Articles for Public Finance

Programme communication: The why and how.

Posted: 29-Jan-2021

Implementers of social and development programmes are typically focused on the design and effective implementation of the programmes they manage, sometimes overlooking the necessity of programme communication or lacking the know how to do so. The following article briefly highlights the importance of communicating programmes and provides key tips for developing an effective communication plan. Read Article

The use of digital technology in fighting COVID-19: Reviewing South Africa’s public health response

Posted: 27-Jan-2021

The COVID-19 pandemic has presented one of the most formidable challenges in recent history to governments, businesses, and society. It has also highlighted the importance of digital technologies in public health systems. This blog looks at South Africa’s use of digital technologies in fighting the COVID-19 pandemic. Read Article

EDUCATION AND THE RELIGION-SUBJECTIVE WELL-BEING RELATIONSHIP (BLOG 4 of 4)

Posted: 11-Dec-2020

This blog amalgamates and expands the insights from my previous three blogs on subject well-being, religion, and education.While religion is thought to have a general positive impact on subjective well-being, the impact of education on religion is ambiguous. A worthwhile question is then: how does the attainment of higher levels of education impact the religion-subjective well-being relationship? Internal measure of religiosity may be diminished, while external measures may be enhanced. Read Article

EDUCATION AND THE RELIGION-SUBJECTIVE WELL-BEING RELATIONSHIP (BLOG 3 of 4)

Posted: 11-Dec-2020

Several studies have found higher levels of education to be associated with greater subjective well-being.The positive relationship is explained by the role of education in improving cognitive abilities and access to economic resources. This blog follows from my previous one on the religion-subjective well-being relationship, thus explaining how another key social institution influences individual well-being. Read Article

Trends in Consumer Financial Education in South Africa

Posted: 11-Dec-2020

There has been a significant effort among financial institutions to drive consumer financial education (CFE) programmes in line with the GN500 requirements. This blog undertakes an analysis across 14 banks and insurers and identifies four key trends in CFE programmes across target audience, delivery modes, monitoring and evaluation, and novel approaches. Financial institutions need to continue refining their CFE programmes to deliver the highest impact to improve financial literacy among South Africans. Read Article

Lessons from Consumer Financial Education Evaluations

Posted: 28-Aug-2020

In South Africa, a number of institutions offer Consumer Financial Education programmes. These programmes are aimed at equipping South Africans with the necessary knowledge and skills to make informed financial decisions. DNA Economics has evaluated a number of these programmes and this blog unpacks some of the lessons from the evaluations. Read Article

The Implications of COVID-19 on Monitoring and Evaluation Practices

Posted: 04-Aug-2020

The escalation of the recent COVID-19 pandemic has resulted in a global reimagining of how workplaces can and do function. An area markedly impacted by this change is in monitoring and evaluating interventions. This blog considers the lessons that can be learnt from a previous global health crisis, namely the Ebola Virus outbreak, in helping to improve monitoring and evaluation (M&E) practice during the current, and future, pandemics Read Article

Monetary Policy and Covid-19: What to Expect from the SARB

Posted: 19-Mar-2020

WHAT IS SUBJECTIVE WELL-BEING AND WHY IS IT IMPORTANT?

Posted: 11-Feb-2020

RELIGIOSITY AND SUBJECTIVE WELL-BEING

Posted: 25-Feb-2020

Economic Pluralism – what does it really mean? And what is it not?

Posted: 01-Mar-2019

Globally, calls for more economic pluralism in higher education institutions are sounding loud and clear. However, it is not always evident what ‘economic pluralism’ actually means and many people oppose it on the basis of various misconceptions and false assumptions. This blog attempts to clarify this and, perhaps more importantly, outline what economic pluralism is not.Read Article

Profit-Led or Wage-Led Growth; How Income Distribution Influences the Macroeconomy

Posted: 01-Mar-2019

"Income distribution dynamics and the macroeconomy have a very intimate link. This link is evident in many key macroeconomic indicators, especially when looking at how national production changes with changes in income distribution. As such, this blog tries to unpack the relationship between output and income distribution (measured by the labourer’s share of national income), and discusses its relevance to South Africa.” Read Article

The Four-Day Work Week – Can it become a reality?

Posted: 27-Feb-2019

Working hours and their effect on productivity and wellness is by no means a new topic of discussion and debate. Prior to 1900, the average American factory employee was required to work 53 hours a week. This was only reduced to the now standard 40-hour work week after much protest by labour unions, and strangely enough has never been seriously contested since. Until now, that is. This article explore the potential benefits, and some of the challenges, of a shorter work week.Read Article

At what price? The budgetary implications of fee-free higher education

Posted: 25-Jun-2018

Much of the on-going debate around fee-free higher education has centred on its appropriateness and fairness for students, universities and colleges. The unavoidable and large budgetary trade-offs this policy creates – i.e. its effect on other government programmes and expenditures – has however received little attention. While the longer term costs and benefits of fee-free education are difficult to quantify, we look at the large short term adjustments that were necessary in government’s 2018/19 budget. The data shows that significant budget cuts have already been necessary across government, many of which are likely to impact on the lives of the poor and / or the growth potential of the economy. Read Article

Too good to be true? The importance of collecting better data.

Posted: 25-Jun-2018

Many evaluations rely almost exclusively on perception based data collected through interviews with, or surveys of, implementers (programme providers) and/ or beneficiaries (programme users). While interview data is relatively easy to collect and often provides valuable insights, such data suffers from a number of shortcomings, biases and limitations. We highlight a number of these issues in the context of educational research and suggest potential ways of reducing the risk that such issues result in incorrect research findings and recommendations.Read Article

Technological Innovation and the Developmental State: China’s Transition to an Entrepreneurial State?

Posted: 24-Jan-2018

Technological innovation. The 'source of energy within the economic system which would of itself disrupt any equilibrium that might be obtained' (Friedberg, 2013). Not a new concept by any means, innovation-based growth has traditionally been the objective of the developed, advanced countries of the world. However, in an evolving global landscape marked by the emergence of expansive 'bottom-of-the-pyramid' consumer markets, complex global value chains and the increasing importance of knowledge-based productive sectors - technological innovation has become a vital source of growth for developing countries. Read Article

The Global Push for Pluralism in University Economic Curriculums

Posted: 24-Jan-2018

In October 2017, I was fortunate enough to travel to Edinburgh, Scotland, to attend the inaugural Festival for New Economic Thinking – a gathering of "organizations and individuals seeking to improve the way economics is taught, studied, and practiced.” Funded by the Institute for New Economic Thinking (INET) and put together by a host of organisations - including the Young Scholars Initiative, The Minskys and Rethinking Economics – this was an economics ‘nerd-fest’ unlike anything I had ever experienced before. Running over two jam-packed days, this gathering really did have an exciting festival atmosphere and offered too many panel debates, presentations, video discussions and key note speakers than one could ever process in such a short space of time.

The Developmental State: What does it mean for South Africa?

Posted: 13-Jun-2017

Within the realm of governance and growth studies, there are various theories regarding the role of the state in promoting economic growth and supporting development. One particular theory, which is increasingly popular in South Africa, is the so-called ‘developmental state.’ Originating from a description of the South East Asian growth experience, this term generally refers to a country that is committed to using state institutions to drive economic development or bolster the social welfare of their citizens.

Higher education: Getting our priorities right

Posted: 09-Nov-2016

A worrying narrative that has emerged from the on-going student protests is that you are either in favour of free higher education for all; or against it. In fact there are a wide range of options in between available, and these options should be weighed against the country’s other priorities. We look at some of the most important government policy objectives within post-school education, and highlight the tremendous financial costs associated with meeting these goals. Against this background, it is clear that what is required is a transparent discussion of the way forward within post-school education. While fee free education for all is a noble goal when viewed in isolation, implementing it is likely to severely constrain the country’s ability to achieve many other important objectives. Attempting to achieve free higher education for all before it has been achieved for the poor and the lower middle class, and before some of the severe financial and other challenges in vocational training system have been addressed; risks undermining the country’s educational and economic progress and even denying education and training opportunities to those who might need them the most.Read Article

What FIFA has shown us about decentralised democratic systems

Posted: 16-Nov-2015

The global soccer fraternity was shaken in 2015 when the US Department of Justice (DOJ) decided to charge and arrest high ranking FIFA executives for "rampant, systemic, and deep-rooted” corruption. Where the FIFA saga becomes more disturbing is that the electoral system and its concomitant outcomes may in certain circumstances be not too dissimilar to national electoral systems and their outcomes, particularly in a decentralised democracy such as our own. Funds transferred from national government that are meant for economic development can become particularly fungible when expenditure decisions and accountability are similarly decentralised.

A ‘Basic Income Grant’ as the solution to South Africa’s social security crisis?

Posted: 29-May-2015

South Africa’s social security system is designed to assist those "impeded from entering the labour market”. Despite the Constitution’s stipulation of  everyone ‘having the right to access social security’, a large portion of the population are not eligible for any social assistance at all. Considering South Africa’s history and its alarmingly high levels of unemployment, it is unsurprising that critics of the system have argued that changes need to be made. The current social security net is too ‘loosely woven’ and too many people who are in need of social assistance end up falling through the gaps. A possible solution? A Basic Income Grant for all citizens!Read Article

Salvage value and the uncertainty of write off thresholds

Posted: 28-May-2015

In taking out car insurance, we like to believe that our insurer will always act in our best interests, and would not write-off a client’s vehicle unless they absolutely had to. In truth, however, the interests of the insurer and the insured are not always perfectly aligned and may at times be diametrically opposed to each other.  This problem can become particularly perverse when insurers include the salvage value of a vehicle into their decision-making process.Read Article

The fine line between tobacco control and a flowering black market

Posted: 12-Feb-2015

Taxes on cigarettes, while not universally welcomed, are often grudgingly accepted because of the acceptance that smoking is dangerous, both to one’s own health and to non-smokers. The ability, however, to balance the cost of consumption and an individual’s freedom to smoke remain finely nuanced, with over-taxation (as well as prohibition) often resulting in far worse outcomes. While sin tax increases are inevitable, it seems that these increases are spawning a range of unintended (but not unexpected) consequences.  

The descent into darkness: chronicles of a South African electricity consumer

Posted: 20-Jan-2015

It’s a Sunday evening and now 30 hours into a power outage. I would have been happy with load shedding. At least, those power cuts last for two hours and there is a defined start and end to it. But in my case, the problem is bigger. Along with millions of South Africans, I have learnt to accept that load shedding and power outages will become a feature of my life over the next few years. Barring the inconvenience, spoilt food and a rather unproductive weekend, I am not overly annoyed by this power outage. After all, it’s been a while since I last drafted a note by candlelight.

However, our plight is made worse by the limited information we have received from the City of Tshwane. So why is it so difficult for the City to let its residents know what has happened and when it will be fixed? Read Article

Can behavioural economics help us understand and fight poverty?

Posted: 05-Nov-2014

Much of economic theory rests on the assumption that people generally make good, rational, choices that maximise their own well-being given their particular circumstances.  In many settings, however people make irrational "mistakes” that are frequent, predictable and persistent.  Behavioural economics uses research from psychology and neuroscience to help identify and explain such cases. Its findings have given rise to a new wave of empirical research that examines how such behavioural biases affect people’s everyday lives (e.g.  the amount they save vs. borrow, their vaccination decisions, the goods they choose to consume or utilise in production). This research, in turn, has led to a new style of ‘nudge’ policymaking that attempts to offset the potentially negative effects of these behavioural factors. But can behavioural economics help us understand and address the most important policy challenge of all: eradicating poverty? Read Article

The Economics of Shrinkflation

Posted: 05-Nov-2014

Numerous firms confronted by rising inputs costs and a resistant consumer are ‘shrinking’ products as means of increasing prices. This widespread concept of ‘shrinkflation’ has become a legitimate business practice for companies in South Africa.  Normally a price increase would result in a rational consumer decreasing the purchase of the good or substituting it for another product, or even purchasing more (and forsake others) if it was needed for survival. Research has affirmed that consumers are more resistant to price increases than decrease in size/mass of goods. Consequently, producers would rather ‘shrink’ the product than increase the price. Soon the ‘shrinked’ size becomes the industry standard with little choice for the consumer. Government can protect consumers by regulating the size/mass of products, but that would be onerous to implement and arduous to monitor. 

However, the authorities can compel firms to inform consumers of size decreases as well as advocate consumer education to embolden consumer engagement and activism regarding ‘shrinkflation’. Read Article

Is South Africa’s social expenditure pattern sustainable?

Posted: 05-Nov-2014

Despite South Africa’s notable accomplishments in the last 20 years of democracy, a number of significant challenges remain. Notably, the unemployment rate stood at 25.5 percent in the second quarter of 2014, over 13 million children are reported to be living in households that are below the poverty line, and 32% of all children live in households where no adult is employed. In principle, the roll out of social programmes is indeed a necessary and noble expense, especially given SA’s history.  However, a growing cause for concern lies in the long-term economic and fiscal sustainability of South Africa’s social protection expenditure path. Read Article

The National Credit Act: Is the regulation of payday lending sufficient?

Posted: 11-Nov-2014

The recent spate of newspaper articles detailing the level of indebtedness of South African consumers is a cause for concern. Is it driven by the actual need of citizens, or by the increasing ease with which short term, high cost credit can be accessed, given that limited credit checks are conducted on those who access them? This blog reviews the effects of the so called "payday loan”; designed with the view of supplementing income to service emergencies, these loans, while legal,  can lead to a spiralling debt trap from which escape is near impossible without an adverse impact on one’s credit rating. Read Article

To hike or not to hike interest rates?

Posted: 11-Jul-2014

The South African Reserve Bank (SARB) has a difficult decision to make ahead of its Monetary Policy Committee (MPC) meeting and announcement on Thursday 17 July 2014. It needs to decide whether or not to hike interest rates, and if so, by how much. This is against the backdrop of a grim macro-economic environment.Currently, the inflation rate stands at 6.6%, clearly outside of the SARB's inflation target range. At the same time GDP growth has fallen into negative territory at minus 0.6%. Hiking interest rates may calm inflation, but may further dampen GDP growth.What then is the best course of action for the SARB under these circumstances? Read Article

The crucial role of pension funds in the National Development Plan

Posted: 03-Apr-2014

It has been argued that pension funds, being a unique vehicle through which the interests of millions of South Africans come together, are the critical component to build a social compact on which the success of the National Development Plan (NDP) relies. In the South African context, what is a social contract - who should be the parties to it and with what objectives?
Read Article

On call: Bolstering the supply of doctors

Posted: 06-Jun-2014

South Africa, like many developing countries, faces severe shortages in doctors. Recently, a group of South African doctors put forward a creative solution to this problem – the establishment of a private medical school to increase the number of medical graduates. This idea was rejected outright by government. Given the limited capacity of the public sector to generate the vast number of doctors that will be needed to implement the NHI, alternative proposals should be welcomed and seriously considered. Our own calculations confirm that additional teaching capacity is desperately needed and the experience of other African countries suggests that the private sector can make an important contribution in filling this gap.Read Article

Smallholder agriculture: job creator or livelihood provider?

Posted: 06-Jun-2014

Considerable effort has been directed towards combating high levels of unemployment in South Africa. Agriculture, particularly smallholder farming, has been identified as having significant potential to address South Africa’s employment crisis and food security challenges. This is because smallholder producers tend to use labour-intensive methods rather than capital-intensive ones, and therefore with proper support, smallholder agriculture is likely to absorb more workers and use land more intensively. Subsequently, a number of job creation interventions have been targeted at this sub-sector. However, these interventions have encountered a number of challenges, including an important economic puzzle around how to define and measure an agricultural job.Read Article

SMME development in South Africa: Through the voices of entrepreneurs

Posted: 06-Jun-2014

Globally, the Small, Medium and Micro Enterprises (SMMEs) sector has long been recognised as a key driver of economic growth, and more importantly, as major source of employment. Given the extraordinarily high unemployment rate in South Africa, and the fact that SMMEs are generally more labour intensive, it is not surprising that this sector has been the subject of significant research and support. This has culminated, most recently, in the establishment of a dedicated Government Ministry and Department to address small business issues. Based on some of our recent work with the SMME sector, there is no shortage of concerns that will demand the Minister’s attention. Without adding to the growing list of demands on this new Department, we provide some ideas as to how the she might begin to tackle some of these issues.Read Article

At your service – or not?

Posted: October 07, 2013

The Department of Performance Monitoring and Evaluation recently released the findings of the Management Performance Assessment Tool (MPAT). The MPAT results yield interesting insights into the way government works. In particular, the scores around governance and accountability mechanisms are low. Only one in every two national departments has service standards in place. These standards are meant to engender a constructive relationship between government and its citizens. For government, they become a form a self-regulation – where service standards are set and monitored. For citizens, they are an accountability mechanism to hold government responsible for the quality of their services. Without service standards in place, government can easily forget who they are meant to serve! Read Article

Rising state wage bill might crowd-out critical public services

Posted: April 22, 2013

Much has already been written on the impact that rising personnel costs might have on government’s capital investment plans. What has perhaps been neglected is that within departments, attempts to curtail overall expenditure are much more likely to lead to cut-backs in operational costs. While expenditure on certain items (entertainment and catering) should be shaved to improve efficiency; there is a risk that the ‘wrong’ items might be targeted. This can be clearly illustrated with reference to the South African Police Service (SAPS) budget. Government needs to act decisively to restrain the state wage bill before it leads to the crowding-out of critical public services. Read Article

The rising role of the Bitcoin - The world's first decentralised virtual currency

Posted: April 21, 2013

During 2007 - 2009, an individual/group with the pseudonym Satoshi Nakamoto created Bitcoin and released the blueprint for the open-source digital currency onto the internet. It is the world's first decentralised virtual currency. However, the Bitcoin is merely the first of its kind, with other competing alternative virtual currencies (with their own features and supply limits) already emerging. Bitcoin’s market cap is currently over $1 billion. Even if Bitcoin itself should fail, it seems that a Pandora’s Box has been opened; and fiat currency is facing its first significant challenge since its roots in the 11th century.  Might the growing influence of an unknown collective of internet geeks provide a necessary yet virtual constraint on the ability of governments and their central banks to mismanage their real economies?
Read Article

Economics - complicating the obvious

Posted: November 28, 2012

The standard first year definition of economics states that "economics is the study of how individuals and groups make decisions with scarce resources in order to best satisfy their wants, needs, and desires". I recently had the opportunity to apply my university training to analyse a decision I was faced with in my personal life. It all started when my children's school sent a newsletter to all parents declaring that hence forth, they will charge a penalty fee for children that were either picked up late from school or dropped off late for school. Read Article

Making a difference: better quality health services in South Africa

Posted: July 02, 2012

Long waiting times, dirty health care facilities and reports of hospital acquired infections are challenges faced by millions of South Africans using public healthcare services on a daily basis. Collectively, these issues reflect the generally poor quality of health services provided by the public sector. While failings in the public sector are widely reported on in the press, the quality failures of the private sector are more nuanced and often overlooked.

The National Health Amendment Bill currently being debated within the National Assembly introduces a new scheme to regulate the quality of health services. It establishes the Office of Health Standards Compliance which is tasked with monitoring compliance by health establishments against acceptable norms and standards. To achieve this, the Office will inspect and certify health establishments (public and private), monitor indicators of risk and investigate complaints relating to norms and standards.Read Article

Bailouts of state owned enterprises and their impact on public finances

Posted: February 27, 2012

SAA has recently requested a capital injection of R 6 billion from the fiscus. Requests from SAA for recapitalisation (or bailouts) must by this point create a feeling of déjavu for most South Africans. In 2009/10, national government allocated R1.6 billion to SAA, and in 2007/08, R744 million was injected into SAA to allow the entity to restructure its operations and improve its debt to equity ratio.  

Unfortunately for taxpaying South Africans, our national carrier is not the only state owned enterprise to have asked for a bailout from national government. Between 2008/09 and 2011/12, government gave Denel R747.1 million to pay for claims under an indemnity agreement with Airbus Military for the commercially nonviable production of A400m aircraft, an agreement which Denel should not have been party to in the first place.  Over and above this, Denel received capital injections of R2 billion in 2005/06, R 567 million in 2006/07 and R933 million in 2008/09. In the 2012 budget, an additional R700 million is allocated to Denel to recapitalise its aerostructures division.

Taxpayer funding for toll roads

Posted: February 27, 2012

The public outcry over the proposed tolls for the Gauteng Freeway Improvement Project (GFIP) have substantially delayed Sanral's toll implementation plan. They also pose a more fundamental question: if the user-pays principle is no longer going to be used to finance road infrastructure, then who is in fact going to pay? In this year's budget, we got our first hint at an answer to this question, and not unexpectedly, its the taxpayer. Read Article

Keeping the public wage bill in check

Posted: February 27, 2012

In the 2012 budget speech, the Minister of Finance raised concerns about the sustainability of the public sector wage bill. Spending on compensation of employees in the public sector has grown from R32 billion in 2001/02 to R98.6 billion in 2011/12, effectively tripling over a ten year period and greatly outpacing increases in inflation. The official explanation for this is higher staff levels in health and policing, as well as the introduction of an occupation specific dispensation (i.e. much higher salaries) for government employees in critical fields like health and education. We also know that the higher than expected wage settlement negotiated after a prolonged public sector strike in 2010 has had an impact. This wage settlement is expected to cost the fiscus an additional R5.6 billion in 2012/13. 
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Gratuities for municipal councillors: is this justifiable expenditure?

Posted: October 28, 2011

The Medium Term Budget Policy Statement contains a wealth of information on government expenditure. We should all give thanks to the Minister of Finance and his team at the National Treasury for compiling such a comprehensive and transparent document. In the absence of the MTBPS, little known facts might not emerge in the public domain. 

One such piece of information is the payment of a gratuity of R266.3 million to non-returning local government councillors. This is reported under the Department of Cooperative Governance and Traditional Affair's vote as unforeseeable and unavoidable expenditure and constitutes the single largest item of unforeseen and unavoidable expenditure in the MTBPS. 

Three questions are worth asking in relation to this payment. Read Article

Ward committees as a mechanism for meaningful community participation

Posted: June 24, 2011

It has been just over a month since the local government elections. Results are out and coalition agreements have been negotiated between political parties. In all of this commotion, we have yet to hear about how our newly elected representatives will better serve their communities. Will they improve on the performance of the class of 2006, which saw increasing community dissatisfaction and violent service delivery protests?Read Article

Fairness and toll roads

Posted: April 05, 2011

The Gauteng Freeway Improvement Project tolls are one of the first big tests of the policy of "user pays" for infrastructure which has been introduced by government. In theory, making the user pay for the infrastructure that they benefit from has the advantage of fairness, and helps to ease funding constraints that could otherwise prevent the construction of economically important infrastructure. However, in practice, both the fairness and economic sense of a given user pays project depends on the details of how it is implemented - and this is where problems begin to arise with the GFIP. Read Article

What went wrong in the toll road fiasco?

Posted: February 23, 2011

This morning we woke up to the news that the Minister of Transport, Sibusiso Ndebele and the Gauteng Premier Nomvula Mokonyane, have taken the decision to suspend the gazetting of toll fees. This decision was based on the large public outcry in recent weeks around the proposed fees by SANRAL.  While many of us sighed with relief at the thought of not having to pay the toll after all, from less selfish perspective, this outcome raises serious questions about what the relationship between a public entity and its oversight department should be, as well as government's commitment to published policy decisions.  

Tender fraud points to deeper institutional failures in the procurement process

Posted: July 22, 2009

Almost 10 months after the Auditor General released his first report on conflicts of interests in public sector procurement, it is finally getting the attention it deserves.   There are some shocking findings in the report. For example, the provincial government of Limpopo has awarded an astonishing R 269 million worth of tenders to companies connected to civil servants. To put it into context, this represents about 3.5 per cent of the entire health budget of the Limpopo province.

Though the media has correctly highlighted a few high profile conflict of interest cases, the entire debacle points to a deeper institutional and systemic failure within supply chain management (SCM) in government. Many of the problems around conflict of interest - we have seen and heard of before - most notably in the arms deal. However 14 years later, government has still not learnt some of these hard lessons.Read Article

My friends all drive Hondas

Posted: November 02, 2009

A number of South African Government Ministers have recently revealed their extreme taste for extremely expensive cars.  In so doing, they have been accused of being unethical and disrespectful of the poor.  But it is wrong to blame our politicians for behaving like politicians.  And this is why tight rules are generally put in place to curtail such extravagances - not only in South Africa, but throughout the democratic world.

The South African Government has correctly pointed to its own guidelines, which explicitly permit our leaders to spend up to R1.2 million on two cars every five years. It is worth comparing our own guidelines to those of some other countries - and the UK and Canada in particular, which are generally rated as amongst the best governed countries on our planet.Read Article