The government’s decision to freeze spending on infrastructure and positions could spell disaster for already struggling citizens, given the persistent rise in living costs and unemployment rates. Gauteng residents may be able to breathe a sigh of relief, however, as the premier of the province, Panyaza Lesufi, has stated that he will not deviate from his job creation mission.

By Mbali Mthembu

Despite the national government’s penny-pinching efforts to tighten the purse strings on new jobs, the Gauteng provincial government is boldly forging ahead at full throttle with its colossal recruitment initiative, Nasi Ispani (Here is Work).

According to the Sunday Times, the National Treasury is worried about the country’s debt which has risen to R4.7 trillion ($250 billion) and could reach R6 trillion in 2025, compared with R500 billion in 2006.

In response, the Treasury has proposed “radical measures” after a cabinet meeting in mid-August at which ministers were warned of dwindling tax revenue. Some of these measures included freezing spending on new public service jobs and procurement contracts for all infrastructure projects to check “runaway” government spending.

The Gauteng government is not deterred.

Gauteng Premier Panyaza Lesufi’s plans to intensify his fight against unemployment, poverty, crime, and corruption in the province will remain on course, premier spokesperson Sizwe Pamla told The Telegram.

“Nasi Ispani is not funded by the national government. It is funded by insourcing services as well as budgeting implements which were made to manage the Covid-19 pandemic and other resources. For instance, the 8,000 posts that were made available in June were already there two years ago but had to be partially frozen so that the province could have a clear sense of the effects of the pandemic. So, the Treasury’s warning will not cause any disruption to Nasi Ispani,” he said.

Youth unemployment is one of South Africa’s biggest challenges and the hottest campaign issue as the national elections draw to a close in 2024. In May this year, the national statistics body, Statistics South Africa (statsSA) reported that almost 5 million (4.9 million) young people aged between 15 and 35 were unemployed resulting in an increase of 1.1% youth unemployment from the last quarter of 2022, to 46.5% for the first quarter of the year.

Nasi Ispani has provided a glimmer of hope for millions of young people in Gauteng. According to the Gauteng government, over 1.3 million young people applied for the 8000 posts that the provincial government had advertised. Gauteng is said to have 5 million young people and almost half of them, 2,3 million are neither working nor involved in any form of schooling or training.

Economist Dawie Roodt mentioned to the SABC that South Africa is running out of money, but the spending cuts were not palatable in an election year.

“The state’s expenses are going to be much larger than expected, and economic growth much smaller. The only way to reduce the country’s debt is to increase income through economic growth or cut spending. However, announcing cuts to public sector employees, salary freezes, or reducing social grants will be unpopular. It can be fatal ahead of an election year when the ruling ANC is fighting to maintain its majority in Parliament,” said Roodt.

Author and political analyst, Susan Booysens, urged the state to treat the matter of cutting spending with urgency because it will devastate the economy.

“Without spending cuts or rapid economic growth, South Africa’s debt will continue to grow, and it will continue to spend more on servicing interest on this debt. It can lead to a debt spiral, resulting in high inflation levels, further stifling economic growth,” said Booysens.

The situation has reached such concerning levels that South African Reserve Bank Governor Lesetja Kganyago said it was essential that the country reduced fiscal risks. In June, the central bank expressed concern about a growing reluctance from local investors to continue absorbing government issuance.

The state continues to spend far more than it gets in, which means it has a growing fiscal deficit and needs to borrow money to make ends meet.

Despite the government’s growing expenses and the Treasury’s warning, President Cyril Ramaphosa said lower spending is not necessary when responding to the country’s fiscal challenges.

“The revenue projections that we had have been lower than what we had anticipated. That immediately tells you that we are going to have headwinds. What should we do? The discussion is ongoing. It is not necessarily cutting spending. It is seeing how best you focus on your key delivery areas. After considering key investment areas, you look at how you recalibrate the other spending, you re-prioritise,” said Ramaphosa.