RECIPE FOR MUCH DEEPER DISTRESS
The plan to end the Covid distress grant on April 30 might save some money but it could lead to widespread anger against the government
The government has said it will end the distress grant at the end of April, now just a matter of days away. The reason given by President Cyril Ramaphosa and finance minister Tito Mboweni is that the state “cannot afford” it.
The grant, you will recall, was meant to provide relief for the disruption of people’s incomes caused by the Covid lockdown.
Some hailed the decision to stop the grant as a sign of “good governance”. Indeed, several respected economists and politicians applauded it as pragmatic, nonpopulist and, above all, attuned to the fiscal discipline necessary for a sustainable economy. Many economists argue, rightly, that fiscal discipline is critical to a stable economy able to produce growth.
Very few economists dissented.
One who did was Neil Coleman, the founder of the Institute for Economic Justice, and his fellow advocates for universal income security. The distress grant was implemented at the urging of this grouping in the first place, and it was extended from its initial end-date last year thanks to the institute’s lobbying.
Its call now is for the grant to not only be extended, but increased.
The government, less than two weeks before the grant is meant to end, has not said what will be put in place to fill the gap that its cancellation will leave. After all, nobody disputes that the economic shock caused by Covid is still very much with us.
In his February budget, Mboweni observed that the economy had contracted and the short-term recovery wouldn’t make up for this. This month, the World Bank said that “extreme poverty” is likely to get much worse in Southern Africa. In SA’s case, this is because the 3.3% expected recovery in 2021 doesn’t come close to compensating for the 7.8% contraction last year.
Stats SA has already confirmed that hundreds of businesses folded due to the pandemic, torpedoing thousands of jobs. And we know that many other companies survived only by shedding jobs or cutting wages. Data, including that from a study by Unisa and the Township Entrepreneurs Alliance, shows young people, women and small firms, particularly in historically disadvantaged areas, were hit hardest.
So, it is abundantly clear that people still need the grant. Though R350 is a small amount, it has plugged the gap — particularly in families with more than one recipient. And the grant has also helped ensure there are at least some financial flows in economically devastated ecosystems such as villages and townships.
What I find most perplexing is why no income sustainability plan has yet been drafted by the department of social development. This would have ensured that when the grant ended, there would be another way to address the human development needs that it helped to meet — not least of which is simple food security.
In Zulu we say, “Indlala ibanga ulaka”, which loosely translates as
“hunger causes anger”. Can we afford an explosion of what sociologists refer to as “hanger” — something many have suffered for years already? With higher levels of hunger, and political entrepreneurs seizing the opportunity like vultures, things are likely to go wrong. We must ask: will “economic stabilisation” trump the political entrepreneurship and extremism fuelled by ending the grant?
In his social justice lecture at Stellenbosch University last month, Harvard fellow Keith Errol Benson argued that we should consider any investment in justice and fairness as our insurance for peace. Does the distress grant have anything to do with justice?
Well, yes — it was for all our sakes that the lockdown restricted commerce, and it cannot be just and equitable that some should continue to suffer while others don’t. And the reality is that those likely to feel it the most, when the plug is pulled on that grant, are those who bore the brunt of past socioeconomic exclusion.
The distress grant is an investment in the economic revival of all South Africans. As author Malcolm Gladwell argues, the idea of investing in “social capitalisation” for the common good is the hallmark of successful economies in Europe and Asia.
Of course, you’ll ask where the money will come from. My answer is that we should all make sacrifices, including political employees of the state. Some perks, including free petrol for members of the executive and excessive security benefits, should be revisited. The state could also save by ensuring those who rip it off, or overcharge it, are stopped from doing so.
As the auditor-general’s report shows, we could save millions just by preventing fruitless, wasteful and corrupt expenditure.
The point is, we can find the money. If we pull the plug on the distress grant within weeks, it will be at our peril.
The repercussions will affect everyone.
So it’s your move, Mr President. x
It was for all our sakes that the lockdown restricted commerce, and it cannot be just that some continue to suffer