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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

Prof Jonathan Jansen bids farewell to Kovsies
2016-08-31

 

Dear Kovsie staff and students

This is my final message to you all.

I wish to use this opportunity for some brief reflections, share a word of gratitude, and convey a sense of the future for our beloved university.

Since the announcement of my departure, I have had more than a dozen breakfasts with mainly students, but also staff, to offer an opportunity for the final sharing of thoughts and, of course, goodbyes. The most common questions asked at those breakfast sessions were the following, with my responses. I repeat them here, since these might also be of interest or concern to you.

What are your proudest achievements?
Two things. The increase in the academic standard for the UFS, both in terms of admission standards and pass rates, but also in relation to the requirements for appointment and promotion especially of professors. This is important because in a globally competitive world, a university stands or falls by the quality of its degrees. And for this you need the best students and the best professors.

What would you do differently, given another chance?
Nothing. I believe that leadership is about doing the best you can with the cards you are dealt in the circumstances in which you are placed. There is no point in second-guessing past decisions. I have always been ambitious as a leader, knowing that most of my goals would be met, and that some would not. That is normal in large and complex organisations, and so, I do not sit around pondering regrets, only remembering with gratitude the things we could achieve together.

What did you learn?
A lot. I learnt that our students have tremendous capacity for greatness both in their academic pursuits but also in their ability to live, and learn, and love together. I have learnt never to underestimate the capacity of our youth to excel in whatever they do. Sometimes I felt I was more ambitious for our students and staff, than they were for themselves. But I have constantly been surprised by the capacity of young students to rise above bitterness and division, and to make great our campus, country, and continent.

I learnt, again, that the overwhelming majority of our staff and students are good people, respectful of each other, and determined to work together to heal our broken past and build a more just society. And I learnt that it is much more fulfilling to build up than to break down, to embrace than to exclude, and to love than to hate.

Were you frustrated with the pace of transformation?
Sometimes, yes. But fortunately I studied educational organisations all my life, mainly schools and universities. Universities are called institutions for a reason, and on century-old sites like the historic Bloemfontein Campus of the University of the Free State, there are core beliefs, values, and practices deeply ingrained in the culture of the place.

Anyone, therefore, who believes that transformation is easy, has obviously never tried to change an old university. It is difficult. You will get blowback. You will get bad press. You will, sadly, lose the support of some people. Some believe the university is changing too fast while others will tell you it is not changing fast enough. As you press for change, you find the university going two steps forward and one step back; in these circumstances, the solemn duty of the leader is simply to ensure that the overall momentum is always forward.

For such a time as this –
a commemorative journey:
2009-2016 (PDF book)

Description: Prof Jansen commemorative journey2 Tags: Prof Jansen commemorative journey

I therefore budget for disappointment even as I relish the many changes we have experienced together over the past seven years. If you want to obtain an objective sense of the scale of the changes at the UFS, ask those students and staff who were here in 2009, not those who came recently. They will tell you that we have a very different university, even though we all acknowledge that there is still some distance to travel. Our remarkable story of change is told in the recent Transformation Audit of the UFS, chaired by Prof Barney Pityana; that Audit Report will be released after it is read and studied by the University Council at its November meeting.

At an individual level, I learnt that most campus citizens change quickly and others more slowly, and that one has a duty to constantly push for change, but also to be patient about change. And I learnt that the ideal change retains the best of our past even as we embrace a more just and inclusive future in which all campus citizens feel that the university truly belongs to each and every one of them.

Are you optimistic about the future of our university?

Yes. The UFS is a very well-managed university thanks to the exceptional talent in the management of our finances, human resources and information technology environments. By the end of 2016, we will have record enrolments, from undergraduates to doctoral students, which is good for our future income. We run a tight ship with regard to the university’s finances, and we have greatly improved the academic standard of our qualifications; in this regard, I am very proud of my senior management team, and the talented middle management personnel, and those who make things work at the coalface of our operations.

I am very concerned, however, about future funding of the 26 public universities and the extremely vulnerable situation of at least 10 higher-education institutions. The economy is not growing and the costs of running a modern university are escalating. The delays in government commission reports on tuition fees do not help, and there seems no urgency ‘higher up’ to make the tough decisions.

We have to ensure free education for the poorest students — that is the position of your senior management – but we also need to guarantee the financial sustainability of our universities. The task of the UFS leadership, in this period of uncertainty, is to manage those two expectations as best we can. But this cannot happen without your assistance, and I do ask that you provide the new Rector and his or her team with the same understanding and support which I have enjoyed from you.

In conclusion
I am grateful.

To the many hundreds of students who have passed through my office and our home, and who sat in my many lectures and engaged me in your residences – thank you for enriching my sense of life and leadership. I am grateful that Grace and I could support and mentor many of you over the years and see you graduate. I am a better leader because of you.

To the staff of the three campuses – there is no university Rector, I can assure you, who enjoyed more love and support than what you offered me since the day I arrived here. Students come and go, but you have been my foundation year after year, and I thank you for that.

To parents, friends, and followers off-campus, in South Africa and abroad – thank you for hundreds of letters, emails, phone calls, prayers and ‘packages of support’ (from biltong to books). In the most difficult times, you rallied from everywhere with a word of support, often on social media. Know this: your words kept me calm in the storm.

Thank you, everyone.

Goodbye.

Prof Jonathan Jansen
Vice-Chancellor and Rector
University of the Free State

Description: Prof Jansen saying goodbey Tags: Prof Jansen saying goodbey

Prof Jonathan Jansen steps down as UFS Vice-Chancellor and Rector (16 May 2016)

 

 


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