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Medium Term Budget Policy Statement

Minister Godongwana tabled the 25th Medium Term Budget Policy Statement (MTBPS) on 11 November 2021. WhatsUp asked Andrew Donaldson to write a brief note on Minister Godongwana's first fiscal policy statement since being appointed finance minister:
 
Building on the fiscal consolidation theme of recent years, the MTBPS adds another year of strict expenditure restraint while deferring decisions about extending income support or further poverty relief programmes to next February’s budget. Adjustments to spending this year include R10.5 billion for employment and livelihood support programmes, and an additional R20.5 billion for public service wages. For the MTEF period ahead, however, increases in social spending or compensation of employees will only be considered if the growth and revenue outlook improves.
 
The MTBPS signals that fiscal consolidation will continue until 2024/25, when the debt-GDP ratio is expected to peak at about 78%. Main budget revenue is projected to moderate from 24% of GDP this year to 23.7% in 2024/25. Non-interest expenditure will decline from 26.3% to 23.5% of GDP over this period.
 
There are some interesting differences between this framework and first MTBPS, tabled on 2 December 2017. GDP was then R619 billion, it is now about 10 times larger in nominal terms – R6.1 trillion. Revenue was 26.2% of GDP in 1997/98 and the deficit was 4%, set to decline to 3% by 2000/01. In 1997, real GDP growth was projected to increase from 2% in 1997/98 to 5% in 2000/01, which turned out to be over-optimistic. This year, GDP growth is expected to average just 1.7% over the next three years, with GDP inflation averaging 3% a year. This might turn out to be over-cautious – the Bureau for Economic Research, for one, expects the recovery to be rather stronger. 

The 1997 MTBPS introduced the child support grant. Its extension over time has been the main driver of the changing functional composition of spending, which has seen welfare and social development spending increase from about 11% to over 20% of non-interest expenditure.The 1997 MTBPS introduced the first statutory division of revenue, with Gauteng targeted to receive a provincial equitable share increasing from 14.6% in 1997/98 to 16.2% in 2002/03. Driven in part by population shifts, this trend has continued – Gauteng now gets 21.2% of the share.
 
 Budget documents

Medium Term Budget Policy Statement (MTBPS): Adjusted Estimates of National Expenditure:

Infrastructure Investment and the South African Economy


GTAC’s Capital Project Appraisal Unit plays a critical role in assisting the National Treasury in the review and assessment of infrastructure investment proposals and feasibility studies before investment decisions are taken.

This is highly specialised, technical and complex work that requires a team with economics, finance, engineering and public policy skills and expertise. Using their appraisal experience, the team also generates knowledge products to promote good practice in project appraisals and build state capability.

CPAU is currently developing knowledge products on Building investor confidence in accelerating infrastructure development and delivery; and Risks associated with mega-projects.
   
Infrastructure investments make a critical contribution to growing the economy and transforming the socio-economic landscape but there is a need to redesign the infrastructure planning and delivery architecture. The infrastructure gap is getting bigger and the slowdown in investment means that government must accelerate efforts to improve the pace at which projects advance across the value chain: from concept to investment-ready stage, to securing funding and finance, to procurement and contracting, to construction and commissioning, and ultimately to continuous operations and maintenance.
 
However, this process is not easy and straight-forward, as it involves trade-offs. The key challenge for government is to accelerate delivery within the binding constraints and removing key bottlenecks while improving its effectiveness to deliver.

For more information please contact Boitumelo Masilo, Head of the GTAC’s Capital Project Appraisal Unit at Boitumelo.Mashilo@gtac.gov.za 

Opinions and Resources
National Planning Commission Assessment 
 
In its official assessment of the National Planning Commission’s labour market objectives,  Ayabonga Cawe and Paul Benjamin review the aims of the National Development Plan and consider how institutional factors (capacity, co-ordination and the distribution of decision-making power) has accounted for (under) performance in the implementation of the labour market proposals in the NDP. They also offer steps to address gaps, in a practical table format, against each of the NDP’s labour market proposals.

Related to this, in a previous
WhatsUp we shared the BER’s NDP Assessment Report to illustrate how trends in the economy and employment, environmental sustainability and South Africa’s rural economies compare with the objectives set out in the NDP. They found that, since the publication of the NDP in 2012, South Africa’s annual economic growth has fallen far below the target of 5.4%. Even before the economic onslaught of the COVID-19 pandemic, South Africans were on a per capita basis becoming poorer, further contributing to an exceptionally high unemployment rate. To eliminate poverty, accelerate job creation and make inroads in reversing the effects of decades of racial exclusion, economic growth must increase.
In this edition GCIS shares the latest developments around the Presidential Employment Stimulus programme. Over half a million South Africans have already benefitted from Phase 1 of the programme, and Phase 2 will now be rolled out (see more in the Postions and Opportunities section below).
 
 
What did children do at home during the long lockdown periods worldwide? The October Newsletter of the Strategic Impact Evaluation Fund (SEIF) provides evidence from the evaluations in SIEF’s COVID Emergency Window. In Bangladesh, in March 2021, only 25% of secondary school students in the evaluation sample reported watching video lessons online and 20% reported watching educational programming on TV. While a larger share of boys reported working for pay, a larger share of girls reported doing care work in the home. In Pakistan, in the autumn of 2020, only 20% of households who had access to a TV or the internet reported knowing about the online and TV-based remote learning options organised by the government. Like in Bangladesh, boys aged 10-14 in Pakistan were more likely to work, whereas girls were more likely to do household chores. On the other hand, in Sierra Leone, among primary school children in public schools receiving support from a non-state organisation, reported use of educational radio was close to 60 percent, and phone calls from teachers increased usage by 10% points.
 
The October 2021 issue of The LEAP Times is now available. Packed with economic history news, this issue also reports on the Cape of Good Hope Panel project which aims to transcribe the full set of Cape of Good Hope ‘opgaafrolle’ – or tax censuses.The first set of fully transcribed tax censuses was printed and published. It covers all tax censuses for the Graaff-Reinet districts, from 1787 to 1828. The records include more than 40 000 household entries, and list the number of agricultural assets (like cattle and wine) owned. It also records the names of the household head.
Interesting Reading and Listening
How can we address the interlinked challenges of poverty, inequality and growth in Africa after 2021, asks Fabio Andres Diaz Pabon. He reports on the recent discussions among SALDRU, ACEIR and DPRU on how we can understand the relationship between growth, poverty and inequality as the basis for actions to ensure inclusive development and the achievement of the SDG goals 1 (ending poverty) and 10 (reducing inequality) in Africa.
Sasha Planting explains why solar and wind power remains the best solution to keep the lights on. Based on the window five bids of the REIPPP programme, South Africa is certainly getting the benefit of renewable energy at some of the lowest tariffs in the world. The lowest of the 25 preferred bids came in at just 37.5c per kilowatt-hour, and the cheapest wind bid was 34.4c per kWh.
Two recent reports by the World Bank and the International Monetary Fund propose abolishing the informal sector. The World Bank study explored the business cycles in the informal sector in 160 countries over the last 30 years, and contrary to the widespread stereotype that the informal sector is a buffer that helps to mitigate recessions in the formal sector, they find that the informal sector’s output moves in sync with the formal one, and informal employment does not increase during recessions. The studies state that informality undermines efforts to slow the spread of the COVID-19  pandemic and to boost economic growth, and that abolishing informality will lead to more tax revenues. But Mike Rogan, Max Gallien and Vanessa van den Boogard find this approach fundamentally flawed as it effectively blames informal workers, not the structural conditions that leave them with no option but informal work. The proposed policies, they argue, will fail to deliver on their promises of higher growth and tax income.
The Covid-19 lockdowns resulted in a sharp increase in household saving in the USA according to this article, The Unequal COVID Saving and Wealth Surge. Lower consumption, combined with an increase in disposable income from government transfers allowed households to save more, buy shares, or pay back their debt. In this IMF article ‘chart of the week’, an analysis of US data as part found the bulk of the increase in saving and wealth occurred at the top of the wealth distribution. Indeed, while recent research has documented that household saving has historically been very unevenly distributed in the United States, very little is known of how the increase in saving or wealth since the beginning of the pandemic was distributed.
Read the review of Steven Pinker's new book Rationalitywritten by a world-leading expert on rationality, the emeritus professor of applied psychology and human development, Keith E. Stanovich.
 
Recent research from the U.K. on the health effects of Covid-19 found that even mild cases could cause significant changes to the brain. Read more in “Is Covid’s Impact on the Brain as Alarming as It Sounds?”
 
Since the outbreak of the COVID-19 pandemic, the number of positive cases has risen and fallen in waves, related to how infectious the general population is. Ahmed Kalebi explains how tracking these waves enables authorities to take fast action, keeping new waves at bay or curbing rising ones. The Conversation Africa has partnered with the Africa Data Hub to present this data in the COVID-19 resurgence map, showing changes in new caseloads and positivity rates across Africa.
Damon Galgut’s latest novel The Promise last week won the UK’s Booker Prize, and here Galgut expert Sofia Kostelac shares why the book matters and what the Booker win means for the South African author.
Positions and Opportunities
National Pathway Management Network Innovation Fund Call for Proposals
The Department of Employment and Labour and the National Treasury’s Jobs Fund are pleased to announce the opening of the Presidential Youth Employment Intervention (PYEI)’s National Pathway Management Network Innovation Fund funding round. For more information please visit www.jobsfund.org.za
 
National Youth Service Call for Proposals
The NYDA and the Jobs Fund are pleased to announce the opening of the Presidential Youth Employment Intervention (PYEI)’s National Youth Service programme funding round. Proposals from non-profit making entities that can participate in the delivery of the National Youth Service programme are welcome. For more information please visit www.jobsfund.org.za.
 
2022 Applications now open

The Nelson Mandela School of Public Governance at UCT provides a space for Africa’s young and mid-career leaders engaged in the public and development sectors to share experiences and learn from some of Africa’s most dynamic scholars and policy thinkers.

The School offers two-year graduate programmes for both part-time and full-time students. For more information about the application process, please email zikhona.sikota@uct.ac.za or visit www.uct.ac.za for an online application.


Closing date: 31 December 2021
The School of Public Leadership at Stellenbosch University invites applications for the following Undergraduate and Postgraduate Diplomas:
  1. Diploma in Public Accountability (NQF Level 6)
    This 2-year Higher Education Diploma is designed to help you develop and improve the competencies and skills you need to follow a career in the public sector or in a public service environment. For entrance requirements and learning outcomes please read this brochure.
    For cost information and other enquiries, please email the programme administrator at:
    dipaccountability@spl.sun.ac.za
  2. Advanced Diploma in Public Accountability (NQF Level 7)
    This 1-year Higher Education Diploma is designed to further build on skills and competencies for widening access to higher education and qualifications for furthering career development in the public sector or in a public service. For entrance requirements and learning outcomes please read this brochure.
    For cost information and other enquiries, please email the programme administrator at: advanced-diploma@sun.ac.za
  3. Postgraduate Diploma in Public Finance Management(NQF Level 8)
    This 1-year Higher Education diploma will give participants the opportunity to learn how Budgeting can be integrated with strategic and operational planning to support organisational goals and objectives, and support effective risk management. For entrance requirements and learning outcomes please read this brochure.
    For cost information and other enquiries, please email the programme administrator at: postgraduate-diploma@sun.ac.za
Events
Future of Payment Systems Series

Join CBPEP and partners for the second webinar of the Future of Payment Systems Series (see details below).  The series includes an overview about Next Generation G2P architecture and critical payment system infrastructure, and interesting G2P case studies from Bangladesh and Indonesia demonstrating the future of G2P payments and how innovation in this area could benefit citizens, governments and the financial system and contribute to financial inclusion. 
 
 Webinar Series  Themes Registration link
 17 November  Beneficiary-centric design  https://bit.ly/2Zm4TMp
 1 December  Hackathon  https://bit.ly/3krtxDd
 15 December  Integrated databases for coordinated social service delivery  https://bit.ly/3Aso0lt

Short course offering
 
The Power Futures Lab at the University of Cape Town’s Graduate School of Business will be presenting its annual short course on “Managing New Power Markets and Regulation in Africa” during the weeks of 22 November – 1 December 2021. The executive education course will expose participants to the challenges facing the African power sector; improving utility performance; global and African developments in new power market reforms; power systems of the future; economic and technical regulation of monopoly components of the sector; accelerating investment in competitive elements of the sector – IPPS and auctions; preparing for the future with the growth of variable renewable energy and distributed energy generation. The course will also offer various country case studies, including the South African power sector.
 
This highly specialized course is anchored by Dr. Martin Pardina, the Chief Economist at Ad Hoc Consulting with extensive regulatory consulting and capacity building experience in Latin America, Africa, Middle East, Russia and India. He will be supplemented by various African practitioners from regulators, utilities and the private sector.
 
We will be presenting the course online this year, using a mix of live online lectures, pre-recorded videos, live and offline exercises, and selected readings. Due to the online mode of delivery, the course fees have already been discounted to R19,500 for 2021 only.

Further details are available here. The registration link is here.

 
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