Business Day: JOHN DLUDLU: Winter of discontent looms if needs of the poor are not met

The government needs to tackle poverty and corruption as they have the potential of undermining efforts to contain spread of the virus

As SA approaches the end point of the extended Covid-19 lockdown there really should be only two important questions on the agenda of policymakers: first, how to assist millions of poor, starving people from taking their desperation into the streets; and second, how to weed out the beautiful bureaucracy erected around much-needed economic support measures to stop the economy from collapsing.

Both questions — and their answers — have a direct bearing on two interconnected sets of issues, namely saving lives by containing the spread of the coronavirus on the one hand, and saving livelihoods on the other. Put differently, poverty has the real potential of undermining efforts such as social distancing and mass testing to contain the virus’s spread, and the slow flow — if at all — of financial and nonfinancial support measures to businesses could scuttle efforts to reopen the economy.

Deservedly, the SA government has been praised for instituting a lockdown as early as was practically possible, on March 26, and extending it to end-April to allow the fragile public health-care system to prepare for the inevitable hospital admissions. These commendable actions, however, have been undermined by long-standing socioeconomic problems, including hunger, poverty and corruption.

Shutting down schools, churches and workplaces has had the unintended consequence of depriving millions of poor pupils and destitute adults of the only meal they had through school feeding and other schemes run by nongovernmental organisations. Then, enter the old SA sport: corruption. There have been numerous news reports of widespread corruption related to the distribution of food parcels, including municipal councillors excluding all but supporters of their political party, and people have reported being given spoilt food.

In his weekly diary on Monday, President Cyril Ramaphosa appeared alive to these problems. “Over the past three weeks we have been confronted with distressing images of desperate people clamouring for food parcels at distribution centres and of community protests against food shortages.

“We have also had to contend with allegations both disturbing and disgusting. A number of provinces have received reports that callous individuals, some of them allegedly government officials, are hoarding or selling food parcels earmarked for the needy and destitute, or diverting them to their friends and families,” he wrote, promising action against those found to be behind this malfeasance.

As it did with the HIV/Aids epidemic that killed hundreds of thousands of people, poverty not only has the potential to undermine the fight against Covid-19, but left unchecked it could lead to a social explosion, pitting trigger-happy law enforcement agents against frustrated, hungry protesters on the streets. This would make mass testing a nightmare.

With corruption such a thriving business, coupled with the state’s poor track record of introducing new schemes and systems, it is hard to avoid calls for all social grants to be doubled — at least for the duration of Covid-19 — as the only credible way of putting bread on the table of the poor.

After all, accessing relief from the Unemployment Insurance Fund is as difficult as having to squeeze toothpaste back into the tube. This week the agency had to rope in the private sector to assist distressed workers.

Economic support measures

Similarly, for weeks now various government ministries have been lining up to announce economic support measures. Most of these are aimed at assisting small and medium-sized enterprises (SMEs), which even before Covid-19 were reeling from the recession, power outages and late payments for services and goods they had delivered.

These are welcome as a start. Unfortunately, access to this badly needed relief — soft loans, grants and other forms of nonfinancial support — has been an administrative nightmare for entrepreneurs. As well as having to fill out detailed forms requiring compliance with a plethora of regulations, the other frustration has been that help appears to target only two critical sectors: food and health.

Assuming that a small business is able to provide all the information, it still has to “demonstrate how the enterprise has been impacted by Covid-19”, despite the fact the entire country is under lockdown. This appears to be an attempt by the authorities to formalise the informal sector and use the crisis to resolve other public policy challenges, such as the poor compliance culture, without bothering to find out why some entrepreneurs choose to stay informal.

Consequently, weeks after opening its doors for applications the government has yet to disclose how much of this help has actually reached SME owners, and how many businesses have been saved.

If the government doesn’t bypass corrupt officials by distributing cash directly to poor South Africans through the welfare system, and streamline access requirements for help to cash-strapped employers, SA might have to brace itself for a winter of discontent as lives and livelihoods are decimated while officials prioritise data collection over real assistance. Both failures will make the fight against Covid-19 infinitely harder, and keep the economy closed for much longer, with the attendant prospect of a slower recovery.

• Dludlu, a former Sowetan editor, is CEO of the Small Business Institute.

by Business Day – https://www.businesslive.co.za/bd/opinion/columnists/2020-04-21-john-dludlu-winter-of-discontent-looms-if-needs-of-the-poor-are-not-met/