This project has attracted a good deal of international interest. In June 2014, a US film crew (freelancing for Discovery Channel) filmed a documentary on Francois’ research (trailer of documentary). Early in 2015, a second crew, filming for National Geographic, also visited Francois to document his work.

More information about Francois’ work is available at the GCF website.

Read Francois Deacon's PhD abstract

Direct enquiries to news@ufs.ac.za.

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