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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

Sunflowers are satellite dishes for sunshine, or are they?
2016-07-20

Eighty-six percent of South Africa’s
sunflowers are produced in the
Free State and North West provinces.

Helen Mirren, the English actress, said “the sunflower is like a satellite dish for sunshine”. However, researchers at the University of the Free State (UFS) have found that too much of this sunshine could have a negative effect on the growth of sunflowers, which are a major source of oil in South Africa.

According to Dr Gert Ceronio from the Department of Soil, Crop, and Climate Sciences at the UFS, extremely high soil temperatures play a definite role in the sprouting of sunflower seedlings. Together with Lize Henning, professional officer in the department, and Dr André Nel from the Agricultural Research Council, he is doing research on biotic and abiotic factors that could have an impact on sunflowers.

Description: Sonneblom 2 Tags: Sonneblom 2

Various degrees of deformity (bad-left
to none-right) in seedlings of the same
cultivar at very high soil temperatures.
Photo: Dr Gert Ceronio

Impact of high temperatures on sunflower production

The Free State and North West provinces, which produce 86% of South Africa’s sunflowers, are afflicted especially by high summer temperatures that lead to extremely high soil temperatures.

Dr Ceronio says: “Although sunflower seeds are able to germinate at temperatures from as low as 4°C to as high as 41°C, soil temperatures of 35°C and higher could have a negative effect on the vegetative faculty of sunflower seedlings, and could have an adverse effect on the percentage of sunflowers that germinate. From the end of November until mid-January, this is a common phenomenon in the sandy soil of the Free State and North West provinces. Soil temperatures can easily exceed the critical temperature of 43°C, which can lead to poor germination and even the replanting of sunflowers.”

Since temperature have a huge impact not only on the germination of sunflower seeds, but also on the vegetative faculty and sprouting of sunflower seedlings, Dr Ceronio suggests that sunflowers should be planted in soil with soil temperatures of 22 to 30°C. Planting is usually done in October and early November. Unfortunately, this is not always possible, as soil moisture is not optimal for growth. Farmers are then compelled to plant sunflowers later.

Impact of herbicides on sunflower growth

“High soil temperatures, combined with the herbicide sensitivity of some cultivars, could lead to the poor development of seedlings," says Dr Ceronio.

The use of herbicides, such as ALACHLOR, for the control of weeds in sunflowers is common practice in sunflower production. It has already been determined that ALACHLOR could still have a damaging effect on the seedlings of some cultivars during germination and sprouting, even at recommended application dosages.

“The purpose of the continued research is to establish the sensitivity of sunflower cultivars to ALACHLOR when exposed to high soil temperatures,” says Dr Ceronio.

 

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