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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

Researcher part of project aimed at producing third-generation biofuels from microalgae in Germany
2016-05-09

Description: Novagreen bioreactor  Tags: Novagreen bioreactor

Some of the researchers and technicians among the tubes of the Novagreen bioreactor (Prof Grobbelaar on left)

A researcher from the University of the Free State (UFS), Prof Johan Grobbelaar, was invited to join a group of scientists recently at the Institute for Bio- and Geo-Sciences of the Research Centre Jülich, in Germany, where microalgae are used for lipid (oil) production, and then converted to kerosene for the aviation industry.

The project is probably the first of its kind to address bio-fuel production from microalgae on such a large scale.  

“The potential of algae as a fuel source is undisputed, because it was these photoautotrophic micro-organisms that were fixing sunlight energy into lipids for millions of years, generating the petroleum reserves that modern human civilisation uses today.  However, these reserves are finite, so the challenge is marrying biology with technology to produce economically-competitive fuels without harming the environment and compromising our food security.  The fundamental ability that microalgae have to produce energy-rich biomass from CO2, nutrients, and sunlight through photosynthesis for biofuels, is commonly referred to as the Third-Generation Biofuels (3G),” said Prof Grobbelaar.

The key compounds used for bio-diesel and kerosene production are the lipids and, more particularly, the triacylglyserols commonly referred to as TAGs.  These lipids, once extracted, need to be trans-esterified for biodiesel, while a further “cracking” step is required to produce kerosene.  Microalgae can store energy as lipids and/or carbohydrates. However, for biofuels, microalgae with high TAG contents are required.  A number of such algae have been isolated, and lipid contents of up to 60% have been achieved.

According to Prof Grobbelaar, the challenge is large-scale, high-volume production, since it is easy to manipulate growth conditions in the laboratory for experimental purposes.  

The AUFWIND project (AUFWIND, a German term for up-current, or new impetus) in Germany consists of three different commercially-available photobioreactor types, which are being compared for lipid production.

Description: Lipid rich chlorella Tags: Lipid rich chlorella

Manipulated Chlorella with high lipid contents (yellow) in the Novagreen bioreactor

The photobioreactors each occupies 500 m2 of land surface area, are situated next to one another, and can be monitored continuously.  The three systems are from Novagreen, IGV, and Phytolutions.  The Novagreen photobioreactor is housed in a glass house, and consist of interconnected vertical plastic tubes roughly 150 mm in diameter. The Phytolutions system is outdoors, and consists of curtains of vertical plastic tubes with a diameter of about 90 mm.  The most ambitious photobioreactor is from IGV, and consists of horizontally-layered nets housed in a plastic growth hall, where the algae are sprayed over the nets, and allowed to grow while dripping from one net to the next.

Prof Grobbelaar’s main task was to manipulate growth conditions in such a way that the microalgae converted their stored energy into lipids, and to establish protocols to run the various photobioreactors. This was accomplished in just over two months of intensive experimentation, and included modifications to the designs of the photobioreactors, the microalgal strain selection, and the replacement of the nutrient broth with a so-called balanced one.

Prof Grobbelaar has no illusions regarding the economic feasibility of the project.  However, with continued research, optimisation, and utilisation of waste resources, it is highly likely that the first long-haul flights using microalgal-derived kerosene will be possible in the not-too-distant future.

Prof Grobbelaar from the Department of Plant Sciences, although partly retired, still serves on the editorial boards of several journals. He is also involved with the examining of PhDs, many of them from abroad.  In addition, he assisted the Technology Innovation Agency of South Africa in the formulation of an algae-biotechnology and training centre.  “The chances are good that such a centre will be established in Upington, in the Northern Cape,” Prof Grobbelaar said.

 

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