2018 FINALISTS - Budget Speech Competition · 2018 FINALISTS NEDBANK & OLD MUTUAL BUDGET SPEECH COMPETITION FINALISTS ... AFRICA’S FUTURE LEADERS. TOMORROW’S LEADERS HONOURED

2018 FINALISTS

NEDBANK & OLD MUTUALBUDGET SPEECHCOMPETITION FINALISTS

NEDBANK & OLD MUTUALBUDGET SPEECHCOMPETITION

POWERING

AFRICA’S

FUTURELEADERS

TOMORROW’S LEADERS HONOURED TODAYAs the world becomes increasingly complex and challenging, we will rely more and more on the insights and problem-solving abilities of conscientious young visionaries. The annual Budget Speech Competition that we sponsor is designed to encourage South Africa’s young students of economics and finance to apply their bright minds to building a future defined by prosperity and progress, social justice and financial inclusion. By inspiring them to address the pressing macroeconomic and socioeconomic issues of the day, we hope to contribute constructively to critical national debates and further strengthen our nation’s economic future and wellbeing. We warmly congratulate the 20 outstanding finalists in the 2018 Nedbank and Old Mutual Budget Speech Competition. Your perceptive and well-argued essays and your commitment to excellence bode well for tomorrow. Mike Brown, CEO Nedbank

Peter Moyo, CEO Old Mutual


CONTENTSTomorrow’s leaders honoured today IFCAbout the Budget Speech Competition IFC

Meet the undergraduate finalists 2

André Lourens University of Pretoria 4Anneleen van Dyke North West University 5Caleb Qoyo University of Cape Town 6Diagoras Stathoussis Stellenbosch University 7Emily Roberts University of Cape Town 8Gerard Pieterse University of Cape Town 9Khayelihle Madlopha University of Zululand 10Makhotso Pulumo Monash University 1 1Schalk Bothma Stellenbosch University 12Zaziwe Maluleke University of Johannesburg 13

Meet the postgraduate finalists 14

Baneng Naape University of the Witwatersrand 16Bianca Fisher University of Johannesburg 17Cayleigh Brink University of the Witwatersrand 18Daniela Lamparelli University of the Witwatersrand 19Esther Bhosha University of the Witwatersrand 20Marcel Bovijn University of Stellenbosch 2 1Mongi Tshaka University of Fort Hare 22Priviledge Cheteni North West University 23Remert Erasmus University of Stellenbosch 24Victor Sithole University of the Witwatersrand 25

ABOUT THE BUDGET SPEECH COMPETITIONThe Nedbank and Old Mutual Budget Speech Competition is designed to motivate and incentivise South Africa’s most talented students in economics and finance to contribute to national debates on crucial issues.

The top three students in both categories (undergraduate and postgraduate) receive cash to further their studies.

Launched in 1972, the competition is the result of collaboration between the public and private sectors and the prize-giving event is timed to coincide with the annual Budget Speech delivered by the Finance Minister.

It’s held on the evening of National Budget Day and the keynote speaker and guest of honour is traditionally the Finance Minister, who usually makes his way directly from Parliament to the event venue.

This is the 47th year that this Competition has played a role in generating fresh ideas and challenging old ones for the benefit of the growth and development of the country. Many winners now hold significant positions in the public and private sectors, as well as in the academic field, both in South Africa and abroad.

ESSAY TOPIC What are the systemic risks of bitcoin/cryptocurrencies, if any, and have regulators

been made sufficiently aware of any risks?

Schalk BothmaAndré Lourens Anneleen van Dyke Caleb Qoyo

Emily Roberts Gerard Pieterse

Diagoras Stathoussis

Khayelihle Madlopha Makhotso Pulumo Zaziwe Maluleke

MEET THE UNDERGRADUATE FINALISTS NEDBANK & OLD MUTUALBUDGET SPEECHCOMPETITION FINALISTS

2 3

André Lourens Anneleen van Dyke

HOMETOWN Pretoria, South Africa

UNIVERSITY University of Pretoria

FUNDING Self

HOMETOWN Pretoria, South Africa

UNIVERSITY North West University, Potchefstroom Campus

FUNDING Self

ESSAY SYNOPSISBlockchain technology enables cryptocurrency to be completely decentralised and unrestricted by national borders or private banks, which makes direct taxability and central-bank regulation virtually impossible, André Lourens explains. Cryptocurrencies are also difficult to use due to the mathematical and computing labour required, and they’re untraceable to any country or person of origin. This anonymity causes transactions to be non-transparent, which makes cryptocurrencies a preferred means of exchange for money launderers, criminals, warlords and other illicit-activity perpetrators.

André notes that some systemic risks – the occurrence of price bubbles, liquidity provision, numerous equilibria and market panic, contagion, political instability, and currency mismatches in the banking sector – are present within cryptocurrencies.

Explaining this, André says that cryptocurrency is deemed exceptionally volatile and unstable in value in the markets in which it is exchanged.

Cryptocurrencies are not backed by any third party or government in terms of value, and demand is generated by financially inexperienced individuals who are not aware of the low liquidity of cryptocurrencies. Cryptocurrencies may potentially form ‘price bubbles’ within global markets, posing the risk of another financial crisis that cannot be predicted or mitigated by governments. In addition, cryptocurrencies pose the risk of creating political instability through public disgruntlement related to the criminal activities promoted by cryptocurrencies.

André concludes that it is imperative for governments and central banks across the globe to engage in collaborative efforts to regulate existing and develop their own versions of cryptocurrency.

ESSAY SYNOPSISThe rapid rate at which cryptocurrency is gaining acceptance worldwide has made it crucial for economists and policymakers to identify and evaluate possible systemic risks (events that cause instability in financial markets), says Annaleen van Dyke.

Arguably, says Annaleen, the reason why the cryptocurrency, bitcoin, has proven to be such a volatile security is because the intrinsic value of cryptocurrencies is not backed by anything other than the idea of cryptocurrencies. It can be argued, however, that once cryptocurrency receives legitimacy, this volatility will disappear.

In recent years, cryptocurrency has been used as a means of exchange, similar to other currencies, Annaleen says, so cryptocurrencies are no longer just a form of investment but can also be defined as a form of consumer spending. This indicates significant systemic risks. One is the effect cryptocurrency would have on the supply and demand of other funds in the economy; another is the potential effect it could have on net exports and how this might drastically

weaken struggling economies’ local currencies; and a third is the effect cryptocurrency would have on government funds, which are generated mainly through taxation.

Any regulation would lead to a significant change to the very essence of cryptocurrencies, Anneleen says. One of the most appealing aspects of cryptocurrencies is the lack of regulation, and if this is lost, cryptocurrencies in all probability will lose their intrinsic market value.

More about AndréFavourite subjects:Macroeconomics, Statistics, Public Economics and International Relations.

Interests:Reading, philosophy, being outdoors and in nature, business and international politics and economics.

Inspired by:Economists Dawie Roodt and Joseph Stiglitz, and businessman Robert Kiyosaki.

Main achievements:I was a Model United Nations simulation winner in 2017.

Community activity:I’m a Model United Nations mentor in the Department of Political Sciences at the University of Pretoria; and co-founder and treasurer of student society: The HUB (UP Chapter), which aspires to empower youth within their community.

More about AnneleenFavourite subjects:Macroeconomics, Developmental Economics and Monetary and Fiscal Policy Formation.

Interests:I’m very fond of reading and writing short stories; philosophy, psychology and epistemiology are fields I enjoy researching; and I love cooking, eating and trying out new and interesting wines.

Inspired by:Myself, aged 50! I owe it to that version of me to live a life that I can look back on without any regrets.

Main achievements:I secured third place in the Media 24 National School Newspaper competition for Social Commentary in 2009; and I was a delegate representing the Hessequa Region at the United Nations COP 17 Conference in Durban in 2011.

Community activity:I tutor high-school students in mathematics, accounting and physical sciences, and first- and second-year BCom students in economics.

... financially inexperienced individuals [...] are not

aware of the low liquidity of cryptocurrencies.

... the intrinsic value of cryptocurrencies is not backed

by anything other than the idea of cryptocurrencies.

I hope to have a PhD in Economics, to be one of the economic policymakers of our beautiful country, and to be one of the top economic researchers in the

world. I’d love to start a charity that focuses on young people. And I’d like to have travelled the world extensively, and

learned to cook like my mother!

IN 10 YEARS’ TIME...IN 10 YEARS’ TIME...

I see myself with a doctorate in Economics, a successful economist and

businessman making a meaningful contribution to the field of economics

and society as a whole.


4 5

Caleb Qoyo Diagoras Stathoussis

HOMETOWN Queenstown, South Africa

UNIVERSITY University of Cape Town

FUNDING NSFAS and Dell Young Leaders Programme

HOMETOWN Stellenbosch, South Africa

UNIVERSITY Stellenbosch University

FUNDING Self

ESSAY SYNOPSISCaleb Qoyo notes that systemic risk is the risk that a shock will adversely affect the real economy. Aspects of systemic risk include imbalances in the economy, information asymmetry, asset bubbles, negative externalities, correlated exposures of financial institutions, and a collapse of confidence.

Cryptocurrencies exhibit high volatility in value in comparison to fiat currencies, Caleb explains, because cryptocurrencies have no intrinsic value apart from their utility as a medium of exchange, based purely on the subjective valuation of their users. Fiat currencies, by comparison, are based on trust in governments, central banks and the broad financial system, and can be valued more reliably.

The bitcoin bubble does not pose a systemic risk, in Caleb’s view, because for it to do so, price volatility would have to be combined with widespread integration into the financial system; this is not the case currently and it’s unlikely to change, Caleb says.

Some countries do not recognise cryptocurrency as legal tender and consumers are cautioned to transact at their own risk. In South Africa, cryptocurrency can be traded as an asset but not used as currency because the Reserve Bank reserves the right to issue legal tender.

Caleb notes that policy on regulating the cryptocurrency bitcoin is still in the early stages in most countries, and regulators are currently looking to address problems of potential fraud and tax evasion caused by the anonymity of cryptocurrency use. The policies adopted will determine the future of cryptocurrencies.

ESSAY SYNOPSISIt is widely believed by many experts in the fields of finance, economics and computer sciences that cryptocurrencies offer various advantages, the most significant being decreased transaction costs for the world economy. However, says Diagoras Stathoussis, cryptocurrencies are under the watchful eyes of regulatory authorities around the world as they assess whether or not these cryptocurrencies pose a systemic risk.

A systemic risk is a threat that jeopardises the safety of the entire financial system, Diagoras explains. In its current form and use, cryptocurrencies do not pose a systemic risk, as even at their peak in popularity, their total share of global GDP was less than 1%, meaning that institutions and consumers are not excessively exposed to cryptocurrencies, and a sudden decline in value will not cause a cascading failure in the financial system. The risks associated with cryptocurrencies at the moment are idiosyncratic, with particular significance for tax evasion and funding terrorist and criminal activity.

Diagoras notes that if cryptocurrencies become so extensively accepted that they essentially operate as an alternative form of money, then they would become a new type of shadow banking and could pose a systemic risk.

The South African Reserve Bank does not currently regulate cryptocurrencies but is monitoring this area as it develops. This passive observance is not sufficient, in Diagoras’s view, because South Africa has rampant crime levels and providing an efficient avenue for money laundering limits law-enforcement agencies in preventing these criminal activities.

More about CalebFavourite subjects:Economics, History and Sociology.

Interests:Development/welfare economics, visual art, cricket, theology and entrepreneurial ideas.

Inspired by:Economic thinkers like Amartya Sen, Steve Keen and Hyman Minsky, and leaders like Nelson Mandela.

Main achievements:I was a Dell Young Leader in 2015.

Community activity:I’m a programme coordinator at Emagqabini Educational Academy, an NPO doing amazing work with high-school learners in Khayelitsha in Cape Town.

More about DiagorasFavourite subjects:Economics and Property Law.

Interests:Playing and coaching football, blockchain technology application and innovation, e-sports and science.

Inspired by:My late grandfather Ernie Wobbe, Albert Einstein, Nelson Mandela and Warren Buffett.

Main achievements:I successfully completed a blockchain technologies executive programme from MIT Sloan School of Management; and I played semi-professional football.

Community activity:I do volunteer in football initiatives in low-income communities around Stellenbosch in order to raise awareness for mental health.

The bitcoin bubble does not pose a systemic risk, [...], because for it to do so, price volatility would have to be

combined with widespread integration into the

financial system; this is not the case currently and it’s

unlikely to change...

... South Africa has rampant crime levels and providing

an efficient avenue for money laundering limits

law-enforcement agencies in preventing these criminal activities.

I’d like to have a master’s degree, and be an economist working in a sphere that influences policy in education or youth

employment; I’d also like to have started two businesses.

I see myself having completed my master’s degree in Economics and with qualifications in blockchain coding, in

order to work abroad in tech-driven companies. I intend to return to South

Africa to start an initiative aimed at utilising new technology to aid in

reducing some of the challenges that the country faces.



6 7

Emily Roberts Gerard Pieterse

HOMETOWN Cape Town, South Africa


FUNDING Scholarships and self



FUNDING Bursary

ESSAY SYNOPSISThe potential for cryptocurrencies to be adopted as the international, decentralised currency of the globe should not be ignored, says Emily Roberts. If the systemic risks involved are not adequately addressed, this widespread adoption could become a source of extensive financial and monetary instability for the global economy.

A systemic risk is one that could cause a breakdown of the financial system at large. One risk is derived from the inherent volatility of cryptocurrencies: with such large fluctuations on an everyday basis, a price breakdown is not implausible, Emily says. Monetary instability is another matter for consideration: if a large majority of market participants were to switch from conducting their everyday transactions in traditional fiat currency to some form of digital currency (which are decentralised), this would severely hinder the central bank’s ability to control prices and real economic activity.

Emily notes that the systemic risk that cryptocurrencies pose to financial or monetary stability depends largely on how widely they

are used. General scepticism and unfamiliarity with the technology, extreme volatility in value, and insufficient ease of day-to-day use are some challenges to their widespread adoption. However, systemic threats may develop as cryptocurrency becomes more widely adopted, especially in the event of insufficient regulatory measures.

The South African Reserve Bank says that regulating these currencies too early could dampen financial innovation and growth, so at the moment they are monitoring developments that may inform future regulatory measures.

ESSAY SYNOPSISBitcoin’s creation served to propose an alternative payment system, free from the inherent flaws of a trust-based model that relies on financial institutions. However, cryptocurrency innovation presents risks of its own, writes Gerard Pieterse.

Arguably the most pertinent risk associated with trading cryptocurrency is the potential for retail investors to get caught up in the speculative bubble, Gerard notes. Financial intermediaries have been wary of speculative risks and have resorted to self-regulation (including refusing to allow the processing of any cryptocurrency-based transactions), and investors are therefore having to internalise risks.

The anonymity of cryptocurrencies could facilitate money-laundering activities and may create incentives for investors to evade taxes. Cybercriminals often exploit cryptocurrencies, and some argue that cryptocurrencies are uniquely suited for criminal use. It is therefore of regulatory interest for systems to be introduced to ensure cryptocurrencies do not become a

vehicle for tax evasion or money laundering, Gerard says.

The anonymity cryptocurrencies offer could lead to their exploitation as vehicles for the undetected movement of capital from South Africa to bank accounts elsewhere. However, for various reasons, Gerard concludes that the risk of large capital outflows resulting from the use of cryptocurrencies lacks credibility.

The South African Reserve Bank is of the view that cryptocurrencies do not currently pose significant risks to the national payment system, financial stability or price stability, and attaches more weight to the potential benefits of cryptocurrency innovation than to the underlying risks.

More about EmilyFavourite subjects:Maths and Economics.

Interests:I’m a family-and friendship-oriented individual, passionate about adventure, keeping active and exercising my creativity; I paint, collage and get creative in the kitchen; and I love travel.

Inspired by:Thoughtful design; nurturing others to reach their full potential; and putting my desired direction for the future into action.

Main achievements:I won the Boston Consulting Group Award for top-second year academic performer in BBusSci: Finance in 2017; I won the UCT Vice Chancellor’s Scholarship for Academic Excellence in 2016, 2017 and 2018; and I qualified as an open-water diver in 2018.

Community activity:I’m a volunteer maths tutor at a primary school in Langa.

More about GerardFavourite subjects:Constitutional Law and Macroeconomics.

Interests:Rugby and mountain-biking.

Inspired by:American basketball player Derrick Rose, for his refusal to give up on his career; and Canadian psychologist Jordan Peterson, for his courage to challenge societal notions and spark debate.

Main achievements:I was a member of the Western Province U19 Currie Cup team in 2015 and have played UCT 1st XV rugby since 2016; I made the Dean’s List in 2016 and 2017; and in 2017 I gained membership of the Golden Key international honour society, and won the Boston Consulting Group Award for top second-year BBusSc Economics student at UCT.

Community activity:I’m a VUSA Rugby Academy volunteer and an organiser of the Ikeys Run for Hope.

... if a large majority of market participants were to switch

from conducting their everyday transactions in traditional fiat

currency to some form of digital currency [...], this would severely

hinder the central bank’s ability to control prices and real

economic activity.

The anonymity of cryptocurrencies could facilitate

money-laundering activities and may create incentives for

investors to evade taxes.

I see myself merging my creative knack and love for business into an epic

entrepreneurial venture.

I hope to have completed an MBA, and be in a management position in a firm

that aligns itself with my values and vision.



8 9

Khayelihle Madlopha Makhotso Pulumo

HOMETOWN Ulundi, South Africa

UNIVERSITY University of Zululand

FUNDING NSFAS

HOMETOWN Roodepoort, South Africa

UNIVERSITY Monash University

FUNDING Self

ESSAY SYNOPSISCryptocurrency exchanges do not involve third parties, which means cryptocurrencies offer more speed in transactions, lower transaction costs and great flexibility, writes Khayelihle Madlopha. However, cryptocurrency transactions cannot be traced back to the user, which could propel illicit financial flows and make financing terrorism easy.

There is also some belief that cryptocurrencies are a source of systemic risk, says Khayelihle – that is, that a collapse in the cryptocurrency market will lead to a collapse of or frictions in the overall financial system and real economy. To clarify, an asset bubble refers to a situation where the surge in asset prices is not driven by fundamental factors, but by many factors, including expectations, market participants’ behaviour, and speculations. Cryptocurrencies are an asset bubble, and this theoretically implies that the crash of the cryptocurrency market would result in severe system-wide economic and financial effects.

However, the cryptocurrency market has very

little connectedness with the rest of the world economy, with bitcoins representing only a small share of the global financial system, so Khayelihle concludes that cryptocurrencies are a potential systemic risk and not yet an actual systemic risk.

In Khayelihle’s opinion, regulators are not sufficiently aware of these risks. This is because regulators generally have a blanket approach to regulation, so they regulate cryptocurrencies not according to the way they are used, which essentially would mitigate the risk, but instead apply a one-size-fits-all regulation or ban them altogether.

ESSAY SYNOPSISWhile some researchers claim that cryptocurrencies will fundamentally alter politics, economics and payments around the world, others argue that they are riddled with too many risks that could potentially spark a systemic crisis, writes Makhotso Pulumo. She argues, however, that while there are indeed some risks associated with cryptocurrencies, these are not systemic.

Systemic risks are those caused by interdependencies or interlinkages in a financial market, where the crash of a single industry or collection of industries can lead to a cascading failure which could spill over into and potentially crash or bankrupt the entire financial system.

Like every other financial industry, cryptocurrencies are vulnerable to risks, which include volatility of value, investors becoming over-indebted, and anonymity of use leading cryptocurrencies to be used in facilitating financial crimes. But Pulumo argues that not only are cryptocurrencies too small to pose

a systemic risk, the fact that there are over 1 600 cryptocurrencies in the market means that should one cryptocurrency experience a complete crash, there will always be another one that investors can turn to.

In South Africa, cryptocurrencies were widely unregulated until February 2018, when the South African Revenue Service announced that it requires cryptocurrency owners and traders to declare their gains and losses on their tax returns. The Reserve Bank aims to look at cybersecurity considerations, risks concerning the clearing and settlement of cryptocurrencies, exchange-control implications, and the implications for financial security and monetary policy.

More about KhayelihleFavourite subjects:Econometrics, Economics, Mathematics, Statistics, and Finance/Banking.

Interests:Reading, and global and domestic economics.

Inspired by:Jesus Christ, economists and mentors Brian Mazorodze and Harris Madhuku, and my former lecturer Sheunesu Zhou.

Main achievements:I came first (undergraduate) in the 2017 Budget Speech Competition.

Community activity:I’m a volunteer tutor at JG Zuma High School in Durban; at Youthful and Useful, a youth-led NGO that assists high-school students with their studies; and at the University of Zululand.

More about MakhotsoFavourite subjects:International Relations and Economics.

Interests:Politics, artificial intelligence, data science, research, crime and the criminal-justice system, and writing.

Inspired by:Laughter, positivity and learning.

Main achievements:I received a Gradstar 2018 award, which recognises the top 100 students in South Africa, and achieved one of 300 sponsorships for the EXPLORE Data Science Academy in 2019.

Community activity:I volunteered at Joint Aid Management South Africa (JAM SA), an international humanitarian relief and development organisation, in 2016; and at the South-South Cooperation, a joint strategy-sharing initiative by South Africa and Colombia, in 2018.

Cryptocurrencies are an asset bubble, and this theoretically implies that the crash of the

cryptocurrency market would result in severe

system-wide economic and financial effects.

... there are over 1 600 cryptocurrencies in the

market means that should one cryptocurrency experience a

complete crash, there will always be another one that investors can

turn to.

I see myself with a PhD in Economics, the author of at least 20 papers, working in academia and adding value to young

minds and society through research.

I see myself funding university students, contributing to South Africa’s growing

fintech industry by focusing on the marginalised and unbanked population,

running a successful cyber-security company, and being a business analyst

for start-ups and major corporations.



10 11

Schalk Bothma Zaziwe Maluleke

HOMETOWN Ermelo, South Africa


FUNDING Student loan

HOMETOWN Malamulele, South Africa

UNIVERSITY University of Johannesburg

FUNDING Bursary

ESSAY SYNOPSISCryptocurrencies have taken the world by storm, says Schalk Bothma, capturing the attention of investors, software developers and entrepreneurs. The massive growth in this new sector offers a variety of opportunities and advantages, but has also been a cause for concern for regulators.

Systemic risk is defined as the risk of triggering a systemic event such as a market failure leading to substantial losses to financial institutions. Schalk concludes that the cryptocurrency market does not yet pose systemic risks or threaten financial stability, because cryptocurrency price movements are independent of the wider financial system, the size of the cryptocurrency market is small in comparison to the rest of the financial system, and financial institutions have very limited exposure to the crypto market.

The risks cryptocurrencies do pose can best be defined as operational risks, Schalk says, which is the risk associated with deficiencies in operating infrastructure and the influence of external disruption, such as fraud and security risks.

These include counterparty and exchange risk, market abuse and price manipulation, and fraudulent actors and scams.

When it comes to regulation, Schalk feels that the cryptocurrency market requires regulation that encourages innovation and allows it to flourish rather than stifling and inhibiting experimentation and growth. In instances where investors have been exposed to operational risks pertaining to the crypto market, regulators have reacted with an approach that expresses sufficient awareness of these risks, he says.

ESSAY SYNOPSISSystemic risk is a possible event that can cause a slump or unsteadiness in the entire industry or an economy, writes Zaziwe Maluleke. Some of the sources of systemic risk include high volatility, imbalances in demand and supply, decentralisation and the threat of hacking and theft.

In explanation, Zaziwe notes that cryptocurrencies pose several risks: price volatility could form a cryptocurrency bubble that could burst in the future; imbalances in demand and supply could result in an excess supply, which could lead to a liquidity crunch; the decentralised nature of cryptocurrency means the system is a ‘centralised bank’ of its own, controlling the demand and supply; and the threat of hacking and theft discourages companies and traders, as they do not have any insurance against lost cryptocurrency.

However, Zaziwe notes, the cryptocurrency market is not large enough to cause a trigger in the entire economy as there are no institutional investors.

There have been countless attempts to regulate the cryptocurrency bitcoin, Zaziwe says, in order to reduce these systemic risks, as well as other issues, such as tax avoidance and money-laundering. She feels that cryptocurrency must be regulated in South Africa, and that companies and traders must submit their documentation as the Financial Intelligence Centre Amendment Act (FICA) requires. They must further make amendments to the Insurance Act, adding a Virtual Asset Act which will protect registered investors from theft and losses.

More about SchalkFavourite subjects:Economics

Interests:Business, politics, reading and fitness.

Inspired by:American-Belarusian entrepreneur and internet personality Gary Vaynerchuk.

Main achievements:In 2017 I was admitted into the Golden Key international honour society, which recognises students in the top 15% of their degree, and I was a finalist in the Budget Speech Competition.

Community activity:I participated in the Dagbreek men’s residence Jooltoer in 2016, 2017 and 2018, reaching out to charities, old-age homes and animal shelters, as well as raising funds for Maties Community Service.

More about ZaziweFavourite subjects:Econometrics, Investment Management and Monetary Economics.

Interests:Medical shows, trading derivatives, spending behaviour of individuals, and mountain hiking.

Inspired by:My family.

Main achievements:I was a top 10 student (Grade 11-12) and the most promising female student in 2014.

Community activity:I raised funds for cancer in 2014 and for a children’s home in 2015, and participated in a sanitary-pads drive for a school in Limpopo in 2018; since 2016 I’ve been director and treasurer at Mfuno wa rixaka.

... the cryptocurrency market does not yet pose systemic risks or threaten financial

stability, because [...] the size of the cryptocurrency market is small in comparison to the rest of the financial system,

and financial institutions have very limited exposure to

the crypto market.

... the decentralised nature of cryptocurrency means the system is a ‘centralised bank’

of its own, controlling the demand and supply; and the threat of hacking and theft discourages companies and traders, as they do not have

any insurance against lost cryptocurrency.

I’ll be doing what I’m doing now: working hard towards achieving every

goal I set for myself!

I’d like to be one of the youngest top economic decision-makers in our

country, using my economics skills to develop new policies to help our country;

and I hope Mfuno wa rixaka will be reaching out to the whole

of Limpopo.



12 13

ESSAY TOPIC It is 2018 and a new ANC

government is in place, what would you, as the new finance

minister, do to restore fiscal credibility? What would the

impact of this be on monetary policy and the economy?

Remert ErasmusBaneng Naape Bianca Fisher Cayleigh Brink

Esther Bhosha Marcel Bovijn

Daniela Lamparelli

Mongi Tshaka Priviledge Cheteni Victor Sithole

MEET THE POSTGRADUATE FINALISTS NEDBANK & OLD MUTUALBUDGET SPEECHCOMPETITION FINALISTS

14 15

Baneng Naape Bianca Fisher

HOMETOWN Lebowakgomo, South Africa

UNIVERSITY University of the Witwatersrand

FUNDING Government Technical Advisory Centre (National Treasury) scholarship

HOMETOWN Johannesburg, South Africa

UNIVERSITY University of Johannesburg

FUNDING GES scholarship

ESSAY SYNOPSISBaneng Naape writes that the values and role players involved in credible fiscal policy – decisions about government spending and revenue – include financial markets, employees and businesses, the media, and elected bodies. Fiscal policy should be realistic, achievable, responsible and transparent; it should include macroeconomic policies that yield constant returns; and it should allow a reasonable amount of insurance to hedge against forecasting errors.

Trends in government revenue and expenditure, says Baneng, include a revenue gap due to tax undercollection, and the government spending more than it generates. The government has been incurring budget and current account deficits but has taken measures to narrow this, including a mixture of tax proposals and expenditure cuts that involve tough decision-making, enhancements in agricultural productivity and various trade agreements.

Baneng points out that government debt repayments have been threatened by widening revenue gaps and budget deficits, while South

Africa’s credit rating has been downgraded to junk status, resulting in exchange-rate depreciation, high inflation, capital flight, increased public borrowing costs (with serious implications on infrastructure and other development projects) and high interest rates.

He lists measures for restoring fiscal credibility that include resolving the state-owned enterprises (SOEs) crisis through good governance and financial practices, reducing political and policy uncertainty, sticking to plans that will improve the wellbeing of all citizens, subduing corruption, improving the efficiency of the tax system, stabilising government debt, and enhancing the accuracy of fiscal projections.

ESSAY SYNOPSISSouth Africa’s track record in tax revenue collection unravelled in 2017, writes Bianca Fisher, while the tax revenue shortfall of R50.8 billion in 2017/18 lowered the country’s potential growth rate significantly. On the expenditure side, there are major liquidity and governance problems at several state-owned enterprises (SOEs), while irregular expenditure poses an additional fiscal risk.

In this environment of uncertainty, government can build fiscal credibility by demonstrating prudent fiscal policy decisions, says Bianca. The optimal approach is gradual, as this would ensure both stability of output and debt in the economy.

First, Bianca says, existing prudent macroeconomic policies could be strengthened, thereby promoting future fiscus stability and sustainability. Government must implement measures that are aimed at increasing productive capital investment while stabilising debt-to-GDP through, for example, the containment of the public-sector wage bill

and improvement in the overall planning and execution of public infrastructure projects.

Second, government must focus on steadily reducing the budget deficit by implementing a gradual approach of fiscal consolidation, so as to preserve the current level of fiscal sustainability and ensure that it is maintained in the future.

Third, a more stringent framework for accountability of government resources should be developed, to ensure that the right people are held responsible for their actions and decisions, with penalties for non-compliance.

And fourth, Bianca says, well-designed fiscal policy rules should be implemented at national, provincial and local level.

More about BanengFavourite subjects:Time Series Econometrics, Fiscal Policy and Inflation Targeting.

Interests:Anything and everything to do with travelling.

Inspired by:Ntsiki Mbono, Deputy Director General: Economic Impact and Policy Alignment at the Department of Public Enterprises, and Gareth Roberts, research methods lecturer at Wits University.

Main achievements:I was a finalist of the Budget Speech Competition and a Top100 Future Leader of South Africa in 2017, a panellist at the World Youth Forum held in Egypt in 2018, and a Country Ambassador for South African Youth in the Global Youth Opportunities Program 2018/19.

Community activity:I volunteered at Bula-Maahlo Day-Care in Mankweng, Limpopo for Mandela Day 2017.

More about BiancaFavourite subjects:Development Economics and Macroeconomics.

Interests:Research, learning and exploring new things.

Inspired by:My supportive family.

Main achievements:I was top student for my honours degree in Economics in 2017; an article I co-authored was published in Studia Universitatis Babes-Bolyai Oeconomica in 2017; I presented at the African Review of Economics and Finance 2018 Conference; and I was second runner-up (postgraduate) in the 2017 Budget Speech Competition.

Community activity:I tutored in economics at the University of Johannesburg.

The government has been incurring budget and current account deficits but has taken

measures to narrow this...

In this environment of uncertainty, government can build fiscal credibility

by demonstrating prudent fiscal policy decisions ...

I see myself with a PhD in Taxation, working as a tax specialist at Treasury.

I hope to have made a positive change in South Africa and in

the world.



16 17

Cayleigh Brink Daniela Lamparelli



FUNDING Self



FUNDING Scholarship

ESSAY SYNOPSISFiscal credibility is under threat despite the efforts of South Africa’s new leadership to stabilise the public debt burden, says Cayleigh Brink. Projected growth may never materialise, state-owned enterprises (SOEs) are largely failing and are placing financial burdens on the state, unemployment is concerningly high, and structural weaknesses are hampering South Africa’s capacity for growth.

Cayleigh believes that the government must reduce its debt burden to levels that are sustainable and which reassure investors and citizens. This will require a restructuring of the budget where government spending must be reduced, while at the same tax revenues must be increased without disincentivising actors within the economy.

Expenditure must be directed to areas that will promote growth and not crowd out private-sector activity. Expenditure must be directed towards structural adjustments that gear the economy for sustainable growth that includes all South Africans including those who were

historically excluded, eg, greater funds must be directed towards transport, electricity and communication networks.

There needs to be considerable reduction in wasteful government expenditure, Cayleigh notes. SOEs must be restructured to be more efficient, must not receive state subsidisation and should not receive bailouts, as this promotes complacency.

Unfortunately, less expenditure must be directed to social spending – a hard decision for policymakers, Cayleigh notes.

Barriers to trade such as border tariffs and regulation should be reduced, and the weak performance of primary-education institutions in South Africa needs to be addressed.

ESSAY SYNOPSISDebt overhang is an obstacle to economic growth and development, Daniela Lamparelli points out: rising levels of debt require ever-larger portions of government revenue to go to debt payments, which takes away from the ability to follow through with desired policy decisions. Since growth and development are two of the South African government’s main aims, reducing this obstacle should make significant progress toward restoring fiscal credibility. A realistic approach involves improving the budget balance so that, at least, the debt level does not increase.

Achieving a primary surplus is a necessary step towards controlling the level of public debt, Daniela says, and this will require a contractionary fiscal stance. This should include an increase in taxes to boost revenue, and reallocating funds toward lucrative sectors (e.g., agriculture) and away from wasteful ones.

Wastage resulting from corruption and mismanagement of state-owned entities (SOEs) are two major problems. Government

expenditure should be reallocated away from these leakages, while not taking away from the required social spending that contributes to the reduction of inequality in the country.

In order to offset the negative effects of fiscal tightening on South Africa’s output and revenue collection, the South African Reserve Bank (SARB) should respond with an expansionary monetary stance.

Fiscal changes will likely lead to worsening statistics in the short term, notes Daniela, but if plans are carried out effectively and efficiently, long-term benefits and economic growth are attainable.

More about CayleighFavourite subjects:Development Economics.

Interests:Health, the environment, the political economy, development economics, political risk analysis and real-estate investment.

Inspired by:Thuli Madonsela, for her courage in defending justice and promoting gender equality.

Main achievements:I made the Dean’s Merit List in 2017 and I’m currently completing an internship at Deloitte.

Community activity:I was involved in my school’s educational programme for disadvantaged students 2010-2014; in 2016 I mentored first-year students; and in 2016/2017 I volunteered at a rhino-rehabilitation centre called Care for Wild, which seeks to rehabilitate young orphaned rhinos as a I am passionate about the environment.

More about DanielaFavourite subjects:Mathematics, Microeconomics and English Literature.

Interests:Good food, environmental economics and conservation, singing, musical theatre, health and fitness, and jigsaw puzzles.

Inspired by:Random acts of kindness and how they improve the world a little at a time.

Main achievements:I obtained 7 distinctions in matric, was a semifinalist in the Budget Speech Competition in 2017, and presented the best Economics Research Paper Poster in 2018.

Community activity:I’m an economics tutor for Wits University; and I’m on the 2018 committee of Rethinking Economics for Africa (REFA), a student society aiming to make economics more accessible to all students.

Cayleigh believes that the government must reduce its

debt burden to levels that are sustainable and which reassure

investors and citizens.

Achieving a primary surplus is a necessary step towards

controlling the level of public debt, and this will require [...] an

increase in taxes to boost revenue, and reallocating funds towards

lucrative sectors ...

I hope to have established my academic career and contributed

towards South Africa achieving its full potential, including greater economic

empowerment for young South Africans.

I see myself with a PhD in economics, establishing my own economics consulting firm that focuses on

environmental and developmental issues.



18 19

Esther Bhosha Marcel Bovijn

HOMETOWN Harare, Zimbabwe


FUNDING Partial scholarship


UNIVERSITY University of Stellenbosch

FUNDING Self

ESSAY SYNOPSISEsther Bhosha notes that mayhem in the political realm has had a very strong influence on the South African socioeconomic environment. She cites the recall of Jacob Zuma as a step in the right direction for the economy, and the appointment of Cyril Ramaphosa as having generated some positive expectations.

Esther points to the fact that several analysts believe that the private sector is South Africa’s only hope of restoring the economy to its full potential, but adds that the private sector must believe that the government is capable of repaying its debts in order for them to be willing to invest.

One of the measures she says that must be taken to improve fiscal credibility is prudent and realistic formulation of fiscal policy, which could be achieved by a highly qualified ministerial advisory team to monitor the formulation and implementation of all fiscal and monetary policies.

Readiness to make tough choices is another measure Esther cites, which will impact on the

country’s abysmal unemployment statistics, inequality and poverty. Esther evaluates whether it is feasible to keep increasing various taxes without jeopardising production or disturbing the normal business/economic cycle. She also highlights the social detriment that may result if the government decides to tackle its debt challenge by reducing spending on social welfare.

Esther suggests that another way of improving fiscal credibility is via transparency, while she notes that corruption must be carefully monitored, especially in public offices.

ESSAY SYNOPSISForeign and domestic belief in the South African government’s ability to honour its debt repayments in a timeous manner and in full is of fundamental importance to helping this country grow, says Marcel Bovijn.

In order to prove itself fiscally credible, the government must focus on restructuring the fiscal budget and state-owned enterprises (SOEs), as well as cracking down on corruption and shrinking the oversized public sector; restoring faith in the rule of law and the tax authority, including reducing the outflow of capital and high-net-worth individuals from the country; promoting wealth creation by creating a business-friendly environment, including cutting spending in certain areas while improving service delivery and investment opportunities; and providing inclusive growth for all the citizens of South Africa, partly by aiding the black majority to have greater participation in the economy by accelerating the transfer of a proportional share of ownership and control of the economy to them.

To achieve these objectives, the government must gain the approval of four key groups regarding its fiscal policies, Marcel notes: the financial markets (which determine borrowing costs for the government as well as other borrowers within the economy); institutions from the labour, business, education and consumer sectors; the local and international media; and the general public and elected bodies, by being open and transparent about their actions, why they are required, what they entail, and how the policies will affect them.

More about EstherFavourite subjects:Macro economics.

Interests:Music and studying economic development.

Inspired by:Zimbabwean business guru Douglas Munatsi inspired me to pursue my career with the aim of making a meaningful economic contribution; and writer, economist and entrepreneur Trudi Makhaya and Yannick Lefang, founder of KASI Insight (an economics firm that collects and assesses consumer confidence data from countries driving economic growth in Africa), enlightened me on Africa’s economic development.

Main achievements:I made the Dean’s List in 2014; I gained my B.EconSc cum laude in 2017.

Community activity:None.

More about MarcelFavourite subjects:Environmental Economics, Behavioural Economics, and Economics of Technological Change.

Interests:Psychology, philosophy, sustainable development, surfing, yoga, free-diving, photography and jiu-jitsu.

Inspired by:Nature, psychologists Carl Jung and Jordan Peterson, South African-born tech entrepreneur Elon Musk, philosopher Alan Watts, ethnobotanist Terence McKenna, futurist and social engineer Jacque Fresco, and architect, futurist and inventor Buckminster Fuller.

Main achievements:I climbed Kilimanjaro in 2013; and in 2017 I was chair of the Stellenbosch University Investment Society, I won a Schroder’s essay competition (run by the statistics department at Stellenbosch University), and I travelled from Cape Town to Zanzibar using only public transport.

Community activity:I’m an economics tutor, I volunteer at animal shelters, and partake in environmental initiatives.

... several analysts believe that the private sector is

South Africa’s only hope of restoring the economy to its

full potential ...

In order to prove itself fiscally credible, the

government must focus on restructuring the fiscal budget and state-owned

enterprises (SOEs), as well as cracking down on corruption and shrinking the oversized

public sector ...

I see myself making a significant contribution to bettering the world’s

economic environment.

I hope to have published my first novel while utilising the benefits of the fourth

industrial revolution to work in far-flung regions.



20 21

Mongi Tshaka Priviledge Cheteni

HOMETOWN Port St Johns, South Africa

UNIVERSITY University of Fort Hare

FUNDING None

HOMETOWN East London, South Africa

UNIVERSITY North West University

FUNDING Self

ESSAY SYNOPSISSouth Africa continues to spend more than it earns, writes Mongi Tshaka, with the budget deficit widening as a result of low revenue collection and escalating government spending. In 2017 South Africa fell into technical recession, while most major rating agencies downgraded the country to junk status. The implementation of fee-free education has put an upward pressure on spending.

Fiscal credibility refers to the perception of the private sector about the willingness and ability of the government to carry out its suggested policies. In order to determine whether a policy is credible, the state normally seeks approval from the financial markets (to determine the borrowing cost for the state and other deficit units in the economy); key stakeholder groups such as representatives of businesses, educational institutions, labour and consumers; the media (in order to shape the view of the public); and elected officials and general public. The policy ought to be realistic, responsible, prudent and transparent.

Among the factors that are destroying South Africa’s fiscal credibility, Mongi lists corruption, mismanagement of state-owned enterprises (SOEs) and political instability.

Measures already taken to restore fiscal credibility include increasing VAT, and the government’s committing to minimising its high wage bill. Mongi suggests that additional measures should include reducing the expenditure ceiling and avoiding reckless spending, tackling corruption, promoting industrialisation and investment, managing debt and ensuring fiscal sustainability, stabilising politics and policy, improving growth and business confidence, and transforming SOEs.

ESSAY SYNOPSISThe issue of fiscal credibility is one that needs much debate, says Priviledge Cheteni. It also requires significant behavioural changes from both businesses and individuals, coupled with government action.

Central banks have limited powers to stimulate economic growth, so coordination from fiscal and monetary authorities is necessary to try to boost business confidence and investment. Monetary policy can influence short-term outcomes such as inflation and unemployment, while fiscal policy is long-term focused. Conditional commitments by the central bank to maintain an expansionary monetary policy could make their commitments more credible and improve confidence in the economy.

Priviledge suggests that, in order to help the South African economy recover from slow growth and boost investor confidence, first, the government must re-set up its financial credentials by embracing a deficit-oriented fiscal plan. This should involve a mix of offensive (infrastructure, research and development)

and defensive (tax rise, spending cutting) consolidation strategies. This will in turn lead to a shift in expectations from key economic players, and have a positive impact on the economy.

To restore credibility, he says, we should reduce the number of cabinet ministers, which would save billions. Changes in government purchases and taxes could also cut the budget deficit, as could reducing contingent liabilities such as those from Eskom and independent power producers.

Alternatively, Priviledge says, we could do nothing that could worsen the problems of 2018/19 and be patient until things return to normal.

More about MongiFavourite subjects:Economics, Econometrics and Commercial Law.

Interests:Research, reading and music.

Inspired by:My parents, who never give up on their dreams; researchers; anything that seeks to unleash the potential of the African continent.

Main achievements:At school I achieved the best performance in economics, accounting, business studies and English. At university I achieved meritorious performance in economics, and was acknowledged for my work facilitating Peer Assisted Learning (PAL) sessions, problem-solving and social skills.

Community activity:I’m a member of Umthombo WeKamva, mentoring high-school learners, and I tutored economics at Fort Hare and Walter Sisulu universities.

More about PriviledgeFavourite subjects:Agriculture, Economics and Ecometrics.

Interests:Playing chess, reading and writing.

Inspired by:Progressive corporations and individuals.

Main achievements:I was a World Bank Institute Social Innovator in 2010, an Enactus (South Africa) finalist in 2013, and a Google Online Digital Lab winner (Sub Saharan region) and an Africa Region finalist for the Commonwealth Youth Award for Excellence in Development Work in 2015.

Community activity:I was a founder of the Biogas Project in Alice in the Eastern Cape; I established the Nkanyiso Education and Sustainability Centre for community projects in agriculture and primary education in Lusikisiki; I’m a regular Nelson Mandela Day cleanup planner; and I’m a gender and human rights activist.

Among the factors that are destroying South Africa’s fiscal credibility, Mongi lists

corruption, mismanagement of state-owned enterprises

(SOEs) and political instability.

... in order to help the South African economy recover

from slow growth and boost investor confidence, first, the government must re-set up its financial credentials by

embracing a deficit-oriented fiscal plan.

I see myself in a research-based environment, especially academia,

finding the most effective solutions to issues facing the economy.

I’d like to be leading an economics research unit, be an economics

researcher or a professor in Economics.



22 23

Remert Erasmus Victor Sithole

HOMETOWN Uitenhage, South Africa


FUNDING Parents



FUNDING Self

ESSAY SYNOPSISSouth Africa’s large government deficits and growing government debt is a growing concern for fiscal credibility, notes Remert Erasmus: the country’s debt-to-GDP ratio increased from 27.8% in 2007 to 53.1% of GDP in 2017. This follows from both lower-than-expected GDP growth, and a composition of government expenditure that favours increasing government wages over government investment.

Remert feels that the minister of finance should follow a rather conservative budget deficit in order to restore fiscal credibility. This strategy can be made more effective by, first, enacting expenditure cuts and enforcing a lower government wage bill – it’s the component of the budget that has grown the most since 2008 and has also underperformed in productivity growth.

Second, there should be an emphasis on economic growth, as this can alleviate most of the budget constraints through higher revenues, Remert says. In South Africa it’s possible to have pro-growth policies that will spill over into higher growth. The minister of finance should improve

confidence in the general economy by virtue of policy certainty, supported by a pro-business sentiment from the side of government. This will increase business confidence, which will have a spill-over effect on private investment in the economy.

Remert says that the implications of this strategy on monetary policy are that it will most likely drive down interest rates and increase the real effective exchange rate once growth in the economy is seen to increase.

ESSAY SYNOPSISSouth Africa finds itself in a precarious condition, says Victor Sithole, with high unemployment and low economic growth proving to be stumbling blocks in achieving social and economic reforms. The country faces challenges of high corruption and maladministration in its state-owned entities (SOEs), the national debt keeps mounting, policy uncertainties surrounding land distribution weigh heavily on social and economic progress, while corruption has emerged as a cancer ravaging the public purse and resources. The announcement by Jacob Zuma of fee-free higher education has left the economy punching above its weight.

Victor says that South Africa needs a prudent fiscal approach coupled with a consolidated debt approach, and the coordination of fiscal and monetary policy structures, to realise a well-functioning economy that benefits all who live in it.

Victor identifies the dominant challenge facing South Africa as the unsustainably high levels of unemployment, and recommends that policies

should focus on creating an environment that encourages the establishment and growth of small, medium and micro-sized enterprises (SMMEs). To achieve this, he says, the government needs to reduce red tape, increase access to finance, and tackle competition laws that are predatory towards startups.

In addition, Victor says, the finance ministry has to narrow the prevailing budget deficit, with the ballooning public-sector wage bill taking top priority, while attention should also be paid to the underperforming SOEs to root out corruption and improve their productivity.

More about RemertFavourite subjects:Philosophy and Economics.

Interests:Anything on Wikipedia!

Inspired by:Canadian professor of psychology Jordan Peterson, for helping young people make sense of the complexities of modern life; and Bertrand Russell, who was a philosopher, mathematician and social critic years ahead of his time.

Main achievements:I came first in South Africa in the General Knowledge Olympiad (Grade 11) in 2011.

Community activity:Junior town council and Interact.

More about VictorFavourite subjects:Econometrics, Development Economics and Competitional Economics.

Interests:Reading and football.

Inspired by:Steve Biko, American social critic James Baldwin, and my mother Khethiwe Sithole.

Main achievements:I was a postgraduate finalist in the Budget Speech Competition in 2017.

Community activity:I’m a volunteer tutor for learners from Alexandra township.The minister of finance

should improve confidence in the general economy by virtue of policy certainty,

supported by a pro-business sentiment from the side

of government.

South Africa needs a prudent fiscal approach

coupled with a consolidated debt approach, and the

coordination of fiscal and monetary policy structures, to realise a well-functioning

economy that benefits all who live in it.

I’d like to have travelled to some of my favourite countries, and to be a portfolio

manager for an investment firm.

I’d like to be leading an economics research unit, or be an economics

researcher or a professor in Economics.



24 25

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2018 FINALISTS - Budget Speech Competition · 2018 FINALISTS NEDBANK & OLD MUTUAL BUDGET SPEECH COMPETITION FINALISTS ... AFRICA’S FUTURE LEADERS. TOMORROW’S LEADERS HONOURED