Without action against corruption, economic recovery is unlikely: commission

Government’s Financial and Fiscal Commission (FFC) has called for a coherent economic and fiscal framework for growth, that is underpinned by the budget.

The commission, which advises Parliament and government on state fiscal matters, said that the government needs to eradicate corruption to save the economy amid the Covid-19 pandemic which is an “unprecedented shock to people’s livelihoods and compounded and accelerated existing structural fragilities in the economy”.

“Such actions (corruption) serve to divert and squander funds meant to procure goods and services for use in the fight against the pandemic and provide relief to the poor,” the FFC said on Monday (17 August), in its submission on the 2020/2021 division of revenue bill, which was tabled in Parliament in July.

“Without decisive action on this front (from a criminal justice or administrative or systems point of view), attempts at ensuring that South Africa emerges from these multiple crises with a real chance at sustainable economic and social recovery, are unlikely to succeed.”

It added that government should cushion the impact of the pandemic as household income is expected to diminish faster and faster.

Below is an overview of its submission:


Unemployment

According to the FFC, South Africa lost 38,000 jobs and 306,000 job seekers could not find a job in the first quarter of 2020. This is on top of the seven million South Africans already out of work.

The FFC believes the root cause lies in the economic system inherited from apartheid South Africa, and the continued “over-dependence” on traditional commodities.

“Since 1994, the state has failed to diversify the economy and eradicate the roots of structural joblessness and inequality. This lethargy has been all the more apparent during the unfolding crisis caused by the Covid-19 pandemic,” the FFC said.

But it believes that South Africa can now restructure the economy by adopting local product value chains to transform the domestic economy, agriculture in particular.

“In establishing food security, agriculture has the ability to simultaneously raise productivity, incomes and employment with broad effects across economic sectors,” the FFC said.

It noted that commercial agriculture grew in the first quarter, while the national GDP contracted by 2%.

The commission said that a fundamental structural transformation of the economy is inevitable.


Public healthcare

The FFC recommends a demand-based approach to determine healthcare coverage and costs. It recommended that the government develop a national information database with the real-time information of patients and doctors.

“However, as in many other government sectors, there is a lack of reliable data to implement this approach,” it said.


Investment in education

Not investing in children will derail the development of a sustainable and equitable economy, the commission warned.

“Currently, government funding is predominantly directed to formal ECD (Early Childhood Development) centres, whereas the poorest and youngest children in need, attend non-centre based ECD programmes such as informal playgroups and toy library programmes. These non-centre based programmes face many constraints,” the FFC said.

These restraints include meeting certain criteria before they can register with the government. “This results in programmes that need government funding the most, cannot access it,” the FFC said.


Children with disabilities

The FFC claims 597,953 children with disabilities are unaccounted for in the schooling system while about 119,000 learners attend six special needs schools.

“The commission recommends that as a matter of priority, government undertake this audit,” it said. “This will ensure more evidence-based policy-making and implementation efficiency for these learners.”

It found that some challenges in supporting these learners are weak coordination and confusion around the division of responsibility.


Corruption

The FCC ‘regrettably’ highlighted the corruption and irregular procurement practices in the health, education and social development sectors during the Covid-19 crisis.

Such actions, it said, serve to divert and squander funds meant to procure goods and services for use in the fight against the pandemic and provide relief to the poor.

“Without decisive action on this front (from a criminal justice or administrative or systems point of view), attempts at ensuring that South Africa emerges from these multiple crises with a real chance at sustainable economic and social recovery, are unlikely to succeed. This practice must be condemned, but more importantly it must be expunged,” it said.


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Without action against corruption, economic recovery is unlikely: commission