Latest News Archive

Please select Category, Year, and then Month to display items

Did the budget speech address SA's current challenges?

22 February 2024 Photo SUPPLIED

Opinion article by Eugene Msizi Buthelezi, nGAP Lecturer in the Department of Economics and Finance, University of the Free State.

Finance Minister Enoch Godongwana delivered the 2024 National Budget Speech on Wednesday 21 February 2024. The speech centred around promoting economic growth, addressing inequality, and ensuring sustainable development in South Africa. Minister Godongwana emphasised the importance of expanding the national pie through economic measures while also focusing on the distribution of resources to achieve social and economic justice. Monetary policy spillover to fiscal policy was evident, as the minister referenced the utilisation of the Gold and Foreign Exchange Contingency Reserve Account (GFECRA). This budget speech came at a time of significant economic challenges in South Africa, including the following:

Falling economic growth projection, reflecting that there are still persistent challenges in addressing unemployment, poverty, and inequality.
Eskom's financial woes and operational inefficiencies, which remain a critical concern.
Rising government debt, budget deficits, and debt-service expenses are among current pressing issues.
Tax adjustments, which are needed more than ever to bolster government revenue, alongside social grant increases to support vulnerable populations.
Public-private partnerships for economic growth, job creation, and enhanced productivity.

Domestic economy and fiscal outlook

The growth outlook for South Africa between 2024 and 2026 is expected to average 1,6%, indicating a shortfall of 3,4% from the targeted economic growth of 5% as outlined in the National Development Plan's vision for 2030. This discrepancy reflects the challenges facing the South African economy in addressing issues such as unemployment, poverty, and inequality. Nevertheless, the minister pointed out key policy initiatives in the budget speech. This included the implementation of measures to enhance procurement efficiency and promote local industrialisation. Moreover, structural reform in sectors such as electricity, logistics, water, and telecommunications to stimulate growth.

On the other hand, the elephant in the room – Eskom – remains a significant challenge in the South African economy. Eskom, the state-owned electricity utility, has been plagued by financial difficulties, operational inefficiencies, and power supply constraints, leading to frequent load shedding and disruption of economic activities. However, in the 2024 Budget Speech, Eskom was granted a debt-relief plan to alleviate its financial burden and allow the entity to focus on its core business operations. It was noted that Eskom's coal-fired power stations are being fixed and renewable energy projects are in the pipeline to promote and further enhance energy security. These interventions will ensure operational efficiency, enhance energy security, reduce reliance on fossil fuels, reduce the frequency of load shedding, and minimise disruptions to businesses and households. Despite this, Eskom may still require significant financial investments, potentially increasing the financial burden. Moreover, integrating renewable energy and restructuring Eskom's operations may face resistance or challenges in implementation, leading to transitional disruptions.

In terms of infrastructure, the minister pointed out that partnerships between the public and private sectors to finance projects are key to delivering infrastructure projects. It is expected that infrastructure investment will stimulate economic growth, create jobs, and boost productivity. However, large-scale infrastructure projects carry financial risks, including cost overruns, delays, and potential budget deficits that could strain public finances. Fiscal authorities have shown a lack of monitoring and evaluation, as the public is still awaiting a report on the generation of sustainable employment and infrastructure projects that have contributed to the overall economic growth, which is a point of concern. On the other hand, infrastructure investment may be vulnerable to corruption, mismanagement, and lack of transparency, leading to inefficiencies and suboptimal outcomes. These are some of the aspects that fiscal authorities need to look at and put necessary measures in place to ensure the success of infrastructure projects. Some of the key macroeconomic variables that were highlighted in the budget speech are the following:

The national government's debt, which is projected to reach approximately 75,3% of the Gross Domestic Product (GDP) by 2025/26.
The budget deficit for 2023/24, which is expected to worsen to 4,9% of the GDP.
The debt-service expenses which are anticipated to increase is now estimated at R356 billion, representing more than 20% of revenue – surpassing the budgets allocated for social protection, health, or peace and security.

Given the economic challenges reflected in these macroeconomic variables, the minister has indicated that immediate reform will be through the 30% utilisation of the GFECRA, which has grown to more than R500 billion. Therefore, the government plans to use R150 billion from GFECRA, expecting a decline of approximately R30,2 billion in government debt servicing costs over the 2024 Medium Term Expenditure Framework (MTEF). The use of the account is effective, because the account provides liquidity in times of need, allowing the government to meet its financial obligations without resorting to external borrowing. Given that the account resides with monetary authorities in the South African Reserve Bank (SARB), fiscal authorities will find that GFECRA has restrictions on utilisation, limiting the government's flexibility in responding to immediate financial needs or emergencies. Moreover, depending on the size and management of the GFECRA, it could impact market perceptions of the country's financial health and credibility.

Tax and revenue

The weak performance of the economy has been identified as a significant factor contributing to a sharp decline in tax revenue collection for 2023/24. It has been observed that tax revenue for 2023/24 is R56,1 billion lower than estimated in 2023. The minister highlighted the implementation of a global minimum corporate tax, which is projected to generate R8 billion in corporate tax revenue by 2026/27. Additionally, measures will be taken to target multinational corporations with annual revenue exceeding a certain threshold. General solutions for revenue generation were proposed, which included the following:

Focusing on excise duties for alcohol products, with increases ranging between 6,7% and 7,2% for 2024/25
A 4,7% increase in tobacco excise duties on cigarettes.

Implementing these tax proposals and improving revenue collection will boost government revenue, allowing for the funding of essential services, infrastructure projects, and social programmes. This enhanced revenue generation will also contribute to fiscal stability by reducing budget deficits and public debt levels over time. However, fiscal authorities must prioritise modernising tax administration and combating illicit activities to enhance tax compliance, ensuring that all taxpayers contribute their fair share.

Social security and government spending

In the budget speech, the minister demonstrated an awareness of the pressing realities confronting South African society by announcing adjustments to social grants in line with inflation. The grant changes included, among others

R50 increase to the foster care grant;
Child Support Grant increases from R510 to R530;
Older Person’s Grant increases by R90 on 1 April and R10 in October 2024; and
COVID-19 Social Relief of Distress Grant of R350.

However, it is crucial to recognise that these increases may still fall short of adequately addressing the needs of those living below the poverty line, especially considering the high levels of unemployment and the rising cost of living. Moreover, while there is a commendable effort to provide support through these grant adjustments, fiscal constraints pose significant limitations. The government must navigate carefully to ensure that these increases are sustainable within the broader fiscal framework. Balancing the imperative to support vulnerable populations with fiscal prudence is a delicate task, requiring careful consideration of both short-term relief measures and long-term fiscal sustainability. Ultimately, while the announced increases in social grants represent a step towards addressing the immediate needs of vulnerable communities, policy makers must continue evaluating and refining these measures to ensure they effectively alleviate poverty and inequality while remaining fiscally responsible. Other critical government spending was pointed out in the budget speech, including the following:

An additional R25,7 billion was allocated to the education sector’s wages.
Childhood development grants increased to R2 billion over the medium term.
The health sector to be allocated a total of R848 billion over the Medium-Term Expenditure Framework (MTEF) for health.
An allocation of R61,4 billion for employment programmes over the medium term.
A R7,4 billion for the Presidential Employment Initiative.

The effectiveness of government spending by increasing wages in the education sector is welcome, as it could attract and retain qualified educators. However, it is essential to consider whether these increases are accompanied by measures to address broader challenges within the education system. Simply increasing wages without addressing issues such as inadequate infrastructure, resource shortages, and administrative inefficiencies may limit the overall impact on educational outcomes. To maximise effectiveness, it is crucial for the government to also invest in building new schools, providing resources for the day-to-day running of schools, and implementing reforms to improve the quality of education.

On the other hand, regarding spending on employment programmes and initiatives to address unemployment, effectiveness will depend on fiscal authorities' design and implementation of these programmes. Allocating funds to employment programmes could potentially create job opportunities and reduce unemployment rates, particularly among artisans and recent graduates. However, there is still a need for alignment of employment programmes with the needs of the labour market, the provision of relevant skills training and support services, and the creation of sustainable job opportunities. Additionally, effective monitoring and evaluation mechanisms are essential to ensure that spending on employment programmes yields tangible outcomes.

In conclusion, the 2024 Budget Speech touched upon various critical challenges facing the nation, including economic growth constraints, Eskom's challenges, rising government debt, tax revenue shortfalls, and the need for social security enhancements. The budget speech regained the need to address these challenges effectively and pointed out the importance of ensuring that fiscal policies prioritise equitable distribution of resources and effective management of public finances. Key areas for fiscal policy focus included continued investment in infrastructure projects, coupled with public-private partnerships, which can stimulate economic growth, create jobs, and enhance productivity. It has been noted that enhancing revenue generation through effective tax policies, such as corporate tax reforms and excise duty adjustments, can bolster government revenue. On the other hand, social grant adjustments were deemed to be vital for supporting vulnerable populations, but efforts to address poverty and inequality should extend beyond grant increases. The speech acknowledged that investments in education, health care, and employment programmes are essential to promote inclusive growth and reduce socio-economic disparities.

Did the budget speech address current challenges? Yes, the 2024 Budget Speech addressed many of the current challenges facing South Africa. However, moving forward, fiscal authorities need to prioritise structural reforms, innovation, and inclusive economic development strategies to address South Africa's economic and social challenges effectively. Exploring opportunities for public-private collaboration, leveraging technology for efficient service delivery, and promoting entrepreneurship and small business development can contribute to long-term sustainable growth and prosperity. Additionally, maintaining a conducive policy environment, fostering investor confidence, and strengthening governance and institutional capacity are crucial for achieving lasting economic resilience and social progress.

The views presented here are mine, they do not represent the views and policy position of the institution I am affiliated with. I do this for community outreach as a person in academics only.

News Archive

During 2011: Highlights at the UFS

2011-12-01

2011 was a phenomenal year in the life of the University of the Free State and the memorable moments will be engraved in the history of this proud institution.

World Universities Forum honours the UFS

The UFS was awarded the World Universities Forum (WUF) Award for Best Practice in Higher Education during 2010.The Best Practice Award recognises the most significant practices of the year around the world. The university’s implementation of a number of interlocking innovations to transform the institution is recognised with the award.

These innovations include: campus-wide racial integration for students; reinvigoration of the academic culture; nurturing of the most promising young scholars by means of the Vice-Chancellor's Prestige Young Scholars Programme; sending 71 first-year students to top American universities to assist with their development into non-racial campus leaders; the revision of the undergraduate curriculum to promote a cross-disciplinary approach to key societal problems; raising the entry requirements; the facilitation of open access to campus leadership through sessions with the Vice-Chancellor and Rector; extension of this spirit of dialogue internationally through the inauguration of its International Advisory Council consisting of key thinkers and practitioners; the identification of 20 of the most dysfunctional high schools in the Free State and the building of relationships with those schools.

This university-school partnership is based on a strict contract of reciprocal commitments to increase the chances of black children attending university. The WUF applauded this as the most innovative step.

New branding for our 107-year old institution

Our university turned a fresh new page with the launch of a new brand that will take the institution on its path to new horizons.

Two primary brands were adopted – an evolved academic crest and a new marketing brand for the institution’s offerings and services. The very foundation of the UFS is built on a dynamic learning environment where academic excellence and the development of leadership qualities. The new brand seeks to adapt to the changing needs of society, without sacrificing its rich history and heritage.

The rebranding process involved one of the most expansive and intensive process of consultations with staff, alumni, Senate, Council and other stakeholders.

The new brand is anchored in the university’s renewed motto “In Veritate Sapientiae Lux” (In Truth is the Light of Wisdom), which has been evolved to embrace the diversity of the community at the university without losing its essence.

Archbishop Desmond Tutu receives an honorary doctorate

One of the great sons of Africa, Archbishop Emeritus Desmond Tutu, received an honorary doctor of Theology and opened the International Institute for Studies in Race, Reconciliation and Social Justice on the Bloemfontein Campus at the beginning of 2011.

The Institute originated in the Reitz incident of 2008 and embodies the UFS’s determination to be a place where reconciliation, forgiveness and social justice would not only be studied, but where it would also be applied. Students and scholars from across the world can study the theory and practice of building societies across the boundaries of race, as well as religion, gender, disabilities and national origin.

By honouring Dr Tutu, the UFS recognises the contribution he has made in the field of Theology through his teachings and the books he has written. The UFS not only honoured him as a moral and religious leader who has maintained his integrity as a Christian, but also as “a great son of South Africa who has made a huge contribution to peace, reconciliation and justice in South Africa and in the world”.

Reconciliation closes book on the Reitz incident

The Reitz incident, that has taken the UFS to front pages and news headlines, could come to closure this year with a reconciliation ceremony between the former students and staff members. The parties involved could meet in private and also took part in a public ceremony with many dignitaries witnessing the closure of the incident and repercussions it had.

Messages of apology were read by Prof. Teuns Verschoor, Vice-Rector: Institutional Affairs, on behalf of the UFS, and Mr Danie Grobler, on behalf of the former students. A message of acceptance of the apologies was read by Ms Emmah Koko on behalf of the workers.

Deputy Chairperson of the South Africa Human Rights Commission, Commissioner Pregs Govender, said of this historic event: “The courage and compassion shown by the workers together with the students’ willingness to embrace the spirit of change have enabled a process of justice, transformation and reconciliation that is an inspiring example for South Africa.”

Grade 12s attend first Leadership Summit

More than 280 learners from all over South Africa and Namibia attended a three-day Leadership Summit on the Bloemfontein Campus in April 2011. The goal of the summit was to enable young leaders to develop their leadership capabilities by looking beyond their normal boundaries.

Prof. Jonathan Jansen, Vice-Chancellor and Rector, addressed the learners on leadership while Mr Louie de Necker, a training consultant, spoke about conflict resolution. Other highlights included a visit to the Boyden Observatory, picnic suppers, an introduction to residence life, a social evening, and a prize-giving ceremony aimed at learners who distinguished themselves as potential leaders during the three-day visit.

UFS honours great teachers

Our university and Sunday Times have joined hands in identifying 150 of the greatest teachers, who moved, inspired and transformed South Africans during their time at school. The project culminated in the book Great Teachers.

These are the teachers who stood out among their colleagues and made a lasting impact on their learners, inspiring them to excel, long after the mathematical equations and English literature tests are forgotten. The book is a powerful account of inspired and inspiring teachers.

All proceeds from the sales of the book will be used to provide bursaries to student teachers of today, who may become the great teachers for tomorrow’s generation.

Graduations now a celebration

By changing its format, graduations are now a festival to celebrate years of hard work and dedication of students and lecturers at our university. Some of the changes include the gathering of the procession on the Red Square in front of the Main Building, from where it moves to the Callie Human Centre. The graduation programme is also filled with music and song items with various young speakers addressing and inspiring the audience.

A total of 83 doctorates were conferred this year, making it the highest number in the history of the university.

African Student Affairs Conference a huge success

The first African Student Affairs Conference (ASAC) was hosted by our university. The conference was attended by delegates from universities across the continent and was aimed to place the focus on issues relating to student affairs in an African context.

Delegates shared and exchanged strategies, ideas and resources, and discussed issues related to the work of student-affairs professionals. A delegate from Nigeria said it was an important conference for Africa and it should become a regular event.

Research published in Nature

A research article on the work by a team under the leadership of Prof. Esta van Heerden, and counterparts in Belgium and the USA, has been published in the distinguished academic journal Nature on Thursday 2 June 2011.

The article – Nematoda from the terrestrial deep subsurface of South Africa – sheds more light on life in the form of a small worm (nematode) living under extreme conditions in deep, hot mines. It was discovered in one of the gold mines in the Free State.

The research can shed some new light on the possibility of life on other planets, previously considered impossible under extreme conditions. It also expands the possibilities into new areas where new organisms may be found.

Postgraduate School is one of a kind

Our Postgraduate School was launched with the aim of bringing research-bases education in line with national priorities and the focus of the UFS Academic Turnaround Strategy of 2010. It spans across our facilities.

The focus of the school is to produce graduates who are global citizens, research literate and able to reflect ethically on the purpose, process and product of research; to improve throughput rates of postgraduate students; and to make the experience of being a postgraduate at our university one which is stimulating, enjoyable and which contributes to the development of people beyond the limits of their disciplines.

Oprah Winfrey now a Kovsie

World attention was drawn to our university when an honorary doctorate in Education was conferred on media icon Oprah Winfrey on 24 June 2011 at our Bloemfontein Campus. The graduation was probably the biggest ceremony of its kind in South Africa, with more than 4 500 people attending.

Our university honoured her for her accomplishments and unparalleled work as a global media leader, as well as a philanthropist with vision and foresight in the field of education and development.

Prof. Jonathan Jansen, Vice-Chancellor and Rector of our university, said: “It is a great privilege for us to be the first South African university to honour Ms Winfrey in this way and to be able to recognise a global icon of her stature.”

UFS doctors make history in South Africa

Two procedures took the UFS to the forefront of the medical world this year.

History was made with the first implant of a special new aortic valve in South Africa. The advantage of this new valve is that it can be implanted percutaneously through a catheter from the groin. This eliminates the need for invasive surgery.

The valve is made from porcine pericardium (tissue derived from pigs) and is mounted on an expandable stent, which is threaded along an artery, until it reaches its desired position. The valve is especially useful in older patients who suffer from aortic valve disease and pose a high surgical risk. It also reduces hospitalisation time.

A rare malignant tumour was also removed in groundbreaking heart surgery. What makes this operation unique, is that the suspicious mass, identified in the heart of a 51-year old man, was rapidly growing into a highly invasive cardiac tumour seen in a small number of patients worldwide.

In the highly complex, 10-hour operation the entire right heart chamber had to be removed and the heart reconstructed.

School of Open Learning adds value

The activities of the new school are driven by a central principle: opening up access to those who have not had the opportunity to study at a higher-education institution due to geographical location, socio-economic circumstances or other factors.

Programmes are delivered through a blended-learning model, which blends contact teaching with distance education.

The school will collaborate with our various faculties, and is managing the continuing education-sponsored endeavours of the Faculty of Education. These include projects for in-service training of teachers in Mathematics, Natural and Physical Sciences, Languages, Literacy, Economic and Management Sciences, Technology and various areas of Management and Leadership.

Second group of young leaders abroad

A second group of first-year students in the Leadership for Change Programme visited universities in the USA, Europe and Asia. Our university could extent the programme to 150 students, up from 71 in 2010.

These students are seen as a leadership core, not only for their university life, but also in public life outside the university borders.

The main purpose behind the programme is to expose students to positive models of racial integration. Their experiences will go a long way towards changing and enriching the minds of young leaders, who have committed to building a truly non-racial society in South Africa.

Odeion School of Music launched

Our former Department of Music transformed into the Odeion School of Music. The name Odeion name portrays not only an excellent asset in the Free State, but also nationally and internationally.

The school’s new name bears the respected Odeion brand and a number of successful and respected ensembles operate under this brand. These include the residential Odeion String Quartet, student ensembles, the Junior Odeion String Quartet, the Odeion Sinfonia, and the Odeion Choir.

The formation of the school paths the way for more flexibility to complement its profile with new developments. These include the application of prestigious international experts as artistic fellows, membership to progressive European, jointly-developed degree programmes and curriculum development initiatives, the founding of a chair in Orchestra Conducting, a master’s degree in Arts Management, as well as the incorporation of bio-kinetics in the teaching methodologies of performance practice.

World-class Chemistry facilities opened

World-class Chemistry facilities, with state-of-the art equipment, opened on the Bloemfontein Campus.

The upgrading of the facilities and addition and replacement of equipment were the single biggest investment at our university in a long time.

Specialised research by the Department of Chemistry includes X-ray crystallography, electrochemistry, synthesis of new molecules, the development of new methods to determine rare elements, water purification, as well as the measurement of energy and temperatures responsible for phase changes in molecules, the development of agents to detect cancer and other defects in the body, and many more.

Back

Economic and Management Sciences

Education

Health Sciences

The Humanities

Law

Natural and Agricultural Sciences

Theology and Religion

Open Distance Learning

Business School

We use cookies to make interactions with our websites and services easy and meaningful. To better understand how they are used, read more about the UFS cookie policy. By continuing to use this site you are giving us your consent to do this.

Accept