There is so much to commend about last Thursday’s State of the Nation Address (Sona). Yet the path to economic recovery – and a return to a semblance of social normality – will be harder and will require much bolder actions than those envisaged in the president’s address.
Last year, the country had two Sonas: first in February, and then another one a few months later during which President Cyril Ramaphosa announced that 10% of the gross domestic product or R500bn would be spent to support households and firms which had been hit hard by the novel coronavirus pandemic lockdown.
He has to be commended for a crisper framing of priorities for the year ahead. To recap, these were summed up thus: First, to defeat the pandemic; second, to accelerate economic recovery; third, to implement economic reforms to create sustainable jobs and drive inclusive growth; and finally, to fight corruption and strengthen the state.
No one can fault the president’s characterisation of the task at hand. Our lives were abruptly stopped by the pandemic last year. It is important that we return as quickly as possible to normality. And without a credible vaccination strategy, we cannot possibly talk about economic recovery.
On Thursday, Ramaphosa shared the government’s plans of acquiring sufficient vaccines for the majority of the population. This is welcome, but we are way behind the curve – news that the 1m doses of the AstraZeneca vaccine procured offer minimal protection against the virus strand (which is now dominant in our country) is a major setback.
Alternatives are available, and government has plans to access them. What is missing, however, is a sense of urgency. A credible rollout strategy, beyond the frontline workers, is essential as a planning tool for sequencing the other actions.
In other words, the rollout should inform the tapering off of the so-called R500bn socioeconomic relief package.
For example, it is common cause that the economy is still operating with restrictions – we have a curfew that forces workers to be home by 11pm and other sectors, such as the alcohol industry, have limited operating hours. This has a direct impact on remuneration of workers in this industry.
Similarly, not all workers who lost their jobs last year have found new employment.
Therefore, it is important that the government doesn’t stop the R350 Covid-19 grant for those South Africans not on any social grant or the top-up grant for those receiving one or the other grant – be it old age, disability or caregivers.
Last Thursday, Ramaphosa announced a limited extension by one month of the unemployment insurance relief only for some businesses. The special Covid-19 grant will be extended by a further three months.
The Covid-19 grant has saved many millions of poor families from a humanitarian crisis of hunger, and government has to be commended for the foresight of extending it. The success of this humanitarian intervention stems from the fact that government directly offered grants – not loans – without impossible qualifying criteria.
Unfortunately, the help to firms came with impossible strings attached. Emerging evidence suggests that help to companies was slow and ineffectual.
In his address, the president said a modest R1.3bn had been made available to companies, mainly small ones, and of the multibillion-rand credit loan guarantee scheme, only R19bn had been approved for some 13,000 companies. This is very disappointing, and suggests lack of appetite for more debt by companies.
Accordingly, it seems counterproductive to keep this loan scheme. Instead, a far more progressive step would be to consider turning a portion of the guarantee scheme – backstopped by the SA Reserve Bank and National Treasury – into grants for the firms that are still operational. This is no time for austerity.
The delays in vaccine rollout expose the country to a possible third wave, and we need to be ready with better tools than just another lockdown. Education, effective testing and tracing of Covid-19 carriers should form part of preparations for another storm.
• Zungu is president of the Black Business Council and founder of Zungu Investment Company which owns AmaZulu Football Club
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