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Unprecedented budget speech, but remember this day

20 February 2025 Photo Supplied

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

State of our campuses: UFS closes campuses until Friday 28 October 2016 to readjust academic programme

2016-10-15

UFS announces strategy for completion of the 2016 academic year

Agreement between UFS management and student leadership in relation to residences

After almost four weeks of student protests about fees at the University of the Free State (UFS) and the subsequent suspension of the academic programme and closing of campuses, the senior leadership announced on 14 October 2016 a strategy to ensure that students will be able to complete the 2016 academic year.

The university on 13 October 2016 announced that it will shut down its Bloemfontein and South Campuses until 28 October 2016 for crucial and complex arrangements to be put in place to readjust the academic calendar and ensure that all students can complete their studies. The senior leadership did, however, make it clear that the university will not be shutting down for the remainder of 2016.

No teaching and learning activities at undergraduate and honours level will be offered between 17 October and 28 October 2016. The university will re-start teaching and learning at undergraduate and honours level in the first week of November 2016.

However, teaching and learning will not take place in the classrooms during November 2016, but through a different mode of delivery that consists of a combination of printed and recorded lectures, study materials and learning aids that will be provided by the university and delivered through Blackboard. In this manner no attempts at disrupting the rest of the academic year will affect our students’ academic programme. Students, however, will sit for the exam on campus.

Students in residence accommodation can return to campus as from 29 October 2016 and it is recommended that students who do not have off-campus internet access return to campus in order to access study material to complete the academic year.A new timetable for exams is still being developed and will be communicated as soon as the arrangements have been finalised.

Faculties have been differently affected by the loss of teaching time. Some faculties like the Faculty of Law have completed their curriculum, while other faculties like the Faculty of Natural and Agricultural Sciences require more teaching time. Some faculties, like the Faculty of Health Sciences, cannot do teaching through alternative modes of delivery.

The needs of the different faculties have been taken into account for developing a rescue plan to complete the 2016 academic year.

The Faculty of Health Sciences will continue its classes and clinical rotations as normal for all three schools on the Bloemfontein Campus and in the relevant hospitals. All students registered in programmes in the Faculty of Health Sciences will stay in residences for the full period of their studies and exams. Final-year medical students will graduate in December 2016 as expected.
In the Faculty of Economic and Management Sciences, final-year students for the Certificate in the Theory of Accounting (CTA) will stay on campus during October through to December 2016 and their classes and tests will not change.
Arrangements for all other faculties and programmes are being prepared and within the next week, students and parents/guardians will receive communication about how curriculum content will be completed and when the final exams will take place.
The university is extending the academic year so that we can recuperate all the lost teaching and learning time. The qualifications conferred on the 2016 class will be of the same quality and standards as all UFS qualifications.

The UFS is and will remain a fundamentally contact teaching and learning education university. However, under the current circumstances faced not only by the UFS, but higher-education institutions across the country, the best way of ensuring the integrity of the academic programmes in most faculties is by using an alternative way of teaching and learning. Other South African universities have chosen the same approach to be able to complete the academic year.

Instead of students going to class, they will have content delivered to them where they are (library, computer labs, their own computers, etc.) through Blackboard and printed and electronic material. This is a different way of learning but students will be carefully guided and supported.

Faculties are currently preparing all the necessary materials and instructions to support student learning.Standards and quality will be the same as if students were attending classes. Some faculties require practical laboratory work as part of their curriculum. The exam timetable will be adapted for these students to be able to complete their practical work when the academic activities commences in November 2016. The relevant faculties will communicate the schedule of practical work directly to the students.

Students in their final year will complete their studies during 2016. It is possible that in some cases the graduation ceremony for these students will be in June 2017 instead of April 2017. This will not prejudice students with bursaries, or committed employment in law firms or other businesses. The university will provide the necessary academic transcripts as proof of the completion of the relevant qualifications. None of these changes will affect postgraduate students.

The university will maintain regular communication with students and parents/guardians to update them on the new exams timetable.Faculties will communicate directly with students about issues related to their programmes.

“One of the areas in which significant progress was made, is that we were able to agree on a basis for stability with student leaders. The student protests occurred during an important time in the university’s academic calendar and the readjustment of our academic programme has put tremendous pressure on academic and support services staff, and created anxieties for parents,” said Prof Nicky Morgan, Acting Rector of the UFS.

“The senior leadership restates its commitment to free education as well as its willingness to stand together with students and other public universities to impress on government the urgency to decide on a time frame for the roll-out of free higher education for the poor and missing middle. We will use the next two weeks to meet with the leadership of Universities South Africa to coordinate collective action in this regard. We will furthermore also roll out a series of activities to inform and educate students and the general public on different models and experiences of providing free higher education,” he said.

The strategy to readjust the 2016 academic year is applicable to students on the Bloemfontein and South Campuses.

Released by:
Lacea Loader (Director: Communication and Brand Management)
Telephone: +27 51 401 2584 | +27 83 645 2454
Email: news@ufs.ac.za | loaderl@ufs.ac.za
Fax: +27 51 444 6393

State of our campuses #15: UFS closes campuses until Friday 28 October 2016 to readjust academic programme

State of our campuses #14: All academic activities on UFS campuses remain suspended on 13 and 14 October 2016

State of our campuses #13: Availability of information about plans for remainder of UFS 2016 calendar year

State of our campuses #12: All academic activities at UFS campuses suspended for 11 and 12 October 2016

State of our campuses #11: Academic activities on UFS campuses continue

State of our campuses #10: Impact of non-completion of the 2016 academic year on UFS students

State of our campuses #9: Academic programme on all UFS campuses to resume on Monday 10 October 2016

State of our campuses #8: UFS extends vacation as from 28 September until 7 October 2016, 28 September 2016

State of our campuses #7: All three UFS campuses will be closed today, 27 September 2016.

State of our campuses #6: All UFS campuses reopen on Tuesday 27 September 2016

State of our campuses #5: UFS campuses to remain closed on Monday 26 September 2016

State of our campuses #4: Decisions about the UFS academic calendar

State of our campuses #3: UFS campuses closed until Friday 23 September 2016

State of our campuses #2: UFS Bloemfontein and South Campuses closed on Tuesday 20 September 2016 (19 September 2016)

State of our campuses #1: Academic activities suspended on UFS Bloemfontein Campus (19 September 2016)

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