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12 May 2020 | Story Prof Francis Petersen | Photo Sonia Small
Prof Francis Petersen.

In a rapidly changing, uncertain and complex world, the role that universities are playing as the engines of social mobility, as drivers of the economy and as generators of new ideas, is now more critical than ever.  Due to the universal nature of knowledge, universities are global in scope – a space that encourages new ideas, controversy, inquiry, and argument and challenges orthodox views, but they are also deeply entrenched in their local environment, influenced by socio-economic and political dynamics.  There is an expectation that universities should exhibit great levels of responsiveness and public accountability, with higher levels of trust in higher education, and between higher education and government, and higher education and the public.  The challenge for both higher education and government is to allow institutional autonomy without oppressive accountability.  

Over the past few years, the purpose of universities has been challenged in relation to their role in society, their advocacy for speaking truth to power, their continuous strive to be great universities without being elitist, and their ability to function in an age of populism. The Trump administration and, more recently, Brexit have demonstrated that there is a decline in the respect for evidence and advice from subject-specific experts.  It seems (as in the case of the Trump administration) as if empirical reality does not matter, nor does empirical reasoning form the basis of public policy – a political place that is becoming increasingly anti-intellectual.  Emotion and personal belief have been shown to carry more weight than objective facts and evidence in terms of influencing public opinion.  Fake news and ‘the alternative truth’ have also challenged the fundamental principles of a university – academic freedom and the generation of new knowledge in the pursuit of truth.

A digitally unequal society
The COVID-19 pandemic has shown deep fault lines in our society – stark poverty and inequality – that universities should engage with (and they do); however, they cannot eliminate it on their own, but can be part of the solution.  South Africa is the most unequal society in the world.  Before the COVID-19 pandemic, the South African economy was already in deep trouble, with sovereign downgrades by all the rating agencies and with an unemployment rate close to 30%.   The national lockdown, in an attempt to ‘flatten the infection curve’ and hence manage the response of the national health system to COVID-19 cases, has added to the pressure on the economy.  It is envisaged that a large number of people (estimated between 3 and 7 million South Africans) will lose their jobs after the national lockdown period, adding to poverty and an already high unemployment rate.  Even during the lockdown period, there are many South Africans living in crowded spaces, hence finding it difficult to practise social distancing, may not have running water and proper sanitation, and possibly do not have regular access to food.  

As schools and the post-school education and training sectors move online with their learning, it further shows how digitally unequal our society really is – access to connectivity, data, and an appropriate digital device is a challenge, and electricity is not evenly distributed or is non-existent in our society.  These institutions, within the environment of digital inequality, are ensuring that digital equity is maintained as far as possible.  Many churches, business leaders, and certain politicians have called for a different social pact between business, labour, and government to address the state of the economy – any such action, however, must be supplemented by concrete measures for social reform.

Regaining trust in universities
But perhaps this pandemic has also created an opportunity for science and evidence to regain credibility in informing government decisions and public trust, and for universities to demonstrate respect for evidence. During the initial stages (early March) of COVID-19 in South Africa, the epidemiologists and virologists have shown through confirmed data from the National Institute of Communicable Diseases (NICD) that South Africa was in the early phase of the infection curve – also interpreted to be the relatively low-risk phase of the curve; this would be the right time to apply the principle of social distancing.  It allowed certain organisations (such as universities) to pro-actively suspend part of their activities so as to minimise the number of people in their operational environment, well before the national lockdown was announced on 26 March – a decision based on science.

Through data and proper analyses, the NICD, other scientific bodies and the Ministerial Advisory Committee on COVID-19 provided evidence-based information to government and the public, from which meaningful decisions could be taken.  The South African government has made it perfectly clear that decisions around COVID-19 will be made based on the science associated with this pandemic – a stance to be applauded.  Hence, the risk-adjusted approach of ‘opening up’ the economy through easing the lockdown measures but constantly monitoring the infection curve is an excellent example of risk management while continuously assessing the risks.

Universities, science laboratories, and pharmaceutical companies around the globe are hard at work to develop an effective vaccine for COVID-19, which is another opportunity to demonstrate how science can assist in protecting people from this terrible virus. Universities are making advances in personal protective equipment (PPE), the development of new technologies for non-ICU provision of oxygen to COVID-19 patients, more advanced methods of testing (for the virus) to reduce turnaround times, and various other scientific studies.  

This platform is giving universities a renewed impetus to use science and scientific developments to advance societal agendas such as climate change, poverty and inequality, public health and social justice (ethics of care) – and more immediate – assisting in re-building a strong South African economy.  It is an opportunity for the public and politicians to regain trust in universities, but it is also an opportunity for universities to profile their public intellectuals so that the value of science and evidence-based output is part of policy debates and informed decision-making.  However, in doing so, universities must strengthen their relationship with society at large, be inquiry-driven, and at the same time be learning and co-creating.

Prof Francis Petersen is Rector and Vice-Chancellor of the University of the Free State.

News Archive

Inaugural lecture: Prof. Phillipe Burger
2007-11-26

 

Attending the lecture were, from the left: Prof. Tienie Crous (Dean of the Faculty of Economic and Management Sciences at the UFS), Prof. Phillipe Burger (Departmental Chairperson of the Department of Economics at the UFS), and Prof. Frederick Fourie (Rector and Vice-Chancellor of the UFS).
Photo: Stephen Collet

 
A summary of an inaugural lecture presented by Prof. Phillipe Burger on the topic: “The ups and downs of the South African Economy: Rough seas or smooth sailing?”

South African business cycle shows reduction in volatility

Better monetary policy and improvements in the financial sector that place less liquidity constraints on individuals is one of the main reasons for the reduction in the volatility of the South African economy. The improvement in access to the financial sector also enables individuals to manage their debt better.

These are some of the findings in an analysis on the volatility of the South African business cycle done by Prof. Philippe Burger, Departmental Chairperson of the University of the Free State’s (UFS) Department of Economics.

Prof. Burger delivered his inaugural lecture last night (22 November 2007) on the Main Campus in Bloemfontein on the topic “The ups and downs of the South African Economy: Rough seas or smooth sailing?”

In his lecture, Prof. Burger emphasised a few key aspects of the South African business cycle and indicated how it changed during the periods 1960-1976, 1976-1994 en 1994-2006.

With the Gross Domestic Product (GDP) as an indicator of the business cycle, the analysis identified the variables that showed the highest correlation with the GDP. During the periods 1976-1994 and 1994-2006, these included durable consumption, manufacturing investment, private sector investment, as well as investment in machinery and non-residential buildings. Other variables that also show a high correlation with the GDP are imports, non-durable consumption, investment in the financial services sector, investment by general government, as well as investment in residential buildings.

Prof. Burger’s analysis also shows that changes in durable consumption, investment in the manufacturing sector, investment in the private sector, as well as investment in non-residential buildings preceded changes in the GDP. If changes in a variable such as durable consumption precede changes in the GDP, it is an indication that durable consumption is one of the drivers of the business cycle. The up or down swing of durable consumption may, in other words, just as well contribute to an up or down swing in the business cycle.

A surprising finding of the analysis is the particularly strong role durable consumption has played in the business cycle since 1994. This finding is especially surprising due to the fact that durable consumption only constitutes about 12% of the total household consumption.

A further surprising finding is the particularly small role exports have been playing since 1960 as a driver of the business cycle. In South Africa it is still generally accepted that exports are one of the most important drivers of the business cycle. It is generally accepted that, should the business cycles of South Africa’s most important trade partners show an upward phase; these partners will purchase more from South Africa. This increase in exports will contribute to the South African economy moving upward. Prof. Burger’s analyses shows, however, that exports have generally never fulfil this role.

Over and above the identification of the drivers of the South African business cycle, Prof. Burger’s analysis also investigated the volatility of the business cycle.

When the periods 1976-1994 and 1994-2006 are compared, the analysis shows that the volatility of the business cycle has reduced since 1994 with more than half. The reduction in volatility can be traced to the reduction in the volatility of household consumption (especially durables and services), as well as a reduction in the volatility of investment in machinery, non-residential buildings and transport equipment. The last three coincide with the general reduction in the volatility of investment in the manufacturing sector. Investment in sectors such as electricity and transport (not to be confused with investment in transport equipment by various sectors) which are strongly dominated by the government, did not contribute to the decrease in volatility.

In his analysis, Prof. Burger supplies reasons for the reduction in volatility. One of the explanations is the reduction in the shocks affecting the economy – especially in the South African context. Another explanation is the application of an improved monetary policy by the South African Reserve Bank since the mid 1990’s. A third explanation is the better access to liquidity and credit since the mid 1990’s, which enables the better management of household finance and the absorption of financial shocks.

A further reason which contributed to the reduction in volatility in countries such as the United States of America’s business cycle is better inventory management. While the volatility of inventory in South Africa has also reduced there is, according to Prof. Burger, little proof that better inventory management contributed to the reduction in volatility of the GDP.

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