Transform RSA says the Disaster Management Act does not give President Cyril Ramaphosa powers to authorise the state to go out and seek international funding. Such decisions require Parliament seating, mandated by public representatives who carry a mandate to authorise the state to go out and seek such funding. Photo: Jacques Naude/African News Agency (ANA)
Transform RSA says the Disaster Management Act does not give President Cyril Ramaphosa powers to authorise the state to go out and seek international funding. Such decisions require Parliament seating, mandated by public representatives who carry a mandate to authorise the state to go out and seek such funding. Photo: Jacques Naude/African News Agency (ANA)

Transform RSA calls for full disclosure of Ramaphosa's relief package funding

By Statement Time of article published Apr 22, 2020

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AS TRANSFORM RSA, we are very concerned with some points from the update from President Cyril Ramaphosa on April 21.

The lockdown and the ensuing hardships it brought necessitated urgent intervention from the state. The Tuesday night update by President Ramaphosa sought to provide an economic response to the pandemic. The measures proposed are far-reaching and they need to be interrogated extensively. We demand absolute transparency given by the President as the Head of State.

As Transform RSA we believe that it is in the public interest for full disclosure on how this so-called Phase 2 relief package is going to be funded, and the relief plan's source of funds.

With R130 billion from the proposed R500 billion relief package said to be reprioritised from current budget allocation as delivered by Minister of Finance Tito Mboweni last February, the pertinent questions therefore are:

  • Where is the people's mandate authorisation to go seek external borrowings?
  • What are exact terms and conditions for the balance of R370 billion earmarked to be borrowed externally from multilateral institutions such as the World Bank, International Monetary Fund, BRICS New Development Bank and the African Development Bank?

Such decisions require Parliament sitting, mandated by public representatives who carry a mandate to authorise the state to go out and seek such funding. The Disaster Management Act does not give the President such powers.

Transform RSA further finds it puzzling that the South African Reserve Bank (SARB) is playing a minuscule role, limited only to interest rates when in actual fact its role should have been central to the economy as is customary with other central banks in the United States, United Kingdom, China, Germany, Japan and South Korea to name a few.

The question, therefore, is why does a sovereign country, with a currency-issuing Reserve Bank, that is allowed by legislation to lend money to Treasury at any interest it deems fit, need to go outside for funding at onerous terms? 

Why is the state indebting us, the citizens, to the devil when we have the resources as a country to fund South Africa’s much needed economic stimulus package? 

This important question has not been adequately answered by the Reserve Bank, and whenever they have attempted to answer, their answers have been shown to be untrue, by economists such as Professor Christopher Malikane and Redge Nkosi.

To date, no coherent explanation has been offered by the SARB as to why they cannot fund an economic stimulus package to fight against the effects of the Covid-19 pandemic as well as to sustain viable job creation and economic growth.

The actual allocation is offering a bluffing relief to the poor and unemployed. The self-imposed restrictions of seeking funding from outside mean that the relief is not doing enough to assist the poor, formal and informal working class and the unemployed, who are most vulnerable from effects of the lockdown.

Child support grant beneficiaries will receive an additional R300 in May, and R500 from June to October. All other grant beneficiaries will receive an additional R250 per month for the next six months. As this is an additional payment, the figures mentioned aren't adequate, as more could have been offered.

A special grant of R350 will be paid to unemployed individuals who do not receive any other social grant or Unemployment Insurance Fund (UIF) payment. This figure is grossly inadequate, given the effect of the lockdown on those who are unemployed and not receiving any assistance, and not forgetting the many students and child-headed households.

Another concern is how the R20 billion earmarked for the fight against Covid-19, including the procurement of personal protective equipment (PPE) is going to be utilised. There are township area factories and special economic zones (SEZs) in places such as Ekangala, Waltloo, Hammanskraal and Roslyn, to mention a few, that are standing as white elephants, which can be utilised to manufacture the PPE instead of importing.

The President did not give any details about how this amount is going to be used to prioritise localisation procurement and manufacturing of those items. This begs the following questions: 

  • Who is going to import the PPE?
  • Who is going to benefit from this allocation?
  • Who are the manufacturers?

An opportunity to revitalise our manufacturing sectors is being missed by insisting on importing products that could easily be manufactured locally. If we prioritised local manufacturing, it would not only save costs, but it will also serve to create employment for citizens in the areas that these under-utilised factories are located.

Given the strain that Covid-19 has put on the economy, any activity that can relief the strain on the state by offering employment to the unemployed during this period should be prioritised, instead of just importing.

The announcement by the President before the update on the economic measures, that an additional 73 180 SANDF members will be deployed at an additional cost of R4.5 billion seems to signal that the President acknowledges that the economic measures taken are not enough, therefore, he expects civil unrest.

The drastic increase in army deployment numbers appears to be the clearest signal that the arguably draconian and economically catastrophic lockdown measures are not going to end anytime soon.

Therefore, the hardships endured by South Africans will be felt for some time to come. As Transform RSA, we believe that more could have and should have been done to alleviate the strain that the lockdown has placed on South Africans. Millions of South Africans have lost their incomes throughout the lockdown period.

Placing South Africans under a very difficult lockdown and giving them inadequate assistance and deploying an additional 73 180 soldiers to enforce the lockdown seems to be signal a State of Emergency and a declaration of war on the people.

The only army required for urgent deployment is that of virologists, epidemiologists, scientists, army medics and public health policymakers to find a cure and a treatment regime, which will enable South Africans to return to a state of normalcy.

The state is very capable of adequately assisting citizens during the lockdown, but the tools at the disposal of government such as SARB need to be utilised fully, as many sovereign states have done to fight Covid-19 pandemic.

Constraining our fightback strategy by seeking loans that will keep us indebted for years after this crisis is over is not the solution.

We urge you Mr President to listen to South Africans who have objected to borrowing from international financial institutions, when South Africa has a Reserve Bank and plenty of gold and platinum to guarantee our sovereign reserves.

TRANSFORM RSA

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