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20 February 2025 Photo Supplied
Prof Johan Coetzee
Prof Johan Coetzee, Chairperson: Department of Economics and Finance, University of the Free State.

Opinion article by Prof Johan Coetzee (MCBI, CMBE), Chairperson: Department of Economics and Finance, University of the Free State.

The Minister of Finance has not had it easy in 2025 and the budget speech not read yesterday pays testament to this. Postponing the speech to 12 March is unprecedented, and is due to the Government of National Unity (GNU) not reaching consensus on a way forward to tabling a budget. It seems as if the fallout was based largely on a proposed 2% increase to VAT that was rejected by two parties. I personally would not have supported this proposal either as the tax burden shifts disproportionally to the poor.

My initial response of the postponement was frustration and disappointment. But I soon realised that it is the outcome of a new government dispensation made up of many voices, and many dissenting at that, becoming more important. In principle, this is good for the nation, but unfortunate for us expecting the budget to be read on the day. It also does not necessarily send a good message to the markets, with the rand weakening by more than 1% within an hour of the announcement. There could also be knock-on effects that a later tabling will have on service delivery and operations of government. After some reflection, however, I have concluded that on balance, the decision to postpone is not as problematic as many have made it out to be over the past 24 hours. Clearly there are many balls to juggle by Minister Enoch Godongwana and many added complexities that have both national and international dimensions.

Lead-up to the budget

Internationally the strong nationalist policy drive by US President Donald Trump has already shown that the ‘make America great again’ mantra is alive and well as reflected in the intentional actions taken against South Africa since his second term started in January. We will see how this plays out over the coming months, but my view is that South Africa as a nation needs to be more deliberate in its policy agenda. We are at an inflection point where we must reflect on who we are as a nation and where we want to be down the line. We cannot afford to rely on handouts from other nations. There is more opportunity to this situation than threat, but we need intentional leadership to exploit it.

My big concern in the lead-up to the budget speech was that the minister would not take a firm stand on fighting the culture of non-compliance within state entities which has invariably led to unsustainable levels of irregular expenditure. For the 2023/24 financial year, the Auditor-General of South Africa reported that irregular expenditure totalled almost R50 billion, up from just over R27 billion the previous year. To put this into perspective, irregular expenditure equals approximately 2.2% of total government spending for the 2023/24 fiscal year. This might not seem significant stated as a percentage, but it has basically doubled since the previous year, and every preceding year before that too. Moreover, irregular expenditure equates to approximately 20% of the 2023/24 social grants budget and just about equals the 2024 National Student Financial Aid Scheme allocation. This is clearly a management failure and nothing seems to have been done about it over the years. As a result, the problem is escalating at an alarming rate. It is quite astounding that accountability management is not more explicit as it is clearly a very unpopular political message to send. But at what cost?

South African economy is not growing

To make matters worse, the South African economy is not growing both enough and fast enough. The most recent real GDP growth figure showed a decrease of 0.3% in the third quarter from the second quarter of 2024. Since 1994, the period with the highest annual rate of growth was a three-year period from 2005 to 2007 where growth exceeded 5% for each respective year. This period preceded the global financial crisis and since then, growth has struggled to reach 3% annually, doing so on only two occasions barring the 4.7% in 2021 which was not a true reflection of reality given the low base of the preceding year amid the COVID-19 pandemic. This is a major concern for the Minister, because with economic growth comes increased tax revenues, which in turn capacitates better budget management. Very simply, the more people spend; the more businesses sell; the larger the profit outcomes; the larger the tax revenue collections. If the economy grows, the fiscus collects more tax revenues without explicitly increasing tax rates. This built-in cyclical dynamic is simply not happening and creates a serious constraint on the ability of the Minister to manage deficits going forward.

Further to this of course is that as deficits are run, all things remaining constant, public debt increases. The public-debt-to-GDP ratio for 2023/24 already exceeds 72% which is higher than the generally accepted benchmark of 60% and almost 2.6 times what it was in 2008 (27.8%). This has resulted in the average interest on public debt approximating R1.1 billion a day, equating to about 22% of total tax revenues, or almost 20% of total government spending respectively. To put it differently, for every R1 government spends, 20 cents is first channelled to pay the interest on the debt before any spending occurs on roads, education, infrastructure, social grants and the like. These are deeply concerning figures in an economy with already high levels of unemployment and inequality.

Might be beginning of something better

There is a leadership void that cannot be ignored anymore. It needs to be intentional and deliberate. The GNU provides the platform to exploit ‘the best that South Africa has to offer’ as it promotes a broad-based and more inclusive political structure and played itself out yesterday. I welcome this in principle, but my concern is that political in-fighting will prevail and perverse politicking will trump working together in the best interests of the South African people. Although the postponement could be interpreted negatively in terms of the GNU not being able to find common ground, I think it is rather a sign of more rigorous engagement and the enablement of a collaborative environment amongst parties in the decision-making structures of the state. Remember this day as it might be the beginning of something better than what we are used to. 

News Archive

Protection of Information bill- opinions from our experts
2011-11-28

Prof. Hussein Solomon
Senior Professor in the Department of Political Science at the University of the Free State. 

In recent years, given their failure to effectively govern, the ANC has become increasingly defensive. These defensive traits have become particularly acute in light of the various corruption scandals that members of the ruling party involve themselves in.
 
Given the fact that for now they are assured of an electoral majority (largely on account of their anti-apartheid credentials), coupled with the fact that they have managed to make parliament a rubber stamp of the executive as opposed to holding the executive accountable, it is the media which has increasingly held the ruling party to account by exposing such corruption and incompetence in government.
 
The passing of the information bill, therefore, is not merely an attack on the media, but an attack on the pivotal issue of accountability. Without accountability, there can be no democracy.
 
By defining national interest broadly, by refusing to accept a public interest clause in the bill, the ANC increasingly shows its disdain to South Africa's constitution and its citizens.
 
More importantly, as former Minister of Intelligence and ANC stalwart Ronnie Kasrils pointedly makes clear, the ANC is also betraying its own noble struggle against the odious apartheid regime. It was the media which played a key role in exposing apartheid's excesses, it is the same media which is coming under attack by the heirs of PW Botha's State Security Council - Minister of State Security Siyabong Cwele and his security apparatchiks whose mindsets reflect more Stalin's Gulag's than the values of the Freedom Charter.
 
The passing of this bill is also taking place at a time when journalists have had their phones attacked, where the judiciary has been deliberately undermined and parliament silenced.
 
Democrats beware!

 
Prof. Johann de Wet
Chairperson: Department of Communication Science 
 
The ANC’s insistence on passing the Protection of State Information Bill in its current form and enforcing it by law, means that the essence of our democratic state and the quality of life of every citizen is at stake.
 
Yes, our freedom as academics, researchers, mass media practitioners and citizens comes into play. Freedom implies the right to choose and is, along with equality, an underlying principle which helps make democracy happen. While the South African state needs to protect (classify) information which could threaten its security and/or survival, the omission of a public interest clause in the Bill at this stage effectively denies a citizen the right to freedom of information.
 
 Freedom of information, along with press freedom, freedom of speech, freedom of assembly, freedom of association and religious freedom, are essential to democracy. These freedoms are granted because they conform to basic liberal ideas associated with (Western) democracy and which resonate with South Africa’s liberal constitution, such as (1) belief in the supreme value of the individual (and thus not of the state); (2) belief that the individual has natural rights (rights which belong to all human beings by nature – such as the right to life and to control government)) which exist independently of government, and which ought to be protected by and against government; and (3) recognition of the supreme value of the individual. 
 
One wonders how many cases of South African government corruption and mismanagement would have been uncovered by investigative journalists over the past number of years if this Bill in its current form was on the statute books. This Bill represents a backward step from the promise of democracy of having an informed public. The former National Party government had similar laws in place and one does not want to go there again. The infamous Information Scandal in South Africa of some thirty years ago, or Muldergate as it has come to be known, reminds one of what governments can do when it works clandestinely.
 
What South Africans need, is more information on what government structures are doing and how they are doing it with taxpayers’ money, not less information. While information in itself does not equal communication or dialogue, it is an indispensable part thereof, and the need for dialogue based on verifiable information is urgent for meeting vexed challenges facing South African communities. Academics in all fields of specialisation are constantly in need of untainted information to pursue answers and/or offer solutions to where South Africa should be moving in all spheres of life.

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