I felt for President Cyril Ramaphosa as he announced his coronavirus economic package to the nation on TV on Tuesday night. He looked even more stiff and uncomfortable in front of the camera than usual.
He must have been full of doubt. At best, when it comes to business and finance, Ramaphosa is a cautious and conventional thinker. And as he spoke I suspect he knew, as did most of the people listening to him, that what he was promising was a wing and a prayer.
A R500bn injection into the economy is no small thing, obviously, but as he broke it down — a R200bn loan facility to distressed companies, R130bn reassigned in a new budget to health, this to the indigent and starving, that to top up welfare payments — it became clear this was no stimulus package.
At best it is a rescue, and two things are scary about that. First, that the president might actually believe he was delivering a stimulus. Or, even if he recognised it as a rescue, can he be sure it will work? What if it doesn’t? How do you revive a dead horse, which we are today?
There’s a joke about what to do. Dismount is the right answer, but modern thinking, popular in the ANC, says you could think about it a bit. Perhaps lower standards so dead horses can be included. Or use a stronger whip.
In Ramaphosa’s case, he has now to entrust the delivery of R350 a month to people who have nothing and are not on welfare or any database to the department of social development, whose minister is Lindiwe Zulu. She is also going to be the minister responsible for distributing 250,000 food parcels around the country.
It just isn’t going to happen. Zulu isn’t a good enough leader to make it happen. Already, if you’re starving and want her department to feed you, you have to at least have a cellphone and be able to fill in a hideously complex form. And even if you fill in everything correctly and manage to deliver it to the right people, delivery is sadly not guaranteed.
The SA Revenue Service (SARS) is given the Herculean task of loosening up R70bn by way of introducing a four-month holiday for skills development levy contributions, fast-tracking VAT refunds and a three-month delay for filing and first payment of the carbon tax. “To assist a greater number of businesses, the previous turnover threshold for tax deferrals is being increased to R100m a year,” said the president, “and the proportion of PAYE payment that can be deferred will be increased to 35%. Businesses with a turnover of more than R100m a year can apply directly to SARS on a case-by-case basis for deferrals of their tax payments.”
His problem is that as a vehicle for delivering anything, the public service is particularly poor and there’s a limit to how much he can ask of the private sector while he keeps it locked down so fiercely
SARS’s systems are not designed to deal with this. Try to access this money and it could be months before they decide that, yes, you do indeed qualify for the break you think you need. Meanwhile your suppliers have gone to the wall and your clients have vanished.
Ramaphosa had lots of advice, much of which consisted of throwing the kitchen sink at the economy, including a more aggressive Reserve Bank to buy government debt. His innate caution (and, probably, the Bank’s governor) intervened and he didn’t. That is probably a good thing, but he will have been questioning himself even as he spoke. As the lockdown, now beginning to have irreversible economic consequences, is his last medical shot, the Tuesday financial package was also his last sovereign economic volley at the virus.
If they don’t work we will have a medical catastrophe on our hands, followed by submission to IMF loans and structural adjustment conditions.
His problem is that as a vehicle for delivering anything, the public service is particularly poor and there’s a limit to how much he can ask of the private sector while he keeps it locked down so fiercely. SARS’s two biggest sources of VAT revenue, Sasol and SA Breweries, are dysfunctional; SAB simply shut down.
But we cannot survive Covid-19 intact as a sovereign country without private sector taxes to pay for the war on it. There’s little appreciation of that in the cabinet and unfathomable depths of ignorance deep in government departments. I saw a note this week from a property sector executive in Gauteng: “Weeks ago,” he wrote to a mutual friend, “the guys that do most of my project management were asked to assist the government in assembling the temp hospitals etc — they have attended numerous meetings and site visits — they say it’s like meeting with toddlers, no guidance, no plan, no clue and no execution — to date they haven’t received a follow-up plan to the first site meeting they had in late March.”
That will ring true to anyone who has ever tried to work with the government. We do not have a capable state here. Asking it to actually prepare, in the sense of placing actual beds with sheets and pillows in actual field hospitals with actual equipment to help people next to them, is simply asking too much. It’s not going to happen without private help and that can’t happen while the current lockdown is in place.
• Bruce is a former editor of Business Day and the Financial Mail.
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