Road map to recovery
It has been more than a hundred days since the economy went on lockdown. The lockdown brought a sense of solidarity among South Africans across the spectrum. We have had stories of employers who continued to pay their domestic workers even when they could not come to work. Narratives of South Africans checking on their neighbours to ensure that they are not starving have become common. Stories of tenants in our townships who stay in back rooms having been granted payment holidays have demonstrated the spirit of Ubuntu/Vhuthu among South Africans. At a macro-economic level, we have had the government announcing a lot of initiatives to save us from an economic implosion. The private sector has played its part, with banks providing repayment holidays on various loans.
However, the Covid-19 crisis has also exposed the deep scars and challenges in our society. The Budget speech presented recently by Minister Tito Mboweni has further highlighted the economic and fiscal crisis we are facing. Earlier in the week, Statistics South Africa released figures showing that unemployment has breached the critical threshold of 30%.
Analysts emphasised that the 30% was actually reflective of the pre- lockdown era. This means that the real unemployment figures are much
higher. There is no doubt the effects of a 7% contraction of the economy announced during the Budget will move along the different contours of our society. The real question confronting us as a society, particularly government, big business, SMMEs and civic society, is this: how can we collectively prevent a socio-economic disaster in the short to medium term?
It is evident that we have to arrest the continuing decline in GDP growth. The minister of finance has already taken a view on a zero-based Budget; this is the great reset which no government has been given in recent history. I maintain, the fight against Covid-19 is effectively a fight against the biggest comorbidity in this country: poverty. Unless SA builds its GDP and effectively produces goods that others can buy, we will slip further back. Nations perish not because of where they come from but because they lack a vision of the tomorrow they seek, Our Budget can’t be just recovery, it needs to be a post-Covid vision.
We need urgent political, social and economic reforms. The Budget is the greatest opportunity to build on such. We can build a genuine social market system that recognises the safety net of citizens and builds on the innovation of our citizens. It’s time we make and build things. I propose not another NDP but six priorities. These in and of themselves realise the need for choice for it’s not the time to do everything but rather make a choice.
At the core of the new normal is an inclusive society. This inclusivity which has innovation and use of digital technologies should be reflected in the social and economic aspects of our society. Whereas the Budget has shown that we will be in austerity mode for a long time to come, every penny spent must be invested wisely.
Owning the new normal is about stepping into tomorrow not returning to the abnormal yesterday. I propose that our Budget should have focused on six areas. The future of our nation depends on these and if any investment is to be brought into SA, we must bring clarity into what the investment must be focused on. I could tackle the inept state-owned enterprises but we simply don’t have the resources to sustain these and can’t keep deferring these decisions down the line. We have to act now, sell what can be sold and create a Jobs and Justice fund to focus investment on the following areas.
There is a need to prioritise building a new education model that prepares kids for the future and the Covid-19 present. A serious government would stop trying to patch the problems in our schools and take the time to make them Covid-19 ready; that means clean toilets, clean classrooms, and adequate provision of PPE. While we have Covid-19 in our lives, we will not be able to have continuous learning.
Schools will be closed and reopened frequently, students will be quarantined and return to the classroom frequently. We need to use digital learning to cover the gaps created by Covid-19 disruptions. We have to do it in this period.
We have to accept that a move to digital is one that cannot be selectively pursued anymore. We cannot have one set of kids online learning digitally on Microsoft teams, zoom, google classroom and other platforms, while others are at the mercy of school closures, teacher absences and quarantines. However, one of the biggest obstacles besides the provision of devices, is access to the internet. Digitisation of the classroom is only possible if we have enough spectrum allocation.
Achieving this spectrum allocation must be a priority. There is nothing stopping the government from adequate spectrum allocation. SA has indicated that it has no reservations around concerns on Huawei. The country can through commercial diplomacy means leverage on its good relations with firms such as Alibaba to roll out the necessary digital infrastructure and technologies. This should not exclude learning from our traditional partners in Europe, Japan, the US and broader OECD.
Our economy will be online and so must our learning.
Covid-19 has revealed just how much of a healthcare threat housing can be. To fight this virus and the ones to come, effectively we have to rethink our housing vision. The indignity of our spatial planning and the dehumanising living conditions of our people were further highlighted during this pandemic. There is a need to reprioritise decent housing for our citizens. It cannot be that the majority of South Africans continue to live in conditions of squalor while servicing a relatively affluent economy. We need to view housing as a creation of a micro economy.
The Public Procurement Bill currently at National Treasury should ensure that an ecosystem in which a broader scope of our SMMEs are involved in the housing supply chain. We need to consider a voucher model in the housing sector in which inputs are sourced locally.
Our economy is still largely dependent on mining and agriculture. While the last couple of years has witnessed a scaling down in the mining sector and the increase in mechanisation, the industry can still be made viable. We should aim for a highly mechanised mining sector that has a focus on beneficiation. This will shield us from being too vulnerable to commodity prices. It will also create decent jobs for South Africans. We need to increase production if the economy is to start growing again. In addition, we need to link our mining sector to SADC regional value chains.
Prior to the outbreak of Covid-19, discussions around agriculture were mainly centred on expropriation without compensation. The pandemic has given us an opportunity to relook at this sector. What is clear is that the sector is one of the golden eggs for the economy. It is one of the few sectors that is export-dependent. This was clear with the negative impact on the wine industry when the government inexplicably banned exports of alcohol at the height of the lockdown. However, the sector needs to transform by being more technology-dependent and open to participation by black South Africans. Training a new cohort of black farmers in digitised farming using models such as the Netherlands could accelerate much-needed transformation in the agriculture sector.
This is important not only for economic reasons but social cohesion and building an inclusive society.
- Medium enterprise
One of the anomalies of our economic policymaking is the peripheral place we allocate SMMEs. This sector has been severely affected by the hard lockdown that was imposed. Most of the businesses will not survive. Some sectors of the economy will become redundant in this period. This gives us an opportunity to craft new SMME strategies. A potential area for SMME growth is capacitating the informal sector. We could learn from Malaysia, a country that has similar challenges to South Africa. Economic redress and future-focused economy require that we aggressively include citizens that were left out of the economy. This is the struggle at core, not to exclusion of any citizens but a proactive call to include the lives of citizens left out.
Malaysia placed SMMEs at the centre of its affirmative action policy, the Bhumiputera, an equivalent of BBBEE. Instead of focusing much on redistribution, the Malaysian government supported Bumiputera owned-SMMEs with grants increasing their productive capacities. We need to urgently focus our energies on the development of SMMEs. Big businesses both local and foreign have to realise that partnering with SMMEs is vital for the whole ecosystem. We need to reform our airline, financial service sectors and healthcare industries. This strategy links redress to productivity and ensures that real value is being derived from SMMEs, not a crony capitalist society that has been created.
Instead of obsessing on asset transfers as a transformation policy, we should strive to create and support black-owned SMMEs. This is not to suggest that SMME Covid-19 relief should be based on demographics, considering that almost everyone was affected. However, in the medium to long term, there should be a deliberate focus on supporting black and women-owned SMMEs. This support should include developing their productive capacity and standards. We should move away from black SMMEs being seen as vehicles of accessing tenders from government.
Instead, black SMMEs should be developed in a way that they become productive business entities that are fully integrated into the economy’s value chains. Geographic tendering is critical if we are to unlock and maximise local economic development, such as supply chain in municipalities.
I have stated previously of my support for a jobs and justice fund in order to create an investment fund to develop entrepreneurs. Not many people are aware that this country has a national herd of cattle worth around R7-billion from black smallholder farmers. That herd is, however, totally excluded from the value chains supplying our major retailers such as Pick n Pay, Woolworths and Shoprite. The new normal challenges us to rethink such cases.
- Tourism and Hospitality
Tourism and hospitality is another sector that has been severely affected by Covid-19. It is a huge employer of our citizens. This sector will need support to be revived. As part of the new normal, the support of the sector should be crafted in a way that ensures that previously disadvantaged South Africans participate beyond being waiters and waitresses. Government could support the sector by subsidising divestments to employees.
All these changes will require political will and bold leadership. Ultimately a capable, smaller and agile state will be the bedrock that underpins our success. We must jail the corrupt and ensure we hire the best to build our future. The recent Constitutional Court ruling offers an opportunity for us as South Africans to create an electoral system that will deepen political accountability. Instead of viewing the ConCourt decision as a threat to the party system, we should welcome the judgment as an additional tool in the crafting of a new post Covid-19 normal.
The Budget speech and the release of unemployment figures by StatsSA should not dampen our spirits as a nation. Instead, we should be jolted into action. Government must ensure that every penny spent is accounted for and returns some form of a dividend. Big business should continue to make efforts towards a much more inclusive economy, in which it joins hands with SMMEs, especially from historically disadvantaged communities. Civil society and like-minded political parties must consistently shine a light on any abuse of public funds. DM
Mmusi Maimane is the leader of the OneSA movement