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22 February 2024 Photo SUPPLIED
Eugene Msizi Buthelezi
Eugene Msizi Buthelezi, nGAP Lecturer in the Department of Economics and Finance, University of the Free State.

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

UFS implements access control measures on our Bloemfontein Campus
2014-11-21



Photo: Hannes Pieterse

Online Application form: non personnel

Map with access gates on the Bloemfontein Campus


Accessing the Bloemfontein Campus from 3 November 2014

Access control during major events on the Bloemfontein Campus

Q&A




The University of the Free State (UFS) has been tightening security measures on its Bloemfontein Campus for quite some time now. Purposefully, we have consolidated several safety measures to keep our students, staff and visitors – the heartbeat of our university – protected.

Our most significant step in this endeavour is now in the process of implementation. All five entrance gates to the campus are being equipped with strict access control.

The first phase of the process was implemented beginning of August 2014. Gates 2 (Badenhorst Street) and 4 (Furstenburg Street) were equipped with card readers. Only persons with valid access cards can enter and leave through these gates. Existing staff and student cards are equipped to be read by the short-distance card readers at the gates in order to activate the booms.

At this stage, staff and students are swiping their cards against the card readers at Gates 2 and 4 or holding it not further than 20 mm from the reader for the boom to open. Card holders now physically stop in front of the boom in order to get access to the campus.  

The duel-frequency card:

The dual-frequency cards available at the Card Division on the Thakaneng Bridge are currently out of stock. New cards will be delivered on Friday 14 November 2014.

The special offer of R30 per access card has been extended to the end of November 2014. To qualify for this offer, staff and students may pay the R30 for a dual-frequency card at the bank or cashiers on the Thakaneng Bridge no later than 28 November.  The cost of dual-frequency cards will increase to R60 per card from 1 December 2014.

Please note that only people with vehicles need to apply for dual-frequency cards.

Students and staff will, however, still be able to gain access to the Bloemfontein Campus with their current cards (in the case of staff and students who haven’t purchased dual-frequency cards yet). As is currently the practice at the gates in Furstenburg and Badenhorst Streets, you will have to stop when you reach the boom, swipe your card past the card reader, the boom will open and you will be able to drive through.

Staff and students using their dual-frequency cards should:

-       Reduce speed
-       Hold the card in a vertical position at the driver’s side window, in the direction of the long-distance reader (see photo)

It is therefore not necessary to stop in front of the boom. On holding your card upright, in line with the card reader, the gate will open automatically and you will be able to drive through (keep your card outside your window; the card reader cannot operate through tinted windows).

Please note that this arrangement only applies to incoming lanes. On leaving the campus, the card has to be swiped. This is due to the number-plate recognition technology installed at exits for additional security.

If the long-distance reader does not work, the dual-frequency card can still be used at a tag reader. 

Applying for your new card:

Electronic fund transfers: Absa Bank: 1 570 8500 71, Ref: 1 413 07670 0198, OR pay the R30 at the UFS Cashiers, Thakaneng Bridge. Please note that the price of the cards will increase to R60 from 1 November 2014.

Take your existing personnel or student card, together with proof of payment, to the UFS Card Division, Bloemfontein Campus, Thakaneng Bridge, to have your photo taken and your new dual-frequency card issued.

Permission to access specific UFS buildings or facilities linked to your existing card, will be automatically linked to the new card.

The new card is marked ‘dual’ on the back in the right, bottom corner.

The UFS Cashiers will provide assistance between 09:00 and 14:30, and the UFS Card Division between 09:00 and 15:00.

Implementation of full access control


Full access control will be implemented on the UFS’s Bloemfontein Campus from 3 November 2014. This means that access control will be implemented at all gates on the Bloemfontein Campus.

Who is using which gate? See Q&A for more information.


Gate 3 (Wynand Mouton Drive) is earmarked for use by official card holders. These include students, staff and persons doing business on campus. Parents dropping and fetching their children for sports, as well as service providers of the UFS, such as architects, may apply for valid cards. These persons will have to provide proof that they have business on campus (complete online application form and sign declaration).

All visitors to the campus will be referred to the Visitor’s Centre at Gate 5 (DF Malherbe Drive). This include, among others, parents, family and friends of students, as well as conference delegates. It is estimated that the Visitor’s Centre will be completed at the end of November (note that the gate at DF Malherbe Drive will be operational by 3 November 2014). Visitors will sign in at the Visitor’s Centre and, depending on the business they have on campus, they will only be allowed on campus for a certain period of time.

•    Lane 1 at Gate 5 will be used by visitors and service providers to enter the campus. Only card holders will be able to use lane 2.
•    Buses and trucks can also enter the campus through Gate 5.

The construction at the Main Gate at Nelson Mandela Drive is to build one extra lane for incoming traffic. The project is estimated to be completed at the end of October 2014.

•    For outgoing traffic, lane 1 (furthest from the guardhouse) and lane 2 will only be used by card holders and lane 3 (closest to the booth) will be used by service providers.
•    For incoming traffic, lanes 2 and 3 were set aside for use by only service providers. Lanes 1 and 4 will be used by only card holders.

Pedestrians

All gates for motorists will also be equipped with a pedestrian thoroughfare on completion of the project. Persons using these pedestrian gates also need to use their cards to get access to the campus.

Pedestrians who are visitors, but aren’t in possession of a valid access card, should please go to the Visitor’s Centre at the gate in DF Malherbe Drive where they will be helped.

More information

For more information on access control at the UFS, please watch our videos and read the Q&A or e-mail your enquiries to accesscontrol@ufs.ac.za.  


Issued by:    Lacea Loader (Director: Communication and Brand Management)
Tel: +27(0)51 401 2584 | +27(0)83 645 2454
E-mail: news@ufs.ac.za


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