Media Statement
23 April 2020
The National Trust for Community Outreach and Education [TCOE] statement on South Africa’s stimulus package as announced by President Ramaphosa on 21 April 2020.
COVID-19 represents a global social and economic crisis unseen in a 100-years, and South Africa is not immune to that.
As TCOE, we acknowledge the deep challenges and many efforts undertaken by the South African government and other sectors of our society in fighting the epidemic and dealing with social and economic impact caused by COVID-19.
We have taken note and welcome some of the intervention by the South African government in its announcement of a R500 billion stimulus package. We especially welcome those measures that might put more money on the table of very poor households. However, we are concerned that a significant part of this package is not additional money. R130 billion is redirected from the current budget and R200 billion is in the form of government loan guarantee to SA banks to lend to business in trouble. So, in reality, the package represents just 3% of the size of our economy. Hence, providing relief to the poor and stimulating our economy is important, the scale could have been greater and closer to what other developing countries are doing not to mention the measures undertaken by developed countries such as Germany, Britain and the United States of America.
What follows are our views and ideas on the use of the stimulus package as announced by the President.
It is useful that the stimulus package targets an extension of social grant to include previously excluded sectors such as the unemployed who for too long, have been the hardest hit by the economy. This long-standing economic crisis and has been the cause of social ills such as violent crime, anger and family instability that engulfing our families and society in general.
Despite the top-up of grants and the introduction of a special grant for the unemployed we feel that social grant for the unemployed is wholly inadequate. For example, an amount of R350 per person per month equals a paltry close to R12 a day. This is not even the cost of a loaf of bread in a township spaza. We are of the view that the amount is set too low to make a significant impact to the lives of the unemployed and the poor in general. We support many popular organisations such as CSAAWU and the Assembly of the Unemployed that called for a Basic Income Grant for R3500 per month.
We are also insisting that there be equity in the allocation/distribution of the COVID-19 stimulus package. As it stands, R100 billion is set aside for big business whilst small businesses are allocated R2 billion and social grants R50 billion. The smallest amount is allocated to the majority who are in the lower rungs of the economy. This needs to be reversed and let the biggest slice of the package go the lower sections of society.
Many of the social sectors such as domestic workers, sex workers, seasonal farm workers, informal traders are excluded from benefiting in the package whist they are directly and negatively affected by the epidemic.
We are of the opinion that government has missed an opportunity to radically restructure our economy and by extension our society. The loans with the World Bank and International Monetary Fund and other financial institutions will compromise real longer-term transformation of the economy. This is contrary to President speech last night that this is a “radical economic” package.
A time to break with neo-liberalism. The stimulus package in our opinion could have been used towards restructuring of the South African economy away from export led, monopoly, urban based and extractive industries which have been responsible reproducing poverty, inequality, unemployment and underdevelopment by facilitating the support and establishment of:
Rural and urban based, community and family owned processing, packaging and distribution industries that facilitates backward and forward linkages.
Visible rural public investments will go a long way towards stopping urban migration which in turn undermines complicates the provision of services in urban centers.
Radical Land redistribution with enough support in our opinion would have stimulated economic activity from individuals and communities who are currently excluded from the current mainstream economic activities.
We would have preferred that the R20 billion allocated to health towards improving primarily health care in both urban and rural communities such as through employing more nurses, community health workers and doctors as well as providing health infrastructure such as extensions and building more clinics, ambulances and medication.
The packages must be used to strengthen the capacity of the state to deliver basic services such as public roads, health care, housing and strengthen key industries that are key to the development of the South African economy and society at large.
We are concerned about the allocation that is going to municipalities who are incapable of delivering decent services and incapable of transparent clean governance.
We are equally worried that the looting and corruption that has characterized food distribution could be extended to new funds if no new measures amongst government officials are not introduced immediately to combat it. We further ask that extended capacity is provided to local municipalities so that they can effectively manage and use the resources they are allocated.
We further call for the involvement of civil society as stipulated in the country’s Constitution and Section 2 of the Municipal Systems Act. This will enhance municipalities’ capacity and ensure transparency, accountability and inclusive governance by the municipalities.
Lastly, to promote accountability and transparency, we demand that terms of these loans be made publicly available so that all South Africans are aware of obligations since the money will be paid out of their taxes.
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