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28 September 2020 | Story Andre Damons | Photo Pexels
Dr Trevor Manuel, Chairperson: Old Mutual Limited and former minister of finance (top left), Ms Ann Bernstein, Executive Director: Centre for Development and Enterprise (CDE) (top right), and Mr Mondli Makhanya, Editor-in-Chief: City Press (bottom left), were the panellists at the University of the Free State’s (UFS) second Thought-Leader Webinar for 2020, which focused on the economy. Dr Max du Preez, Editor: Vrye Weekblad (bottom right), was the facilitator.

The state is broken, and the country cannot move forward unless the state is fixed and bold, tough decisions are made.

This is the opinion of panellists who took part in the University of the Free State’s (UFS) second Thought-Leader Webinar on Wednesday (23 September), which focused on the economy. This webinar is part of a series with the theme ‘Post-COVID-19, Post-Crisis.’  Dr Trevor Manuel, Chairperson: Old Mutual Limited and former minister of finance, Ms Ann Bernstein, Executive Director: Centre for Development and Enterprise (CDE), and Mr Mondli Makhanya, Editor-in-Chief: City Press, were the panellists. Dr Max du Preez, Editor: Vrye Weekblad, was the facilitator.

Country needs reform

Both Bernstein and Makhanya said that the state is broken, with Bernstein saying that the state is corrupt, and government decision-making bandwidth is much weaker than it used to be.

“The country is in a very serious situation and cannot do more of the same. We have to reflect honestly on what got us into this terrible situation, and then COVID exacerbated all our problems. What got us into it and what we have done previously has to change.”

“The country needs reform and it is my view that we will not move forward unless government’s credibility as a reformer is establish, and two and a half years of promises and very little action of any significance has undermined that credibility. I think you have to start from that,” says Bernstein.

According to her, bold choices must be made if we are to save what growth we have, if we are to expand growth, to expand more labour intensively. 

“South Africa has all the potential to be a great African economy, with all sorts of strengths that we could build on. But we keep disappointing.”

Building a capable state

Makhanya said going forward, a good starting point is to fix and build a capable state. “The fundamental thing of the NDP (National Development Plan) – a plan that can take us forward – was the part about a capable state.” 
“The state is very broken, and there is no way we can move forward while the state is as broken as it is now. This is what we saw during lockdown, when it was so easy for certain elements to steal from very essential funds that were meant to save lives. It was a classic example of a broken state.”

Another thing we absolutely need to do, is to have one message and one conversation.  

“Tough decisions should be taken. It was frustrating again to find us as a country talking about where to find R10,5 billion to fund our ailing airline. Why is this a priority? We know what our priorities are. We know Eskom is a priority, we know food security is a priority, unemployment is a priority. Why is it necessary for us as a country to have this hectic debate about having a national airline?” 

“Decisions need to be taken around the health of the fiscus, decisions around the public wage bill, around issues of freeing up enterprise, and about reforms. The decisions will take a long time to make and some of them will be unpopular, but they need to be taken,” says Makhanya.

According to him, President Cyril Ramaphosa needs to take these decisions. He also needs to tell himself that he would be happy to serve one term, and that he does not need friends to vote him back as leader of the ANC and as President of the country in 2024. President Ramaphosa needs to do things now, knowing that he will leave a legacy of having fixed a country, and importantly, having fixed the economy.

Announcement of hard lockdown saw the economy hurtling down a cliff

Dr Manuel said the hard lockdown announced at the end of March saw the economy hurtling down a cliff. This happened after three successive quarters of contraction. “We find ourselves at the base of this ravine, having tumbled down. How do we extricate the South African economy from where we are given the geography of where we are?”

According to him, the country has fewer options than we would like to imagine. 

“I think the 51% contraction in the second quarter must introduce a sense of urgency and focus the mind. We are not alone. But we need to be rigorously honest about where we are. And we need to also ask ourselves tough questions of whether we have the wherewithal to reconstruct the economy,” says Dr Manuel. 

According to him, the $3,4 billion borrowed from the IMF is unlikely to be sufficient, and there is a growing consensus that the full-on standby facility from the IMF will probably be needed.  

He says while the RFID has no obvious conditions, it is important to pay attention to the fine print. “In the letter of intent, which was jointly signed by the Governor of the Reserve Bank and the Minister of Finance, we committed to take action to revoke the upward trajectory of the debt-to-GDP ratio, and also a commitment to remove the structural impediments to growth. So, it is quite important to understand what we committed to and against what we will be measured.” 
“The IMF, in accepting those commitments, also warned about the urgency and the sequencing of the series of policy measures to prevent – in their words – the risk of social unrest. They also raised a series of red flags that are important in the context. The first is the growth of the public sector wage bill, something that is in the public domain and about which NEHAWU is threatening to strike. The second issue is the scale of transfers to state-owned enterprises. Thirdly, the risk of the curtailment of infrastructures.”

There has also been a flurry of policy writing and discussions. The National Treasury, Business for South Africa, and the ANC have written their own papers on reconstruction, growth, and building an inclusive economy.  According to Dr Manuel, however, the question is how to get things done. 

“The concern I have about these papers is that there is inadequate attention to public finance, which sets a frame for all economic development that needs to take place. And it is basically an equation – what you have to spend is the sum of what to tax and what you can borrow.”

What the country needs right now is clarity on the trade-offs, and not even the social partners paper deals with trade-off clearly enough. If you put money into an airline, it has to come from somewhere else. Your ability to govern and exercise choices is therefore severely limited.

News Archive

UFS will increase its volume of quality research
2009-11-25

 
From the left are, seated: Prof. Alice Pell, Vice-Provost: International Relations at Cornell University in the USA and Prof. Jonathan Jansen, Rector and Vice-Chancellor of the UFS; standing: Prof. Ezekiel Moraka, Vice-Rector: External Relations at the UFS, and Prof. David Wolfe from Cornell University during the signing of a memorandum of agreement between the two institutions.
Photo: Stephen Collett

The University of the Free State (UFS) is taking its research serious and is therefore going to increase its volume of quality research. This includes the production of quality scholarly books in the humanities and social sciences.

This was said by Prof. Jonathan Jansen, Rector and Vice-Chancellor, at the launch of the Strategic Academic Cluster initiative of the University on the Main Campus in Bloemfontein last night.

“We are going to produce the kind of research that is associated with scholarships. New models of training, new standards of performance and the introduction of an accelerated Vice-Chancellor’s Prestige Scholars’ Programme are among the initiatives that will be introduced. These are all aimed at boosting our university’s research performance,” said Prof. Jansen.

Another strategy to boost research performance at the UFS is the search for 25 leading professors to be appointed across the disciplines, but especially in the social sciences, education and the humanities. These positions have already been advertised and will be phased in with the goal of achieving equity and excellence in the academic and research profile of the UFS. “We’ve had an overwhelming response to the advertisements from local academics as well as those abroad,” said Prof. Jansen.

Each of the six Cluster Directors gave a short presentation of its aim and focus areas during last night’s dinner. These Clusters will in future direct the University’s research endeavours. It represents a move from a fragmented to a more focused approach to research development at the UFS.

The UFS also signed a memorandum of agreement with Cornell University (USA) last night. The guest speaker, Prof. Alice Pell, Vice-Provost: International Relations at Cornell University and member of the UFS’s International Advisory Board, said that, just as the cluster research teams need representatives from different disciplines, universities need diverse partners to recognise their potential fully. Collaborating with partners with ‘fresh eyes’ that have different cultural perspectives, access to different technologies and partners with different priorities can have important implications in the research and education provided by the UFS and Cornell,” she said.

“The interdisciplinary approach adopted by the UFS in developing the Strategic Academic Clusters seems likely to provide students with the intellectual frameworks and research tools that they need to address the problems in society,” she said.

“The most important issues facing the USA and South Africa are similar, namely how to effect the social transformation that will provide equal opportunities to all of our citizens. South Africa, Brazil, India and the USA share strong commitments to democracy, to overcoming our dark histories of religious and racial discrimination and to sustainable economic development without adverse impacts on our planet. We at Cornell are excited about the opportunity to work with the UFS on all of the clusters, but we are particularly looking forward to learning more about social transformation,” said Prof. Pell.

Media release
Issued by: Lacea Loader
Deputy Director: Media Liaison
Tel: 051 401 2584
Cell: 083 645 2454
E-mail: loaderl.stg@ufs.ac.za  
24 November 2009

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