The budget cuts that spite a nation’s face

Statistics South Africa (StatsSA) has demonstrated its resilience despite existential challenges emanating from ludicrous budget cuts of its nose to spite the country’s face.  

At the height of Covid-19 this mighty organisation innovated and produced a map of citizens vulnerable to Covid-19, applying a multidimensional poverty tool to generate indices of vulnerability.   

Covid-19, rampant corruption, joblessness, poverty, inequality and the insidious racial undertones that accompanied and culminated into the wanton looting formed a perfect storm against which a weak state needed and still needs to respond.  The shambolic way the government and security cluster responded to the apex of these events would be comical if only it weren’t massively tragic. The consequences are so catastrophic that all South Africans have to ask themselves about what happened to the noble rainbow dream.  We are here now, and what next?

The deliberate destruction of the state apparatus is angering and treasonous. It played out in front of our eyes. The carefully crafted state architecture at the dawn of democracy was systematically destroyed brick by brick by those entrusted with power. They were protected for the last twelve years despite protestations and level-headed judgments by, notably, the public protector Advocate Thuli Madonsela and Chief Justice Mogoeng Mogoeng. 

Many argue that our constitution is strong. I argue that it is not. The last twelve months have shown the vulnerability of a document, however strong, in the hands of wicked men and women. 

Take parliament, for instance. We saw how legislators became facilitative for corruption and how at every stage they undermined the constitution. The Hawks and the National Prosecuting Authority were led by pliant yes-men and -women and these institutions collapsed despite being constitutional entities, as did the executive arm. 

All these are creatures of the constitution, which were manned by straw men. 

It is only when the piece of paper is in the hands of ethical and disciplined people such as Mogoeng Mogoeng, Thuli Madonsela and the late auditor general Kimi Makwetu that the piece of paper ceases to be just a piece of paper and breathes life into what we refer to as the constitution.   

The role of statistics

This brings me to Statistics South Africa and its role in our constitutional democracy.  Our attempt in 1992 was to influence the powers-that-be to have statistics as a constitutional entity. But by 1994, my colleague Professor John Kahimbaara and I took our eyes off the ball. 

All was not lost because StatsSA was led by people who were committed to transform.  First, my predecessor Mark Orkin quickly assembled a team who worked around the clock to transform the timeliness of statistical releases. He led a badly underfunded institution with delays for each of the series by up to more than three times the unit of time, but by the time he left office after five years, the monthly consumer price index was released within a month after collection, as was the producer price index. The quarterly GDP was released a quarter after its compilation.  

On taking over the reins, I focused on settling an organisation bruised by the trauma of implementing the 1995 White Paper on transforming the public service, with special reference to Chapter 8 which focused on rationalising and restructuring the levers of the civil service.  With a largely female white clerical staff, the fears of retrenchment were palpable.  Mark Orkin had done a clean job at the top. All four male chief directors were replaced and that continued to send shivers down the white clerical spine of the institution.  My task was to comfort the tannies and recruit younger black professionals and ensure that the system worked. My team then expanded on the raft of products, making statistics visible for use in policy, focused on training of staff, transforming working methods by infusing project management with competence and stepping up on the international agenda of statistics.

• We transformed from what was the October household survey to introduce a twice-a-year labour force survey.  The key users of this series, the presidency and the national treasury, registered their displeasure as regards the frequency and quality of the survey.  We responded by revamping it and by 2008, a quarterly labour force survey with much more high-quality information was introduced. 
• We moved from postal collection of the CPI to in-store direct collection of the CPI after a deadly mistake, a failed CPI, occurred under my watch in 2003. (More on this later.)
• We reincarnated the October household survey into a general household survey that modularised key concerns into the most formidable survey that annually covers topics such as education, health, transport and violence. 
• We introduced an income and expenditure survey based on the diary method that ran for twelve months and took into account seasonal variation instead of a one-at-a-time collection that risks recall and telescoping of, in particular, large expenditure items.  
• We introduced a victims of violence survey, which highlighted the plight of women and children.  
• Furthermore, we cloned a twin of the income and expenditure survey, called the living conditions survey, which would run every five years and reveal poverty not from the income side, but from the multidimensions of poverty. This way, every two-and-a-half years we could have a refresh of the CPI.
• The expenditure side of the GDP was brought under the roof of StatsSA from the South African Reserve Bank and improved, to the delight of users. That also allowed us to resolve a century-long moral hazard that set in, with a user being a producer of this critical indicator, besides the real danger of a growth figure riding on two horses. 
• We also introduced a census twin, the community survey, which alternated with a census of the population every five years. 
• We introduced the tourism satellite account and started experimental accounts on the environment under the system of economic and environmental accounting  UN-SEEA, and led with five other agencies globally. 
• We got the input-output tables, the social accounting matrix and supply and use tables up to speed. These form the bedrock for econometric modelling and building tools of foresight and scenarios for development planning.  
• The large scale sample surveys that rotated each industry every three years were introduced.  We used the tax records as the basis for transforming economic statistics.
• We introduced a more sophisticated and fully fledged geography department in the organisation, and  the information technology division was revamped.  The dissemination function was sophisticated to the delight of users. We opened a leadership programme on cultural economic geography at the University of Stellenbosch called the Centre for Regional and Urban Innovation and Statistical Exploration. 

We were an organisation at work, yet now an existential danger hovers over its head. 

We were an organisation at work, yet now an existential danger hovers over its head. 

Google “Statistics South Africa” any time of the day, you will get 1.6-billion results in under 0.66 seconds. Try that with any department in the country or statistics agency in the world, the results come at half the number. Statistics Canada has 1.1-billion in 0.72 seconds.  South African Reserve Bank comes in at 133-million in 0.95 seconds,  Microsoft at 1.5-billion in 0.67 seconds.  Beyoncé, Jay-Z, Nicki Minaj and others are in the millions. StatsSA is a power house, a city on the hill that cannot hide.  

During my period StatsSA was well resourced and by the time I left office I could leave the organisation in a world-class building fit for a world-class organisation which under my successor, Risenga Maluleke, still remains a shining gem, albeit one that faces existential challenges that had already crept in two years before my departure.  It is sad that people in the know have failed to address a lurking sudden death. 

Lessons from a costly CPI mistake

In January of 2003, the then-governor of the Reserve Bank, Tito Mboweni, said, “I am worried about the CPI.” Minister Trevor Manuel, fresh from meetings in Washington, came to my office: “Pali, the CPI is problematic.”  

Heavens were dropping and they dropped. We had made an error in CPI estimation and it cost government at least R50-billion. The team at StatsSA worked hard to address this and finally we moved from postal delivery to direct collection.  StatsSA produced granular data and not grainy CPI.  Yet today StatsSA is faced with a real prospect of a grainy CPI.

To get granular CPI, StatsSA has to run an income and expenditure survey (IES) every five years. To date, the last was run in 2011 and StatsSA was not funded to run one in 2016.  The living conditions survey (LCS) was to alternate with the IES every five years. The treasury declined to finance this crucial survey that informs the governor of the Reserve Bank on setting the repo rate, which rate is crucial for inflation targeting.  

One of the multiple roles the CPI plays in the national accounts is as a deflator. 

At the height of building its human resources, StatsSA boasted the highest number and concentration of PhDs that could challenge any statistics or demography institution of learning in the country.    

But now South Africa is no longer able to measure poverty and inequality, two of the three evils alongside unemployment.   Neither has it managed to retain the PhD talent that made it a great institution.

StatsSA professionals are poached left and right, however intellectually deep the organisation was, it cannot survive for longer with the tyrannical resource reduction it is facing.  

There are many ways in which you can capture institutions. One of the ways is by destroying them through starving them to death. This is how the ears and eyes of the nation have been demobilised when we need them the most and when we will need them the most should we be serious about reconstruction and recovery. 

I can only summarise the national stupidity with a wise Nigerian saying, that the builder has rejected what is the cornerstone of the building.  Faced with massive challenges, some shambolic building is expected, but when you reject the cornerstone that anchors the building, then the shambolic way in which we haplessly move from one disaster to the next in the past twelve years cannot be an accident.  

It is a deliberate choice to be in the gwara gwara scenario, where inequality is at its highest. It’s time to wake up to make South Africa work towards the so-called nayi le walk scenario, characterised by social cohesion and economic expansion. For that to happen, we need to collect all the cornerstones we rejected. And at the top of that list is statistics: the eyes and ears of daring the future.