PRETORIA – The University of Pretoria’s Alumni Office presented the first in a pair of pre- and post-budget debates that saw a panel of experts evaluate the condition of South Africa’s economy in light of Finance Minister Tito Mboweni’s Special Adjustment Budget (the “emergency COVID-19 relief budget”) presented on Wednesday 24 June.

Titled Lead UP: Alumni Thought Leadership Series, this session was chaired by Dr Morris Mthombeni, Interim Dean of the Gordon Institute of Business Science (GIBS), with a panel made up of economist Dr Thabi Leoka; Dr Petrus de Kock, General Manager at Brand SA; Professor Adrian Saville, senior lecturer at GIBS; and Duma Gqubule, founding director at the Centre for Economic Development and Transformation. 

One of the first areas tackled by the panel was what could be expected in the budget speech. Panellist Dr Leoka said the government would need to alter policy in order to protect the country from sinking further into debt.

“A lot has changed since the February budget, and not just South Africa but the world, and also the numbers that National Treasury had. If we look at what they should be doing and what they will do, they will obviously look at adjusting their figures and changing policy. In the past couple of years since 2012, when we introduced the expenditure ceiling, our policy was cutting expenditure. Even though we weren’t successful at it.

“Now we find ourselves in a pandemic, and we have to spend. We have to save the country from sinking as well. What that means is that we are going to see an increase in expenditure, likely to be in the areas of health, education, water and sanitation, transportation, and we’re likely to see a deficit of 14%. With the GDP also expected to contract between 8 to 10% this year. If you combine this, fewer revenue collection, weaker GDP growth, and a huge expansion, this means we’re going to sink deeper and deeper into debt. We have to then pour in money to keep us from sinking further,” Dr Leoka said.

Gqubule, on the other hand, raised the issue of unemployment. “The unemployment figures for the first quarter of 2020 have been released; 7.1 million South Africans are unemployed. The unemployment rate of Black African people is 44%, the unemployment rate of Black African females is 48%. This being the worst contraction in almost a century, we’re likely to see unemployment going to beyond 50%. The whole society in a very short time is going to become unviable, and I believe we have to speak boldly, and that would be the first thing I would think about if I was in charge,” he said.

Gqubule added that one of the ways to address the looming crisis is through a basic income grant at R1 227 per person for people aged 18 to 59.

Brand SA’s Dr de Kock said as an entity they are promoting collaboration, but also the idea of South Africa being a good country to invest in, which would ultimately have a positive effect on the country’s economy as money comes in.

“Something that we have been following closely as Brand SA since last year is in line with the discussion document that was released by Treasury last year. This is something that the President reiterated in his State of the Nation Address earlier this year, and I think this budget speech will be interesting to watch in terms of that agenda. Some of the concrete examples I can give include how within the Department of Trade and Industry there has been a team from the World Bank, working with InvestSA on the investment infrastructure of the country. That is part of the President’s investment drive of gaining $100 billion of investment over five years. So there has been practical work being done on a lot of systems and processes to create an enabling business environment,” he said.

Dr de Kock added that it was important to remember that even with these tough economic challenges facing the country, that the picture around the world isn’t too different. Around 50% of the world’s population has been under lockdown over the past three months, with greatly reduced economic activity globally. This, he said, meant that most governments across the world, be it in the US or France for example, were also considering ways to stimulate economic growth following the crisis caused by the COVID-19 pandemic.

The discussion was made possible through the generous support of Brand SA. Watch the LeadUP Thought Leadership post-budget debate on Thursday 25 June from 6pm to 7pm, by streaming it from the UP LinkedIn or TuksAlumni Facebook pages.