Solly Moeng: Can SA afford a coronavirus stimulus package?
Few people can reasonably disagree that the South African government has done very well with its communication around the coronavirus, up to the recent imposition of a number of restrictive measures to help contain the spread on this pandemic.
Government communication has been regular, well-structured and relatively well streamlined to avoid sending out conflicting, confusing messages to the public.
It is helpful that Health Minister Dr Zweli Mkhize has been measured, factual, informative, and overall credible in his various media appearances to communicate the evolving steps taken by government to manage the developments around the pandemic, as well as to provide advice to us, members of the public, on the part each one of us should play in all this.
We shouldn’t forget that the measures imposed by government to combat the spread of the coronavirus reach us at a time when our country has been trying to recover from the ongoing and devastating effects of sustained state capture and other forms of corruption, which involved the weakening and repurposing of South Africa’s institutions to serve the interests of a rapacious group of politically connected rent seekers, many of whom continue to walk the streets and corridors of power with impunity.
It is also not helping that our country has been experiencing a recession, with increasingly regular and extended electricity shortages hampering seamless economic activity.
Elsewhere around the world, several countries, mostly in the developed world, have proposed a variety of financial stimulus packages and other interventions to help soften the pandemic's blow on their economies in general and, specifically, on affected citizens and businesses.
As the real implications of government’s restrictions begin to be felt, in the coming weeks, more South Africans will need assistance. Businesses, especially in the hospitality sector – which is known to employ millions of middle-skilled workers – will shut their doors and retrench staff, leaving us with more elevated levels of social tax.
Only legal firms and debt collectors will be smiling from ear to ear as they go about issuing letters of demand on behalf of financial institutions and other lenders. People will be threatened with foreclosures and repossessions of cars and other needed assets when they can no longer make their monthly payments.
Ahead of all that, panicked citizens who have the means have already taken to rushing to supermarkets around the country to stock up on whatever household goods and food they can get their hands on, all done in preparation for a feared, mostly imagined, period of large-scale shortages. It is not helping that social media is gradually being filled with trending photographs of empty supermarket shelves à la Zimbabwe.
Does SA have the means?
Can South Africa, which once boasted healthy levels of reserves before the drivers of state capture and other forms of corruption raided its public coffers at all levels of government and state-owned entities, afford to do more than it has to date? What reserves are we left with to cushion us from the devastating Covid-19 blow?
Below are a number of stimulus measures to consider:
The Reserve Bank could drop interest rates, which analysts have suggested is already on the cards. The SARB has previously commented that a 25 basis points cut in the repo rate could lift GDP growth by 0.1 percentage points over a 12 to 18-month period, Fin24 reported.
Loan or mortgage payment holidays could be assessed, giving badly affected South Africans time to assess their resources. This has been done by some banks in the UK, Italy and elsewhere, while locally, Capitec has said it is weighing its options to help clients who fall behind on payments during the coronavirus crisis. No doubt, such a measure would have a short-term knock-on effect on big businesses, but many big businesses sit on cash reserves that could cushion them against pain in the short-term. We know that cash is king.
In the longer term, government could consider tax incentive packages to encourage companies to make "local more lekker" post-crisis.
Landlords could be urged to avoid evicting anyone during this period.
Other creditors, too, must be urged to exercise restraint during this time, instead of rapaciously going after debtors and compounding the problem. The legal profession can play its part here, too, protecting vulnerable citizens who would otherwise fall victim to overzealous creditors, law firms and debt collectors.
Labour law, meanwhile, should not be wielded like a weapon. Some struggling businesses may have to reduce their workforce. But this reality should not be used by either employers or labour to settle scores in protracted battles that have nothing to do with the coronavirus.
And while it may be too much to hope that Moody's may once again give South Africa a reprieve, there is surely room for global institutions like the World Bank or the International Monetary Fund to consider relief for developing nations in the wake of this pandemic – with clear terms and conditions, of course, to avoid leaving loopholes for ever-hungry rent-seekers to exploit at the expense of the poor.
These are extraordinary times which require extraordinary measures at domestic level and, at a global level, heightened efforts at information and resource sharing, as well as other forms of solidarity across national and political borders.
While notoriously porous borders have to be tightened to avoid losing control of who and what passes through them, our shared humanity can only thrive when our fences are kept low enough to see early signs of any fires that might engulf our neighbours and reach out in time to help them.
* Solly Moeng is brand reputation management adviser and CEO of strategic corporate communications consultancy DonValley Reputation Managers. Views expressed are his own.