Events

27 February 2023

Fiscal Framework and Revenue Proposals – Dr Seán Mfundza Muller

This is a summary of the submission to Parliament regarding the 2023 Budget with a particular focus on the fiscal framework and revenue proposals as well as the broader mandate of the Committees. It seeks to cover the following issues and concerns:

• The Political Economy of the Eskom Debt Plan;
• Renewable energy tax incentives;
• The Employment Tax Incentive; and
• Recent developments in civil society.

In its current form proposed Eskom Debt Relief Bill would undermine legislative oversight. Should it be passed, it would allow the Minister of Finance to dictate terms to Eskom without any public consultation or legislative approval. This level of autonomy is inconsistent with the provisions of the constitution relating to executive accountability. The reason for this loosening of controls relating to executive powers may be intended for the approval of loans disguised as aid, or financial support from developed countries. In principle financial support from wealthy countries and debt relief to Eskom are both desirable in order for South Africa to achieve something like a ‘just transition’. However, these necessary initiatives are being co-opted to serve pre-existing agendas and interests. Like the COP26 agreement that was essentially intended to force through the agenda of such interests by making the associated actions a condition of the favourable loans, while giving the impression that wealthy countries are supporting a global just transition. Thus it is in fact those seeking to advance the agenda of an overly rapid, overly decentralised, inequitably financed transition that favour the wealthy who are the ones driving this additional source of corruption. Perhaps the committees could at least do something to ensure a more credible performance of democracy and adherence to the constitution, such as insisting that the relevant conditions must be the subject of public comment and receive the explicit approval of the relevant committee(s).

In South Africa, the National Treasury has been offering tax incentives that reward defection from the national grid. Eskom’s ‘death spiral’ is characterised by wealthier customers defecting from the grid by generating their own power, requiring increases in tariffs for less wealthy customers who incidentally are less able to pay. In the absence of evidence or substantive reasoning, it is quite possible that these incentives are merely another rent-seeking scheme. As things stand, those who can afford large domestic solar systems already save money over the medium-term relative to those of equivalent usage rates who cannot afford to install such systems. These incentives have the potential to channel R9bn to wealthier individuals and better-resourced businesses for little public benefit, thereby increasing inequality and further hastening Eskom’s demise.

The budget documents provide the most recent information on the amount of tax revenue foregone due to the Employment Tax Incentive (ETI). In 2020/21, the amount increased to R7.1bn from R4.7bn the year before. Previous research on the ETI indicated that there is no credible evidence of net job creation, and implied the money meant for poor South Africans is instead going to company profits and the ETI is in effect a massive rent-seeking scheme. Therefore the insistence for the Presidency, Ministry of Finance and National Treasury , business press, and the legislature to allow the continuation and even expansion of the ETI therefore discredits any claims to be committed to ‘evidence-based policy’ or a ‘developmental state’. In its last submission to Parliament (2022/23), the Financial and Fiscal Commission (FFC) however endorsed the ETI’s expansion and based their recommendation on analysis that excluded all references to critical scholarship on the policy, which does not reflect well on the FFC’s competence, credibility or impartiality.

One of the most credible Civil Society Organisations (CSO) involved in legislative oversight, which was also leading the ‘ParlyWatch’ initiative, has apparently had to close down due to a lack of funding. The organisation in question was the Women and Democracy Initiative (WDI) at the Dullah Omar Institute at University of the Western Cape (UWC). The WDI had recently led a four-year project on parliamentary oversight that worked with grassroots organisations to try and increase the linkages between the concerns of South Africans and legislatures – especially at provincial but also at national level. CSOs are heavily reliant on foreign funders and the drying up of such funding wells reveals a lot, most notably, about what really determines the criteria for funding and subsequently the composition of civil society, and the corresponding implications for parliamentary oversight and public debate in the country. The implications for the composition of South African civil society and representations to Parliament should be of serious concern to anyone who cares about the public interest and national sovereignty.

It is disturbing that the executive, namely, the Ministry of Finance and Treasury prefer to continue and expand rent-seeking schemes, like those mentioned above, for big business and wealthy individuals rather than using those resources to continue much-needed social support for the poorest South Africans.

17 November 2022

2022 African Economic Conference (AEC), 09-11 December 2022, At the Intercontinental Hotel, Mauritius

On behalf of the African Development Bank (AfDB), the Economic Commission for Africa (ECA), and the United Nations Development Programme (UNDP), Dr. Frank Bannor was invited to the 2022 African Economic Conference (AEC), which took place from 09 – 11 December 2022 at the Intercontinental Hotel, Balaclava, Mauritius. The theme for the conference was “Supporting Climate-Smart Development in Africa.”

October 2022

During the 4th Annual Urban Economic Forum (UEF4) held in October 2022 in Toronto, Mr. Jugal Mahabir, Director at the Public and Environmental Economics Research Centre (PEERC), based out of the University of Johannesburg (UJ) emphasized the challenges South African cities and municipalities face in maximizing their own revenue potential, as indicated by the high levels of debt owed to municipalities in the country.

Using the 4th quarter (unaudited) results of the Section 71 Municipal Finance Management Act financial reports as reference, Mr. Mahabir highlighted that the total outstanding debt owed to municipalities constituted around 59% of the total operating budget of municipalities for the 2021/2022 municipal financial year. The magnitude of the debt to total revenue highlighted the foregone revenue that could have contributed significantly to improving service delivery and the financial sustainability of local government.

As part of the general panel discussion that looked at finances in African cities, Mr. Mahabir emphasized that African cities need to get the basics right by improving current performance and efficiency of planning, spending and revenue collection. He pointed out that even new and innovative ways of financing cities will not be successful if the basics are not in place.

2022

The South African Local Government Association (SALGA) invited Mr Jugal Mahabir, Director of the Public and Environmental Economics Research Centre (PEERC), to present a webinar on the potential impact of the revised National Pricing Strategy for Water Use Charges on local government.

Mr. Mahabir outlined the potential impacts of the strategy on local government – namely, the water pricing value chain in South Africa and the role of local government in this value chain, among others – in order to facilitate discussions amongst municipal officials and councillors.

This engagement builds on PEERC’s continued contributions to the water sector in South Africa.

22 June 2022

In November 2020, the Water Research Commission (WRC) launched a Water Graduate Employment Programme (WaterGEP) funded by the WRC and the Department of Science and Innovation (DSI) to provide workplace exposure for 400 graduates.

The Public and Environmental Economics Research Centre (PEERC) was selected to partner with WRC in stream 1 which involved the matching and placement of 500 graduates with hosts from academia, government, private organizations and institutions nationally for workplace exposure.
The objectives of this programme include:
•            Improvement in skills, knowledge and attitude of graduates;
•            Preparation of graduates to be workplace ready;
•            Providing graduates with some workplace exposure and experience;
•            Sourcing of Companies / institutions who are willing and easily able to manage similar future programmes;
•            Improved employability of graduates;
•            Long term reduction in graduates’ unemployment.

PEERC hosted 2 graduates for a period 6 months through the WaterGEP program. Since the conclusion of the program in June 2022, 1 graduate has been offered employment at the research centre.

Partners such as PEERC that are intimately involved with projects especially in the research sphere of Water and Sanitation, were instrumental in mentoring and providing insight into avenues for career development that graduates could pursue. This information and time spent with senior experienced personnel was invaluable to the graduates insomuch as to award the Head of PEERC, Jugal Mahabir a certificate of appreciation for lending his extensive experience in the area to the development of eager graduates. A special mention must be made to Ms. Nadia Hoosen, who tirelessly facilitated and ensured that the Graduate Placement process was smooth from start to finish. To all who were involved, thank you and congratulations on a job well done.

02-04 August 2021

African Association of Environmental and
Resource Economists (AFAERE) Inaugural Conference
for more info

08 October 2020

African Association of Environmental and
Resource Economists (AFAERE) Webinar
For more info

24 September 2020

African Association of Environmental and
Resource Economists (AFAERE) Webinar
Thursday 24 September, 2020 – 14h00 GMT

Past AFAERE Webinars are available here

01 September 2020

WRC Webinar
Dialogue: Are Water Services Affordable in South Africa?
Click here for presentations

24 June 2020

Online EAERE Pre-Conference Workshop
The economic impacts of air pollution and the implications for policy
Wednesday, June 24, 2020 – 13:00 – 18:00pm (Paris time)
Click here for programme

17 June 2020

Municipal Money: Household Bills
Click here for presentations