Dr Thami Mazwai is the chairman of Mtiya Dynamics, which specialises in enterprise and supplier development. Photo: Supplied
Dr Thami Mazwai is the chairman of Mtiya Dynamics, which specialises in enterprise and supplier development. Photo: Supplied

Basic social grants must be linked to expanded Public Works Programme in the country

By Time of article published Oct 25, 2021

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Dr Thami Mazwai

The calls for a basic income grant (BIG) for the unemployed are going to feature in our national dialogue until we deal with the gogga known as poverty, unemployment, and inequality (PUI).

For the record, more than 2.2 million lost their jobs and the total unemployed is over 12 million. In the small business sector close to 47 percent formal entities gasp for oxygen and some have had to close.

According to StatsSA, more than 30 million South Africans live on less than R1200 per month. Oxfam notes that 2 million suffer food insecurity, which means they do not know if they will have the next meal, and when.

Thus, while the call for a BIG is based on real issues of life and death, it is not the solution. We instead dig ourselves worse into the national debt hole. The National Treasury states gross national debt is projected to rise from 80.3 percent of gross domestic product (GDP) in 2020/21 to 87.3 percent of GDP by 2023/24, with debt-service costs reaching R338.6 billion.

In rand and cents, StatsSA has warned that South Africa’s debt stood at R2.2 trillion in 2016/17. This translated to about R40 000 per person. The debt accumulated yearly because of ongoing budget deficits, now worsened by the Covid pandemic. In July we were then hit by the unrest and more than R50 billion is needed.

Cosatu, the labour federation, has demanded that the R350 Covid-19 relief grant must be increased and this then kickstarts the BIG. Taking the above figures on the national debt into account, this approach carries horrendous outcomes that will haunt us for eternity. More so, if we recall that when the Covid-19 pandemic emerged, we were already in a recession. Three points also militate against a grant.

Firstly, an analysis by Professor Daniel Meyer of the University of Johannesburg reveals that social grants for the 2021/22 financial year were at R195.5 billion, which increases to R205.3bn in 2022/23. These grants are critical for the millions of beneficiaries, some of them elderly people and other children or people with disability. The social grants must thus continue.

However, and on the downside, research has shown that social grants have had an adverse effect on economic activity or entrepreneurship by households or communities. Go to any part of the country and you will find fields lying fallow when in the past there was abundant small scale farming.

Thirdly, there has been a dependency and entitlement syndrome in the black community since 1994. Providing a BIG is simply going to reinforce this syndrome. Small wonder our productivity levels, which today are among the lowest in the world. According to the Organisation for Economic Co-operation and Development, labour productivity in South Africa is at $20 (R297) per unit, the lowest of the 30 measured countries.

It may be necessary to add that the National Planning Commission has decried the fact that our national budgets are more consumption orientated than production driven.

All of us are concerned about the misery affecting millions of compatriots, but do we have to plunge us into more misery? The correct route is a thorough implementation of the government’s recovery and reconstruction plan and to ensure that programmes for the poor and unemployed are top of the agenda.

A special unit must be created to ensure that the business-as-usual mode of programme delivery must cease, and to be specific, evaluation must be on impact or actual delivery to the intended beneficiaries.

Furthermore, the implementation of the enterprise and supplier development (ESD) pillar of the black economic empowerment (BEE) legislation leaves much to be desired. The abuse of this pillar has been phenomenal, but there has been no action taken despite pleas from the BEE Commission. Yet, these legs could see more people integrated and active in the economy, what BEE was about in the first place.

While the current social grant system must continue as it has lifted millions out of poverty, we have now reached our limit and more grants will place the country in the ICU. The country needs to think out of the box on how to develop new and mass economic activity, as the Brazilians and Chinese did.

Thus, the BIG can be linked to the Expanded Public Works Programme (EPWP) which can be fine-tuned to create entrepreneurs rather than dependants. The programme has developed a momentum of its own and funds earmarked for BIG can be part of this programme, but with some radical improvements to the EPWP, something that experts from government and labour can do.

Thoughts of a BIG must be a discussion of the past unless it is linked to people working for what they will get.

Dr Thami Mazwai is the chairman of Mtiya Dynamics, which specialises in enterprise and supplier development.

*The views expressed here are not necessarily those of IOL or of title sites.

BUSINESS REPORT ONLINE

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