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Economy

Agriculture grants cut as R50 million is re-directed

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Staff Reporter

The Comprehensive Agricultural Support (CASP) and the Ilima/Letsema grants will lose just under R50 million as more funds from this year’s provincial budget have been re-directed towards fighting the COVID-19 pandemic.

The CASP grant has been reduced by about R32.8 million while that of Ilima/Letsema was cut by R17.1 million.

The provincial supplementary budget states that the funds from the conditional grants have been reprioritised towards COVID-19 response measures.

The adjustments are however expected to be temporary as agriculture and economic development will be reprioritised in the next financial year.

CASP is aimed providing post-settlement support to targeted beneficiaries of land reform as well as other producers who have acquired land through private means and are involved in value-adding enterprises or exports.

The Ilima/Letsema projects grant seeks to assist vulnerable black farming communities improve agricultural production.

Other budget cuts are:

  • Community Library Services Grant loses R34.700 million;
  • Mass Participation and Sport Development Grant is reduced by R11.552 million;
  • R140.163 million is reprioritised away from Education Infrastructure Grant;
  • R2.864 million is reprioritised from HIV and AIDS Grant;
  • Maths, Science and Technology Grant is reduced by R5.069 million;
  • Human Settlements and Title Restoration Grants are reduced by R100.817 million and R22.140 million respectively; and
  • R219.198 million is reprioritised from Provincial Roads Maintenance Grant.

The net effect of this reprioritisation is the reduction of R461 million on the conditional grants allocated to the province in March 2020.

Business

Free State unemployment drops

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Staff Reporter

The official unemployment rate in the Free State dropped 1.4 percentage points from 38.1 percent to 36.7 percent between the third and fourth quarters of 2021, Statistics South Africa (Stats SA) has revealed.

This means the province now has over 727 000 people who are employed compared to the third quarter which had 720 000 people.

The Free State has a population of about 2.9 million people.

In its Quarterly Labour Force Survey, Stats SA said the expanded unemployment figure for the province — which includes discouraged jobseekers — fell by 1.6 percentage points from 45.8 percent in the third quarter to 44.2 percent in the fourth quarter.

The Free State now has the third highest official unemployment rate after the Eastern Cape which stands at 45 percent and Mpumalanga with 39.7 percent.

Statistician General Risenga Maluleke said in the report the country’s unemployment rate now stands at 35.3 percent.

“The official unemployment rate increased by 0.4 of a percentage point to 35.3 percent in the fourth quarter of 2021 compared to the third quarter,” said Maluleke.

“The official unemployment rate increased in five provinces,” he added.

The largest increases were recorded in KwaZulu-Natal (up by 3.7 percentage points), followed by Mpumalanga (up by 2.2 percentage points), Western Cape (up by 1.7 percentage points) and Limpopo (up by 1.4 percentage points).

Nationally, the working-age population increased by 143 000 or 0.4 percent in the fourth quarter of 2021 compared to the third quarter of the same year.

Compared to the fourth quarter of 2020, the working-age population increased by 578 000 or 1.5 percent.

The number of employed persons increased by 262 000 to 14.5 million in the fourth quarter of last year.

The number of unemployed persons increased by 278 000 to 7.9 million compared to the third quarter of last year, resulting in an increase of 540 000 or 2.5 percent in the number of people in the labour force.

The number of discouraged work-seekers decreased by 56 000 or 1.4 percent.

Most jobs were created in trade and personal services, nationally, where employment increased by 118 000 and 129 000, respectively.

The mining, agriculture and community and social services also added jobs, while manufacturing, construction, utilities and transport reduced employment.

The Nedbank economic unit said in a commentary that the increase in community and social services could be a reflection of a spike in temporary jobs to manage the municipal elections in November last year.

It said employment in the domestic trade sector was lifted by increased activity in the hotel and tourism industries due to more lenient lockdown restrictions.

According to Nedbank, the annual numbers suggest that the economic recovery has not been strong enough to support employment creation.

“Most of the key indicators suggest that the economy is slowly mending,” it said.

“However, the pace of recovery has been too slow to translate into sustainable employment creation.

“Unfortunately, the outlook for the job market remains uncertain.

“The worst of the pandemic seems to be over, which implies that lockdown disruptions would be minimal.

“This, together with ongoing economic reforms, should lift business confidence, encourage investment spending and ultimately support employment growth.

“However, the unemployment rate will remain structurally high in the short term because the economy is still facing many long-term challenges that are hindering jobs growth.”

Nedbank said fundamental structural deficiencies, such as electricity shortages and policy challenges, could take years to resolve and possibly limit growth in private sector investment.

“Employment by the government will be limited by significant budget constraints,” said the bank’s economic unit.

“A large number of discouraged workers will also increasingly return to the job market as economic activity improves.

“All these factors will keep the unemployment rate elevated throughout 2022.”

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Business

Business chief bemoans slow transformation

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Staff Reporter

Business Unity South Africa (BUSA) president Professor Bonang Mohale has blamed the high poverty levels among black South Africans on slow transformation and urged the government to use its powers to improve people’s lives.

“When you have political power, you were not given this political power to look at it and admire it every morning and caress it,” said Mohale, who is also the chancellor of the University of the Free State.

He said this during a Business Breakfast Masterclass organised by the Department of Economic, Small Business Development, Tourism and Environmental Affairs (DESTEA) and the Free State Black Business Chamber (BMF) in Bloemfontein on Monday.

“Do something with it (power) and that something is . . . you have to love your people to lead them,” said Mohale.

“That something means – because we were not left alone for 370 years of colonialism, 98 years of separate development and 48 years of apartheid – can I use this power to change this so that our children do not disown us . . . saying poverty still has primarily a black and feminine face,” he added.

The BUSA president anchored his keynote delivery on his latest book, Behold the Turtle.

“The Basotho say ‘behold the turtle’ . . .  it only makes progress when its neck is stuck out. We all begin to die when we are silent about things that genuinely matter to us,” he said.

“When the turtle is concerned about ‘me, myself and I’, it sits in its own shell. It’s protected. It cannot be touched. It is safe, it is secure. But it will sit there, it will die there.”

The event, which drew a cross-section of people from the local business sector, was held under the theme ‘Growing the Economy of the Free State Province in 2022 – A Collaborative Approach’.

Mohale continued: “For it to move from point A to point B, it has to risk it all and take its head out of the shell.

“But when it does so, the birds of prey can swoop on it, hit it on the head and it might die.

“So, every single time it wants to make progress, it’s a dance with death.

“Therefore, in South Africa today, when so many of us dare to hope that joy and peace will prevail, we will only make progress when we are prepared to risk it all, especially now.

“In another three months, we will be 28 years into our democracy and yet poverty still has primarily a black feminine face, and yet we are in office.

“We refuse to be in power because power means you can do something about it. You can change the circumstances.”

A firm talker, Mohale warned civil servants and ordinary citizens not to look aside when there is injustice for fear of losing their jobs as it doesn’t help society.

“Therefore, when you say, but I am a public servant, if I use my voice judiciously and speak truth to power, I might lose my job, better I be quiet . . . know that you are killing not only yourself, but the entire generation that comes behind you,” he said.

“So, when you are a common citizen and state capture happens on your watch, you are silent and do not say anything, know that, that is genocide.”

He said nationally, 51 percent of the population is female and yet women representation in positions of leadership is not more than 24 percent.

The number of senior black executives, according to the BUSA boss, has just increased from 14.3 percent to 14.7 percent, but warned it could take the country another 150 years to reach the ultimate intention of Broad-Based Black Economic Empowerment.

“And what is that ultimate intent? It’s to ensure that this economy is broadly reflective of us,” he said.

“It must look like us . . . just like China, India and Japan. Those businesses look typically Chinese, Indian and Japanese. 

“The culture . . . the language, the dress code is Chinese, Indian and Japanese, except in South Africa.”

“In fact, when you get into our boardrooms in South Africa, you’ll be forgiven to think that we are an outpost of Europe,” he pointed out, adding white males still occupy about 70 percent of the top executive positions in the corporate sector.

“Today all you have to do is to be born black and chances are you are condemned to live in the informal settlements of Alexandra.

“You just have to be born white and the chances are you are destined for the leafy suburbs of Bryanston without doing much because the economic power patterns have been set for generations to come.

“Now, the reason we have this power is so that we do something to intervene and that intervention is called transformative instruments.

“All of us, myself included, we have not succeeded in eradicating the legacy of apartheid. It’s still living with us.

“All of us have not done (enough) to make sure the black majority live better lives. Those poor living conditions were by design . . .

“Today, 28 years into democracy, out of every R100 that we spend on education, R67 is spent on a white kid, R20 on a coloured kid, R10 on a coloured kid and the balance on an African kid. You don’t need to read it. You see it . . . and we are in power. We command the budget,” he explained.

PUSHING ECONOMIC TURNAROUND . . . DESTEA MEC Makalo Mohale flanked by FEZI Auditors and Consultants chief executive officer Nthabeleng Khawe and Will Choene

In response, DESTEA MEC Makalo Mohale said one of the weaknesses of the Free State economy is that there is very little value addition to what is produced in the province.

He said the province has mainly relied on the primary sectors where commodities are extracted and are value-added outside, coming back as finished goods to be sold.

The MEC said the province has also tried to invest in education because it understands it’s one effective way to improve people’s lives as well as the economy.

“Our approach is to make sure that we work with business to drive this vision that we have to grow the economy of the Free State,” he said.

“What we want is to ensure there is industrialisation in the province.

“Our key programme towards value addition is ‘let’s make the Free State a big factory . . .’ where all the commodities that we consume, we are able to produce.”

He also took the opportunity to explain the Free State Integrated Local Economic Development and Transformation Bill which has been put out for public comment saying it seeks to respond and integrate various interventions.

“The Bill seeks to ensure that all the things you said must happen become reality. We are using our legislative power to ensure that happens,” the MEC said.

“There are four key areas in the Bill: it recognises the sector as a key partner and creates important structures to ensure business is not left behind in the new development model.

“We envisage a situation where there is a formal business voice not the current set-up that is voluntary.”

He said the Bill also seeks, among others, to promote manufacturing in the province.

It also gives power to the MEC for economic development to designate certain commodities for enterprise development.

This means the government will only buy certain products from local producers.

It also addresses the issue of business licensing.

The MEC said some of the requirements are that only those that are lawfully in the country will be allowed to operate businesses in the province.

Other panellists included BMF chairperson Mosebetsi Dhladhla, Standard Bank behavioural economist Emile du Plessis and FEZI Auditors and Consultants chief executive officer Nthabeleng Khawe.

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Economy

Treasury promises spending restraint despite mining windfall

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National Treasury on Thursday pledged to cut the deficit and curb debt in its mid-term budget, saying it would not commit to new long-term spending despite a windfall from high commodities prices.

Africa’s most industrialised nation was hit hard by the COVID-19 pandemic last year, but its economy bounced back unexpectedly strongly in 2021 as global demand for its exports, such as metals, surged.

The Treasury now sees the deficit at 7.8 percent of gross domestic product (GDP) this fiscal year, versus the 9.3 percent  forecast in the main February budget, and gross debt peaking at 78.1 percent of GDP in 2025/26 versus the 88.9 percent seen in February.

The improved projections were influenced by a GDP rebasing by the statistics agency in August.

The Treasury said it would stick to a disciplined fiscal strategy and set a new target of narrowing the deficit to 4.9 percent of GDP in 2024/25.

The Treasury now sees GDP expanding 5.1 percent this year, compared to the 3.3 percent predicted in February.

“The economy has recovered more quickly than anticipated. Nevertheless, the recent spike in commodity prices, which has supported GDP growth and tax revenues, is considered temporary,” it said in its budget review.

“Government will not commit to new long-term spending in response to temporary revenue windfalls.”

The new pledges come a week after the governing ANC recorded its worst election result since taking power at the end of apartheid, securing less than 50 percent of the vote for the first time amid frustration over poor services and repeated corruption scandals.

The coronavirus crisis has prompted heated debate about whether the country’s already generous social protection programmes should be expanded.

But the Treasury said additional funding for social grants was dependent on revenue outcomes and a decision would be made by the cabinet in time for the February 2022 budget, sticking to the cautious approach for which it has become known.

“In the absence of faster, job-creating growth, it is essential to maintain social protection in a sustainable way,” it said.

The Treasury said it would provide R2.9 billion to state defence company Denel to help it repay part of its debt and that it had provisionally set aside R11 billion for state insurer Sasria in the wake of civil unrest in July.

Duncan Pieterse, a senior Treasury official overseeing asset and liability management, said Denel’s guarantee conditions meant the state had to step in.

Beyond the amounts to Denel and Sasria, the Treasury said there would be no new money for state companies over the medium term.

“We’ve got to practise tough love,” Finance Minister Enoch Godongwana told reporters, referring to efforts to put an end to repeated bailouts to state firms.

Godongwana, who was appointed in a cabinet reshuffle in August, said he was “broadly . . . on the same page” from a fiscal standpoint as his predecessor, Tito Mboweni. – Reuters

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