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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 alumnus receives PhD in Statistics from the University of Oxford
2016-06-03

Description: DW Bester  Tags: DW Bester

In May of this year, DW Bester obtained
a DPhil in Statistics at the University of
Oxford.
Photo: Supplied

On 14 May this year, Dr DW Bester received a DPhil in Statistics from the University of Oxford. The entire ceremony, which was held in the Sheldonian Theatre in Oxford, was conducted in Latin, as has been the case for the past 800 years.

Dr Bester completed his undergraduate studies and his honours degree at the University of the Free State (UFS). “At first, I was only planning to study for a master’s degree, but was privileged to get an opportunity to do a PhD as well. I didn’t think twice!” he says.

Studies at the University of Oxford


Universities in England do not require a master’s degree for PhD studies. With the help of Prof Max Finkelstein from the UFS Department of Mathematical Statistics and Actuarial Science, Dr Bester registered for the DPhil programme in Statistics directly after his honours studies.

“The title of my thesis was: Joint survival models: A Bayesian investigation of longitudinal volatility. It dealt with a problem in the medical field to determine the cause of stroke risk: is it the absolute level of blood pressure, or the volatility thereof? The analysis of this question led to interesting models which needed advanced application techniques. I had to study these techniques and write programmes for their application.

Although Dr Bester is working currently as the technical head of a company that calculates insurance for power stations, satellites, rockets, and cyber risks, he would like to continue working with his Oxford supervisor in future to make the techniques they have developed more accessible for researchers outside of the field of statistics.
 
“Studying at Oxford requires hard work, perseverance, and a lot of luck. Luck plays a big role, since there are no guarantees that hard work will ensure you a spot in one of the top universities.

Regarding his studies at Oxford, Dr Bester thinks back on his exposure to the GNU/Linux operating system, and free software. “I have seen how valuable this is for analyses in practice. I also had the privilege of meeting the father of free software, Richard Stallman,” Dr Bester says.

2011 Rhodes Scholar

He was elected as Rhodes Scholar in 2011. According to Dr Bester, who has been interested in Mathematics since high school, the Rhodes scholarship was something of a fluke. He applied for the Rhodes scholarship on the recommendation of Prof Robert Schall of the Department of Mathematical Statistics and Actuarial Science.

Role of the UFS in his successes


In addition to the continued support from the team of passionate professors and lecturers at the UFS, the actuarial degree at the UFS is fraught with statistics. Emphasis is also placed on Bayesian statistics. This was crucial to his studies at Oxford. According to Dr Bester, this topic is emphasised strongly in the international statistics community.

Dr Bester regards the work done by two of his lecturers, Michael von Maltitz and Sean van der Merwe, among his highlights at the UFS. Since our first year, they have created an atmosphere of camaraderie among the students. “I think this contributed to the success of everybody. They also make an effort to present topics outside of the syllabus regularly,” says Bester.

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