Johannesburg - The announcement by President Jacob Zuma of free higher education for poor and working-class youth lacks substance and is deliberately vague on what is needed to implement it, the Banking Association of South Africa (Basa) said on Saturday.
"In light of the state of public finances announced by [Finance] Minister [Malusi] Gigaba in October, it is difficult to reach a different conclusion than that it amounts to nothing less than a further empty promise and another failed delivery," Basa MD Cas Coovadia said.
While a response to the Heher Commission of Inquiry into higher education funding could be welcomed, Zuma had failed to provide any clarity on how the entire scheme would be funded from what was an already stretched fiscus.
"While embracing the idea of supporting the poor, we must ask what will this do to South Africa’s budget deficit and overall debt burden announced by the minister of finance two months ago. A number of questions come to mind," Coovadia said.
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"What will be the total additional funding required to meet this commitment? How will the funds be raised? How much more borrowing will be required? Taking this into account, how much more will South Africa pay in servicing the debt as a percentage of GDP given our unfavourable credit rating? Which vanity projects will be discontinued or abandoned in order to make this noble policy affordable?
"This is, unfortunately, a way of fooling South Africans by adopting unaffordable populist policies in the name of the poor without the ability or even the political will to deliver."
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The impact of this policy on public finances required that it should have been presented to parliament's finance standing committee and ultimately tabled in the National Assembly before adoption. "Sneaking it in", as Zuma had done, could only be viewed with suspicion, he said.
"The president clearly lacks any understanding of South Africa’s economic predicament. Given the lack of economic growth, a growing fiscal deficit, ongoing falls in tax revenues, and increasing demands on the fiscus from other pressing social needs, it is not clear how promises will turn into action. We call for the president to make these plans available for public scrutiny.
"The president's promises must be accompanied by significant detail or they amount to nothing more than painting his successors into a corner and an attempt to manipulate popular opinion in the process.
"We look forward to studying the detail behind the president's plans and ask that these are made public as a matter of urgency," Coovadia said.