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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

Research into surrogate milk important to wildlife conservation
2017-05-08

Description: Prof Garry Osthoff  Tags: Prof Garry Osthoff

Prof Gary Osthoff from the UFS Department of
Microbial, Biochemical and Food Biotechnology,
will soon work on a milk formula for elephants.
Photo: Supplied

Research is being done at the University of the Free State (UFS) to analyse and synthetically imitate the unique milk of various wildlife species. This research is not only of scientific value, but also serves the conservation of South Africa’s wildlife species. At the forefront of this research is Prof Garry Osthoff from the Department of Microbial, Biochemical and Food Biotechnology.

Orphaned rhino calf pulled through with surrogate milk

“There is still a lot of research to be done. Naturally the research is of scientific importance, but with surrogate milk having the same composition as the mother’s milk of a specific species, orphaned calves or cubs of that species could be pulled through during a difficult time of weaning. Bearing in mind that exotic animals fetch thousands and even millions of rands at auctions, it goes without saying a game farmer will do everything possible to provide only the best nourishment to such an orphaned animal. In such a case, synthetically-manufactured milk would be the right choice,” says Prof Osthoff.

The fruits of his research were recently demonstrated in Germany when a rhino calf was left orphaned in the Leipzig Zoo. Prof Osthoff’s article: “Milk composition of a free-ranging white rhinoceros during late lactation” was used as a directive for applying surrogate milk for horse foals (which is already commercially available), since the composition of horse and rhino milk largely corresponds. The surrogate milk was used with great success and the rhino calf is flourishing. He mentions that such an orphan is often given the wrong nourishment with the best intentions, resulting in the starvation of the animal despite the amount of cow’s milk it devours.

With surrogate milk having the same
composition as the mother’s milk of a
specific species, orphaned calves or
cubs of that species could be pulled
through during the difficult time
of weaning.

Milk formula for baby elephants in the pipeline
With baby elephants left orphaned due to the increase in elephant poaching for their ivory, several attempts have been made to create a milk formula in order to feed these elephants. To date, many elephants have died in captivity from side effects such as diarrhoea as a result of the surrogate formula which they were fed.

Prof Osthoff recently received a consignment of frozen milk which he, together with researchers from Zimbabwe, will use to work on a milk formula for elephants. They are studying the milk in a full lactation period of two years. During lactation, the composition of the milk changes to such an extent that a single surrogate formula will not be sufficient. Four different formulas should probably be designed.

Prof Osthoff says that of the different species he has researched, elephants are the most interesting and deviate most from the known species.

Although his research to develop surrogate milk is adding much value to the wildlife industry, and although he finds this part of his work very exciting, his research focus is on food science and nutrition. “What is currently authentic in milk research is the study of the fat globules with content, the structure and composition of the casein micelle, and the prebiotic sugars. The knowledge which is gained helps to improve the processing, development of new food products, and development of food products for health purposes,” says Prof Osthoff.

 

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