Herman Mashaba: What kind of South Africa will arise from our current crises?

Tough decisions will need to be made on the economy, says the writer. (iStock/Gallo Images)
Tough decisions will need to be made on the economy, says the writer. (iStock/Gallo Images)

Our government will need to prove to its people, and the world, that it is serious about rooting out the theft of public funds. The turnaround of our economy needs this statement of intent, writes Herman Mashaba.

Since the emergence of Covid-19 in South Africa, I have been unequivocal in my belief that, as a people, we will emerge from this crisis that we are currently facing.  

This belief is grounded in the fact that we are a resilient people, who face injustice and hardship and never give up.  

News on Friday that Moody’s has downgraded our sovereign rating to junk status, was a stark reminder that we cannot forget that when we emerge from this health crisis, we will face another, larger crisis - an economy that will need resuscitation.  

Despite this, I have noticed some among us who think that we shouldn't be addressing discussions of the economy in the current times of our health crisis.

Instead they call on us to show nothing but blind support for our government.

How ridiculous.

Running a country is a massively complex task, one that does not allow us to deal selectively with one crisis at a time.

If we do not address these issues simultaneously, the humanitarian disaster will be beyond comprehension. 

Because when we have emerged from this health crisis - and make no mistake we will emerge from this - we will face an economic crisis the likes of which we have never seen before.  

We do not have the luxury of ignoring this, or dealing with one crisis at a time.

We have to be proactive to prevent an economic collapse. 

As much as it will be spun that our economic woes arise from Covid-19, analysts have warned that our ratings downgrade has been a long time coming.

Covid-19 has just exacerbated our situation.  

Focusing on how we got to this point, is not helpful.

It is the opposition politics of our broken political establishment that has failed us so fundamentally as a country.

What we need is a conversation about measures that need to be put in place right now to prevent the worst from happening.

We need to be solutions-orientated now so that when the lockdown ends, we do not go out of the pot and into the proverbial fire.  

In the midst of this crisis we face as a country, is an opportunity to begin the rebuild of South Africa.

What I am suggesting is the following measures to be put in place immediately:  

A stimulus package needs to be put together as a matter of urgency to prevent the closing down of various industries and the bloodbath in jobs.

The government should finance this package by freezing unspent funds allocated to low-priority projects at local, provincial and national government levels.

With the country in lockdown a great deal of these funds will go unspent in any case. 

Trust me, when I served as Mayor of Johannesburg, I killed more than R2 billion in a single year in low-priority expenditure.

International and domestic travel (which is easy to reduce right now), catering, marketing and public relations, conferences and consulting fees – these are easy targets for local government.

Imagine this, across 278 municipalities, nine provinces and one national government, and you have the funds for a significant stimulus package.  

This stimulus package should be equally funded by a drive to reduce the public sector wage bill by 25%.

Any discomfort with this, should be considered in light of two facts.

Employees in the private sector, across the board, are facing salary cuts to ensure businesses survive in this time. Why should the public sector, funded by these same companies and private individuals, be any different?

Furthermore, with our new found dependency on the IMF, one should assume this is going to be a requirement attached to any funding going forward.  

Labour laws need to be relaxed across the spectrum.

For decades our labour laws have favoured the employed at the expense of the unemployed.

Immediate legislation, relaxing the Labour Relations Act, will encourage companies big and small to hire or retain more people.

This would immediately reduce the impact of the bloodbath that is likely to follow the lockdown.

I would go further to say that any company that does not retrench employees, or that continues to hire in the months that follow the lockdown, should be entitled to a tax rebate that incentivises them to retain staff.  

Small and medium sized businesses must be given access to very low-interest rate loans after the lockdown that will allow them to recover from their loss of operations, and get back on their feet without having to retrench personnel.  

National government must announce immediate plans to privatise our ailing state-owned entities.

SAA should be sold, more like given away.

Eskom should be privatised through a deal that contains annual cost increases for consumers.

If the days of state-owned entities being bailed out to the tune of tens of billions over the past decade made little sense before, it makes absolutely no sense in a post-Covid-19 world.  

Provision should be made for a three-month income grant to informal traders and micro-enterprises who have lost access to their daily income during the lockdown.

It is estimated that there are as many as three million people in our informal economy who are not covered by the UIF measures announced to date.

These are people who support entire families and support upstream economies of small-scale food production.

The day the Covid-19 lockdown began, these three million people started an income lockdown that leaves them starving and vulnerable.  

National government needs to immediately reconfigure our national budget.

We cannot afford to operate under the business-as-usual budget adopted in February this year.

The kind of financial reforms that are going to be necessary to attract investment and satisfy the IMF, will mean major reforms.

These reforms are likely to be politically unpopular within the ANC and its tripartite alliance partners, but their discomfort means little to a nation paying the price for their politics over the past two decades.  

As a footnote to all of this, has to be a concerted and deliberate effort to wage war on corruption.

Our government will need to prove to its people, and the world, that it is serious about rooting out the theft of public funds. The turnaround of our economy needs this statement of intent.  

There is no question that the steps taken by President Ramaphosa were correct in achieving the social distancing measures to flatten the infection curve of Covid-19.

I am the first person to acknowledge the leadership he has shown. 

However, without wanting to be unfair, decisive leadership will ultimately be measured when the time comes to make decisions that are deeply unpopular, especially with those around you.

It is only with this kind of leadership that we will emerge from this health crisis into an economy is retaining, and ultimately, growing its employment base.   

- Herman Mashaba is the founder of The People's Dialogue

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