President Cyril Ramaphosa
announced his R500 billion package
on April 21 to, among others,
“support over 700 000 firms and
more than three million employees
through this difficult period”.
That is R8 506 a head, at Statistics South Afria’s mid-2019 population estimate of 58.78 million South Africans.
This added to prior measures, including “tax relief, the release of disaster relief funds, emergency procurement, wage support through the Unemployment Insurance Fund (UIF) and funding to small businesses”. Why small businesses?
Unlike their older, larger counterparts, they create more jobs for every rand of their revenue. Our government is not prioritising these. A friend of mine, whose company employs 23 people, wrote to the Minister of Small Business Development in May, suggesting ways to improve the department’s capacity to dispense funds to businesses like his without the red tape. No response; and he is not alone. Instead, he was told to apply for UIF grants.
South Africa needs an economic Marshall Plan. We need capable professionals, not bureaucrats, beefing up the capacity of the government to help in directing the bulk of its rescue package resources towards the most productive economic activities, that is keeping SMMEs (small, medium, miccro enterprises) trading, more than consumption expenditure like UIF payouts, social grants, food parcels, overpriced imported masks and gloves. However necessary, they burn cash and generate no additional value in return.
In lowering the restrictions this week to, “Advanced Level 3”, Ramaphosa opted for the only choice he had. Only R130bn of the R500bn is from his budget; the rest is expensive debt from “the World Bank, International Monetary Fund, BRICS New Development Bank and the African Development Bank”.
If we are going to borrow money at junk status interest rates it better not go to waste. What Auditor-General Kimi Makwetu has been begging the government to address has been evident during the lockdown. Remember the highlights of his October 2019 presentation to Parliament’s standing committee on public accounts?
Irregular expenditure by government departments and public entities at R174.88bn; R61.35bn of that in 2018/2019. Fruitless and wasteful expenditure of R1.42bn in 2018/19. The culprits were KwaZulu-Natal, Gauteng and the government.
Is it reassuring then that the missing personal protective equipment in KwaZulu-Natal reappeared two weeks ago, delaying the reopening of schools? Is it just me or was last week’s decision to buy motorbikes with side cars for R100 000 apiece to transport Covid-19 patients in the Eastern Cape a fiscal blunder? Why not buy a Nissan NP200 with a canopy; at least that can carry more than one patient and medical equipment, while traversing rural terrains? How about the Deputy Speaker who reportedly diverted food parcels in Mpumalanga? These are either irregular or wasteful or both; if not misdirected at consumption instead of productive expenditure.
Ramaphosa should tackle these and other government inefficiencies if he wants to rescue the economy.
* Victor Kgomoeswana is author of Africa is Open for Business, media commentator and public speaker on African business affairs.
** The views expressed here are not necessarily those of Independent Media.