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Mr President, where is the proposal to assist the poorest of the poor?

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Oscar van Heerden is a scholar of International Relations (IR), where he focuses on International Political Economy, with an emphasis on Africa, and SADC in particular. He completed his PhD and Masters studies at the University of Cambridge (UK). His undergraduate studies were at Turfloop and Wits. He is currently a Deputy Vice-Chancellor at Fort Hare University and writes in his personal capacity.

A proposal for a special grant for the most vulnerable and marginalised in society is something that the presidential team needs to explore urgently. It is a short-term, caring measure.

Yet again, President Cyril Ramaphosa provided much-needed leadership with the announcement on Monday night of a nationwide lockdown to effectively deal with Covid-19.

From the outset, there were two fundamental objectives that our government had to ensure.

First, curb the spread of the virus immediately or else face the dire situation we have observed in Italy and elsewhere, and do so with all the necessary legislative options open to one.

Second, protect the economy as the virus wreaks havoc in the world. There’s minimal trade between countries, domestic exports have virtually ceased and industries such as tourism, agriculture and manufacturing are on their knees. 

I get that our government must do all it can to protect small, medium and micro enterprises (SMMEs) and the contributions from the Oppenheimer and Rupert families are welcomed. 

Furthermore, we see all manner of assistance being provided to the bigger industries. SARS made relief packages available to industry, the banks announced tax incentives over fixed periods, there was a clear commitment to additional funds being made available through the Unemployment Insurance Fund (UIF) and so much more. Billions have been made available to the formal sector to cushion it and the 75,000 SMMEs in South Africa.

We congratulate our government and certain private sector companies and individual families.

But, I was disappointed that almost nothing was placed on the table with regard to the most vulnerable in our society, the poorest of the poor. A solidarity fund made a paltry R150-million available. This gives the impression of a government that does not care for the poor and most vulnerable. These are citizens that have no means of income, or battle to make ends meet through spaza shops or street vendor activities, which they now cannot do. What do you say to these people – you are on your own, black man?

Is this the spirit of ubuntu? A solidarity fund which, if I understand correctly, will only assist with cases concerning the coronavirus and not necessarily with the provision of food, electricity and water. 

I hear a presidential task team is putting together a comprehensive plan for the poor and that we will be notified of its content hopefully by Friday. I hope it will be a good plan because in the US the government has provided at least $1,000 to certain citizens for relief purposes, and in Germany, I’m told it is as high as €5,000 per family.

I realise our government cannot match such amounts. But countries where such relief resources were made available did so knowing full well that they would increase their budget deficits and hence their debt levels. We will be no different, considering that we already have a very strained fiscus. 

This is a time, Mr President, to think out of the box. Subscribing to outdated neoliberal economics will not help us out of this quagmire. Bold and difficult decisions are needed.

Winston Churchill was ridiculed at first for his insistence of readying the British people for war, but he stuck to his guns and was proven correct. Similarly, Nelson Mandela faced ridicule at first from many corners for his reconciliatory stance towards white South Africans but in the end, he too was vindicated. 

Consultation is and will always be a good quality of any leader and you do it so well Mr President, but there comes a time when you must make certain decisions because it is the right thing to do. The poorest of the poor look to you to tell them how they are going to survive these times.

Dr Kate Philip, a development strategist in policy development, has made a proposal worth noting. She speaks of a Covid-19 special grant for the most vulnerable and marginalised in our society. It is a short-term measure but a good caring one. 

She states that, “Important as they are, proposals for economic relief for the small business sector leave out enterprises in the informal sector, yet job and income losses here are likely to be severe. This will have dire knock-on effects on poverty in poor communities, where the informal sector often provides people with a tenuous grip on survivalist livelihoods. 

“Targeted at the poorest decile, most of whom receive no other form of social grant, a special grant would simultaneously address the needs of the most vulnerable. It would also act as a trickle-up economic stimulus for the economy as a whole.

“Many stakeholders are putting forward proposals for economic stimuli and relief that include a focus on the small enterprise sector and on wage relief for companies. 

“This all matters, of course. Yet, proposals linked to UIF benefits, to tax relief, to new lines of credit or to enterprise grants all limit the response to formal enterprises and formal workers. None will reach the informal sector — or those who have fallen through the cracks of our existing social protection systems.”

And as we have observed after Monday night’s speech by the president, this is exactly what has happened.

We need a special Covid-19 grant to augment our existing social support systems in ways that put money in the hands of those who need it most — as fast as possible. Doing so will directly address the impending crisis of heightened poverty, and it will also boost demand in ways that benefit the informal sector — trickling up into the wider economy from there. 

Philip says that, “If adopted, South Africa will certainly not be alone. The developed world is racing to roll out economic stimuli at unprecedented scales. Hong Kong has announced that it will reach its seven million adult residents with a once-off payment…. Indonesia, Malaysia and China are all expanding their flagship cash programmes as part of their Covid-19 response.”

What would it cost? Philip’s research demonstrates that, targeted at six million people, with a payment of R1,000 a month for three months tapering to R750 and R500 in the outer months, this would cost R25.5-billion. The R1,000 level aligns with programmes such as the Community Work Programme and Youth Service and avoids the risk of arbitrage between programmes. These payments would start per person on successful application, with the rollout staggered over a period of time as people enrol, within a window period for applications that could stay open for six months. 

The sooner enrolments take place the better, but the poverty impacts of this crisis are likely to extend well beyond the peak infection period.  

Where would we find this money when we have a struggling economy and a stressed national budget? 

Philip points us in the direction of the UIF Reserve of over R150-billion raised from workers and the private sector to provide social protection in a context of unemployment. Using these unclaimed funds for the purpose of a special Covid-19 grant is directly aligned with the mandate of the fund, she states.

So, in as much as no one can argue against the very real interventions proposed for the formal sector during this lockdown period, lest we heed this very real warning, we will face another social upheaval of a different kind. A hungry man is an angry man.

Please, be a caring government. DM

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