On Tuesday, the nation held its breath as President Cyril Ramaphosa announced the government’s Covid-19 support package, intended to offset the devastating social and economic impacts of the national lockdown and its aftermath.
The headline-grabbing figure was R500-billion – half a trillion or 10% of gross domestic product – as the total commitment both from reallocating existing budgets (old money), and from local and national borrowing (new money).
So far, so good: up to now, the government’s fiscal stimulus has been a dismal 0.1%. Now we are moving into territory similar to many other countries, and taking a decisive step to pump money into the economy and into households. Then comes the more thorny question of who gets what, how much is for business bailouts, and how much for people who’ve lost incomes.
The most dramatic policy shift was the promise of bigger direct cash transfers from the state to poor households: the increase of the Child Support Grant (CSG) by R500 for six months (R300 in the first month); an across-the-board top-up of other grants by R250; and a new Covid grant of R350 for unemployed informal sector workers.
While the president clearly said that the CSG top-up was for all grant beneficiaries, the South African Social Security Agency (Sassa) has since indicated that the R300 will be per child while the R500 in subsequent months will be per adult receiving the grants, which, because so many households have more than one child grant, would mean a dramatic shrinkage in the amounts of money going into these households. A single mother with three children would then receive only R500 top-up, not R1,500.
The question now stands: does the promise of the president stand? Or will it be superseded?
The grant increases, and the new grant, came after several weeks of desperate advocacy attempts by civil society organisations and teams of researchers, led by the Children’s Institute at the University of Cape Town, to demonstrate to the government not only that:
(a) such cash transfers would be the quickest, simplest and most effective way of addressing the crisis predicament of the estimated 5.5 million households that have lost informal-sector incomes due to the lockdown, but also that
(b) the government could afford this and compared with other essential expenditure, it was “affordable”.
The speech was, naturally, short on detail. How will the Covid grant work and how will people access it? It may take time to extend to the millions of people entitled to it, which only underscores the point made by many social justice activists, advocacy groups and academic researchers that means-testing and conditionality creates unnecessary bureaucratisation and unintended exclusions.
While these increases are initially for six months, presumably they cannot be easily reversed. The current crisis is not likely to have any clear endpoint and there will be massive political risk associated either with reducing the grant amounts or reducing the coverage by stopping the Covid grant.
The extension of the social security system to able-bodied adults is a politically significant moment: it represents an admission of the structural failings in our economy. Contrary to the conservative tropes that people must stop depending on “welfare”, in fact what this crisis exposes is the reality that our economy as it is currently excludes livelihood opportunities for a vast portion of the population. Social protection in the form of cash transfers is not merely a “safety net” for a minority of people, but a central distributive task of the state in a brutally unequal capitalist economy. The campaign for universal basic income just got a shot in the arm.
In addition to the social grant increases, the president announced that 250,000 food parcels will be made available – including the government’s own provisioning, and the Solidarity Fund’s distribution, via private sector and civil society partners.
This news is not really new: the existing food distribution has been targeted to rise to 300,000, so this could even be a downward projection. Food parcels are much needed. But it’s worth reiterating that government’s ability to deliver food falls short of what is needed by a factor of at least 20, with up to 20 million people now estimated to be food insecure, cash increases are only going to start in two weeks, and the Covid grant will take some time to set up.
Food parcels are not an ideal response to a food crisis such as ours – they are patently insufficient, patronising, expensive, often nutritionally limited, and inevitably susceptible to manipulation and abuse. Yet in the short term, they are also essential for those not yet getting cash transfers, and can complement the cash about to come into households.
The rationale for food aid is to bring food into places where it is not available – such as in famine-struck countries – rather than to compensate for a profound market failure. Our situation in South Africa is not that food is unavailable (most of the grocery shelves are stocked) but that people cannot access it. What’s needed primarily in South Africa is not food, but cash, so that people can make their own dignified choices as to what they wish to buy, and eat.
A voucher system
Between the two responses – cash and food – is a proposed food voucher system. How the vouchers are distributed and where they can be redeemed (and on what) will be crucial.
On the distribution side, there’s no detail. All people who live in South Africa, and require it, must be able to access food. This means that food vouchers must be available to everyone who needs them – including for those falling outside the now-expanded social grants system.
The constitutional right to sufficient food is for “everyone” – not only citizens. How can these measures address the urgent needs of non-citizens, including the large population of documented and undocumented foreign migrants, whose livelihoods rely on informal sector work? Think of the waste reclaimers, car guards, street traders and many other informal sector workers. Without access to social grants, they will need to be assured of access to food parcels in the short term, and to other forms of assistance as this crisis unfolds.
On the redemption side, a food voucher system will need to ensure that people can redeem these vouchers in the informal sector, so as to support street food vendors and spaza shops — and prevent all the benefits of this injection of cash into the economy from benefiting an already concentrated supermarket sector. This means it must be “inter-operable” and not linked, as so many of the electronic vouchers that have quickly arisen, to specific supermarket outlets. It must be based on a mobile money system, and be based on USSD codes, so that it doesn’t require a smartphone or data.
Small-scale food producers
While society’s attention to the unfolding food crisis has focused on the “demand” side – enabling people to access food – there remains a wider crisis among poor and marginalised food producers, most acutely felt by small-scale farmers and fishers, and farm workers, many of whom (especially women) are casual and seasonal.
Meanwhile, Minister of Agriculture, Land Reform and Rural Development Thoko Didiza’s R1.2-billion for a small farmer relief package has some design flaws, including bureaucratic requirements and prescriptions as to what people can buy with it, and where – and would reach a maximum of 24,000 farmers, leaving most black farming households without any support.
No equivalent is yet available for small-scale fisher communities, whose operations on sea and on land have been closed down.
But input-support isn’t enough. Small-scale producers are desperately needing guaranteed markets. While supply chains from commercial farms to agro-processing to supermarkets is largely intact, the same cannot be said for small farmers, who have lost access to markets – via bakkie traders, selling directly at grant payout points, into informal value chains to street vendors, and via niche supply chains to restaurants.
We have a crisis of surplus seeking markets at the same time as desperate food shortages. Urgent measures are needed to buy up small farmers’ produce and feed this into food provisioning schemes, including food parcels. This is not something that the government can do alone. It is a model that the Solidarity Fund can and should support, together with social justice organisations that have a community base and can mobilise volunteers.
Going back to the president’s speech: much of the language signalled a turning point in the role of the state in the economy, but the actual provisions and promises did not match up. He spoke of localisation and reindustrialisation and even promised to strengthen the informal sector. These notions are diametrically opposite to policy directions in the past, where our economy has been hollowed out by deindustrialisation, jobs and industry sacrificed to wanton liberalisation, and systematic bias against the vast and poverty-reducing informal sector (the lockdown regulations and their implementation being a case in point).
The detail of the actual budgetary and policy provisions really matters, and it’s not yet clear. While working out the detail, the president’s economic advisers would do well to engage further with the convincing alternative economic measures proposed by the Institute for Economic Justice, many of which have also emerged in the C19 People’s Coalition, the broad platform of 245 civil society groups, including social movements and nongovernment organisations.
While our country again waits for the president to tell us what to expect in terms of the extension or gradual easing of the lockdown, questions are circling about the 73,000 additional personnel being called up to the South African National Defence Force, and whether this suggests an intensified militarisation of the lockdown, at a cost of nearly R5-billion. This would bode badly for community-based efforts to resolve the food crisis – something which the state patently cannot do by itself. And it would signal that the state has abandoned its attempts to enlist the country’s support for measures to contain the spread of the virus, and needs to do so by force, rather than through social solidarity and social justice in this time of crisis.
As my colleagues and I at the Institute for Poverty, Land and Agrarian Studies (PLAAS) at the University of the Western Cape noted at the start of the lockdown, “The social legitimacy of the ‘Covid-19 lockdown’, government’s regulations imposed to contain the spread of the virus, is most likely to run aground unless an urgent plan can be made to ensure that everyone in the country has access to sufficient food.” DM/MC
Ruth Hall is professor and holds the SA Research Chair in Poverty, Land and Agrarian Studies at the University of the Western Cape. She is associated with the Centre of Excellence in Food Security, and is contributing to the C19 People’s Coalition.
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