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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

UFS awards honorary doctorates during its centenary week

2004-10-07

The University of the Free State (UFS) will award 12 honorary doctorates on Thursday 14 October 2004 to a diverse group of outstanding South Africans and international experts.

This will be the last in a group of 18 honorary doctorates that the UFS will be awarding in its centenary year.

The awards comprise of a number of well-known language experts and writers, experts in higher education, first-time awards in community service and development studies, as well as music.

“This reflects quality and also diversity, a spectrum of convictions as well as the recognition of persons who played a major role in changing society in the last couple of decades, “ says Prof Frederick Fourie, Rector and Vice-Chancellor of the UFS.

The awards can be grouped in the following categories:

Language and literature:

Mr Karel Schoeman (D Litt (hc)) – well-known Afrikaans author and former student of the UFS. Some of the awards he has received include the Hertzog prize for prose (1970, 1986 and 1995), the CNA prize (1972 and 1994), the Old Mutual prize (1985 and 1991), the SABC prize for best television drama in 1990, the M Net book prize in 1997 and the State President award (former President Nelson Mandela: Order for Excellent Service – silver) in 1999. It is an honor for the UFS to have this gifted and creative person among its former students. This conferment is a fitting recognition of his status as leading South African writer.

Ms Antjie Krog (D Litt (hc)) – well-known South African poet and former student of the UFS. Her popularity as poet is evident in her piercing honesty and unequalled power of expression. Some of the awards she has received include the Eugéne Marais prize in 1973, the Rapport prize in 1987, the Hertzog prize in 1990 and the RAU prize in 2000. Her writing has been translated into seven languages. She has also received numerous honors for her involvement in and journalistic documentation of the Truth and Reconciliation Commission’s (TRC) proceedings. It is therefore an exceptional privilege for her alma mater to honor her with an honorary doctorate.

Prof Jaap Steyn (D Litt (et phil) (hc)) – recently, Prof Steyn again distinguished himself as biographer whose thorough research is apparent in the published biographies of illustrious writers such as NP van Wyk Louw and MER. The numerous awards, among which the Stals prize from the South African Academy of Science and Art for the Van Wyk publication, are a matter of record. He conducted the research for this great prize-winning work as honorary professor at the UFS.

Prof Jakes Gerwel (D Phil (hc)) – Chancellor of the University of Rhodes and Director of Naspers, Old Mutual, Gold Fields and Brimstone. His doctoral thesis was published in The Netherlands under the title Literatuur en apartheid. Konsepsies van “gekleurdes” in die Afrikaanse roman tot 1948 (1983). He received an honorary doctorate from Clark College ( Atlanta), the City University of New York and Missouri in the USA, the University of the Western Cape, the University of Cape Town, the University of Natal, Rhodes University, the University of Stellenbosch and the University of the Witwatersrand. He is also outstanding professor in the Humanities at the University of the Western Cape, honorary professor in the Humanities at the University of Pretoria, and was the chairman of the Human Sciences Research Council (HSRC).

Development Studies:

Dr Frederick van Zyl Slabbert (D Phil (hc)) – for his academic achievements, his endeavors for bringing about a peaceful transition in South Africa and his demonstration of the social investment role of the corporate sector. Dr Van Zyl Slabbert has received honorary degrees from the University of Natal and the Simon Fraser University in Canada. He has published seven books and various academic articles.

Community Service:

Prof Robert G Bringle (D Phil (hc)) – from the Indiana University-Purdue University Indianapolis (IUPUI) in the USA. He is currently Chancellor’s Professor of Psychology and Philanthropic Studies at the IUPUI and also Director of the IUPUI’s Centre for Service Learning. He is honored for his exceptional contribution to several of the UFS’s community service projects as well as his role in the advancement of a multi- and inter-disciplinary approach to academic development and the integration of service learning within the faculties of the UFS. He has also made a valuable contribution to the conceptual framework of the UFS’s unique community service policy and more recently to the advancement of a research culture regarding community service.

Higher education:

Dr Khotso Mokhele (D Phil (hc)), President of the National Research Foundation (NRF) is honored for his contribution to the South African higher education sector. He has also made a substantial contribution to the development of the research capacity of universities and technikons in South Africa. Dr Mokhele was born in Bloemfontein and matriculated at the Moroka High School in Thaba Nchu.

Prof Saleem Badat (D Phil (hc)), the Chief Executive Officer of the Council on Higher Education (CHE). Prof Badat has devoted himself to transforming and building South African higher education, and has constantly challenged the higher education sector to retain the moral basis of higher education and tackle its challenges with intellectual honesty, ingenuity, creativity and courage. He is honored for his intellectual leadership in the development of a equitable, just and quality higher education system in South Africa.

Law:

Prof HA (Boelie) Wessels (D Legum (hc)) – for his contribution to the fields of Roman Law, Legal History at the UFS. He is currently a part-time lecturer at the UFS’s Faculty of Law.

Medicine:

Prof CJC Nel (D Phil (hc) Posthumous) – for the way in which he strived for the advancement of excellent medical education in the country. Prof Nel also did pioneering work in the field of transformation in higher education. Under his guidance the School of Medicine at the UFS became one of the first medical schools to adopt a parallel-medium system of instruction.

Music:

Prof Leo Quayle (D Mus (hc)) – for the significant contributions he has made to the development of music – not only in Bloemfontein, but also on national level and abroad. His initiative, enthusiasm and dedication contributed to the eventual founding of the Free State Musicon, as well as the first symphony orchestra and the first string quartet in Bloemfontein. Prof Quayle is a former head of the Department of Music at the UFS.

Prof Jack de Wet (D Mus (hc)) – well-known for his exceptional contribution to violin tuition in South Africa. As pedagogue of international stature, he still moulds violinists who compete at national and international level. At an advanced stage of his career, he still actively conveys his knowledge, experience and distinctive insight in his field of speciality to yet another new generation of young violin teachers. Today the symphony orchestras in Bloemfontein and Port Elizabeth also stand on the foundations laid by him.

Media release
Issued by: Lacea Loader
Media Representative
Tel: (051) 401-2584
Cell: 083 645 2454
E-mail: loaderl.stg@mail.uovs.ac.za
7 October 2004

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