BUDGET ANALYSIS

IT’S A GDP GROWTH PROBLEM, NOT A DEBT PROBLEM

e only way out of our economic crisis is for the government to start investing in its people and infrastructure again, writes Duma Gqubule

Aer more than a decade of no gross domestic product (GDP) growth and soaring unemployment – the number of unemployed people increased by 6.5 million to 12.5 million people between December 2008 and September 2021. Finance Minister Enoch Godongwana’s maiden budget has condemned South Africans to three more years of the government’s failed economic policies.

Delivered within the context of an unemployment rate of 46.6 per cent, the budget forecast a GDP growth rate of only 1.8 per cent a year for the next three years. By comparison, 153 emerging and developing economies will grow by 4.8 per cent and 4.7 per cent over the next two years, according to the International Monetary Fund’s (IMF) World Economic Outlook publication. is means that the government does not believe that its own economic recovery plan and structural reforms will deliver a faster rate of GDP growth. e World Bank and the IMF agree. ey have forecast GDP growth of only 1.5 per cent a year between 2022 and 2026. In another article in this publication, Asghar Adelzadeh and Pali Lehohla have forecast GDP growth of 1.8 per cent a year until 2030 based on the government’s current economic policies.

On this dangerous trajectory, assuming that the growth of the labour force and the relationship between GDP growth and job creation will be almost the same as they were before the pandemic, there will be 17 million unemployed people by 2030. e unemployment rate will be 50.9 per cent.

Due to high commodity prices, there was a bumper R469.9-billion increase in estimated main budget revenues for the 2021 three-year medium term expenditure framework (MTEF) until 2023/2024 compared with the forecasts that were made in last year’s budget. For the 2021/2022 scal year, the main budget revenue overrun was R197.4-billion.

Noninterest expenditure was R63.1-billion higher than what was budgeted for in 2021, due to the reintroduction of the R350 a month social relief of distress grant after the July 2021 riots and the need to fund an increase in wages for public sector workers. The difference between the budget overrun and the increase in spending of R134.3-billion was used to repay debt.

This means that only 32 per cent of the revenue 2021/2022 overrun was invested in the economy. If National Treasury understood the scale of the economic crisis, it would have decided to prioritise the interests of the people of South Africa, rather than those of the financiers. As expected, the 2022 budget extended the R350 a month social relief of distress grant for one year at a cost of R44-billion and allocated R18.4-billion towards the presidential employment stimulus for two years. ere was no news about civil society calls for the government to introduce a Basic Income Grant, which would have been a ordable, given the large tax windfall and the fact that many economists believe that the increase in world commodity prices is set to continue over the next few years.

Over the next three years, main budget revenues will increase by 4.6 per cent a year to nearly R1.8-trillion in 2024/2025. But noninterest spending will increase by only 2.1 per cent a year to R1.7-billion. The difference will be used to achieve a primary surplus.

A er in ation, there will be a real decline in noninterest spending of 6.6 per cent a year over the next three years. e quality of poor public services will continue to decline. Real health and education spending will decline by 11.8 per cent and 7.1 per cent a year respectively.

Treasury’s Budget Review publication said the budget cuts would result in fewer teachers and larger class sizes in some provinces. In health, compensation budgets would grow by only 1.1 per cent, which would limit the ability of provincial health departments to employ more frontline sta .

Over the past few years, the government has been talking about an infrastructure-led recovery. But a R100-billion infrastructure fund it established in 2019 has no money because National Treasury has cancelled previous allocations made to it.

South Africa’s debt is not high by international standards, even when it is benchmarked against similar upper middle-income countries. e only way out of the crisis is for the government to start investing in its people and infrastructure again. South Africa has a GDP growth problem, not a debt problem. If the economy grows again, the debt ratio will decline.

NWU BUSINESS SCHOOL FIRST TO RECEIVE INTERNATIONAL ACCREDITATION FROM BGA

e NWU Business School at North-West University is a driving force of business education in Africa

The international Association of MBAs (AMBA) recently renewed the business school’s MBA accreditation for ve years, and the school has now received international accreditation from the Business Graduates Association (BGA).

Prof Jan van Romburgh, chief director of the NWU Business School, says: “Business education in general – and the role of MBAs in particular – is going through a fundamental transformation, both globally and domestically. In a fast-changing world and country, business schools must remain relevant by providing business education that critically unpacks their socioeconomic environment for successful business strategies.”

He says the accreditation is a huge vote of con dence from the BGA. “And, the AMBA accreditation denotes the highest standard of achievement in postgraduate business education. We are pleased to be among the two per cent of recognised business schools around the world to have AMBA accreditation.”

AMBA ACCREDITATION

Spearheading excellence and trailblazing innovation for more than 50 years, the AMBA has been the impartial authority on postgraduate management education. It established that vision in 1967 and, in a volatile, uncertain world, it is as relevant today as it was then. The AMBA is committed to raising the profile and quality standards of business education internationally for the benefit of business schools, students and alumni, employers, communities, and society.

It is the only professional membership association that connects MBA students and graduates, accredited business schools and MBA employers globally.

Accreditation certi es that an institution can ful l a particular function within the quality assurance system. e AMBA with senior academics at top global educational institutions to continuously update accreditation policies and maintain their unique, in-depth and detailed approach. Programmes receiving this accreditation re ect changing trends and innovation in the postgraduate education sector. ey foster innovation and challenges and encourage business schools to continuously perform at the highest level.

WHY IS THIS A BIG DEAL?

Students and graduates, business schools and employers all recognise the AMBA and BGA accreditation as a gold standard. e rigorous accreditation criteria and assessment process ensure that only the best programmes achieve accreditation. e accreditation bodies look at programmes that demonstrate the highest standards in teaching, learning and curriculum design; career development and employability; and student, alumni and employer interaction.

“Employers looking to recruit game-changing managers and future business leaders know that graduates from accredited programmes have received the best quality, most relevant management education and are top talent,” van Romburgh explains.“ is accreditation gives our business school worldwide recognition and honour. e AMBA accreditation identi es the best programmes from the thousands available.”

“THIS ACCREDITATION GIVES OUR BUSINESS SCHOOL WORLDWIDE RECOGNITION AND HONOUR.” – PROF JAN VAN ROMBURGH

WHAT DOES IT MEAN FOR NWU BUSINESS SCHOOL MBA STUDENTS

Employers are increasingly asking for business graduates who possess a balance of hard and so skills, innovative capabilities and a mindset geared towards social responsibility. “We can guarantee that our students who obtained an MBA or Postgraduate Diploma in Management will bring all these qualities and skills to the table at their workplace and make a viable contribution to their company.

“For our MBA graduates, accreditation o ers the opportunity to connect with peers from the best global MBA programmes. Membership of the AMBA means alumni can network internationally, knowing that they are connecting with individuals from equally impressive programmes,” explains van Romburgh.

“AMBA members can enjoy career advice and support, a job portal, events, access to the latest research and thought leadership, and selected o ers. It opens doors and facilitates opportunities, and we are committed to ensuring that each student receives the best possible education to shape executive minds in Africa.”

➔ Scan this QR code to go directly to the NWU website.

For more information:

Johan van Zyl 0845043544 johan@jakemedia.co.za www.nwu.ac.za NWUBusinessSchool