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The crisis can ‘galvanise all of us to eradicate inequality’

The coronavirus crisis cuts two way and balancing on the knife edge is a healthcare emergency and economic devastation. The 35-day lockdown and the subsequent economic downturn have laid bare the deep inequalities in the country.

Before the outbreak, about 29.1% of South Africans were unemployed and almost 60% of children (11.6-million) lived in households below the poverty line of R1277 a person each month. These numbers are expected to increase as more businesses lay off staff and restrictions on people’s movements continue.

On Tuesday night, President Cyril Ramaphosa announced a R500-billion “extraordinary coronavirus budget”. For people close to starvation, it included crucial increases in the social and child-support grants, as well as a R350 a month grant for people who do not have work but don’t qualify for another grant. To lessen the damage being wrought by the response to Covid-19, the coronavirus budget mixed increased grants with more money for infrastructure and to keep businesses open through spending by state institutions and loans from local and international institutions.

To get a sense of business’s opinion about the Covid-19 budget, the Mail & Guardian spoke to a few of its leading thinkers.

Judy Dlamini, chairperson of the Mbekani Group

For Dlamini, the Covid-19 crisis presents South Africa with an opportunity to fix its long-standing problems of poverty and inequality. She says the coronavirus is an “invisible enemy” that affects everyone regardless of their socioeconomic standing, but “it is more devastating to those of less means”.

“Poverty and inequality is a bigger threat to this country than Covid-19. However, it can be that catalyst that galvanises all of us to fight and eradicate inequality,” Dlamini says.

Although the uneven economic effects of the coronavirus are still being worked out, there is no doubt that the economic harm has so far been severe. “The importance of partnerships between the public and private sector cannot be overemphasised. So far that partnership has helped in confronting the challenge, thanks to good leadership.”

Dlamini says critical needs such as access to water and sanitation, proper housing, universal access to quality education and healthcare, universal digital access and affordable data “will go a long way in addressing the stark reality of poverty and inequality in the country”.

Gerrie Fourie, chief executive of Capitec Bank

“We just need to be positive, because that is the most important thing if you lead people,” says Gerrie Fourie, sounding cheerful during a phone interview on Wednesday. The night before, the president said R200-billion in loans and financing will come from the local financial sector.

Fourie says the banking sector, like the rest of the economy, is taking strain, but he chooses to focus on the light at the end of the tunnel while navigating through the dark parts.

“In life you’ve got two choices, you can either be negative and then you are going to find no opportunities, or positive and you handle the crisis and then you look for opportunities in that crisis. And for me that is quite important.”

Fourie says the banking industry has seen fewer transactions and cash deposits are down. The sector is surviving the moment because it has a lot of capital in reserve — the opposite situation to banks in the United States during the 2007-2008 financial crisis when they collapsed.

“Our bank system in South Africa is run very well and we’ve got the South African Reserve Bank that supports us.”

At the beginning of the pandemic, banks were allowed to have a collective discussion on how to strengthen their response to the pandemic. They are also open during the lockdown because they are considered an essential service.

Fourie says that he thinks the stimulus package has “lifted everyone’s mood” and people are a bit more positive.

But he says the government still needs to work out how to lift the lockdown, and how it will continue to finance the cost of the lockdown.

The full cost of that will become clear in October, then Finance Minister Tito Mboweni delivers his mid-term budget.

Tshokolo Nchocho, chief executive of the IDC

The Industrial Development Corporation (IDC) was mentioned often in relation to the last big stimulus conversion, which was about the ailing state-owned power utility, Eskom. Trade union federation Cosatu had proposed a R250-billion bailout for Eskom with the state-owned IDC taking much of the risk.

Now the IDC is using its vast resources to stimulate various activities such as manufacturing emergency supplies for the Covid-19 response.

Nchocho says the scale of the stimulus package is a reflection of how seriously the government is treating the pandemic. “The nature of this pandemic, and of the lockdown measures adopted to contain it, requires a highly agile and dynamic approach to interventions. After all, we are dealing with an extraordinary set of circumstances both domestically and globally.”

He adds that “the overall quantum of the support package is massive and unprecedented”.

The country already has constrained resources, he says, so South Africa will have to be very strategic in how it allocates scarce resources.

The IDC has made R3-billion available in the next quarter to support businesses during this crisis.

Nchocho says: “Most initiatives are currently aimed at supporting critical capacity and short-term liquidity challenges. As we look to emerge from lockdown, opportunities for growth will certainly emerge and we will look to respond appropriately to these opportunities.”

Tshegofatso Mathe and Thando Maeko are Adamela Trust business reporter at the Mail & Guardian

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Thando Maeko
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian
Tshegofatso Mathe
Tshegofatso Mathe
Tshegofatso Mathe is a financial trainee journalist at the Mail & Guardian.

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