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Will Ramaphosa’s R500bn stimulus reach SA’s poor?

Millions of South Africans’ lives have been upended by Covid-19 and the government’s five-week lockdown to arrest the spread of the virus. But those living in townships and informal settlements are bearing the brunt, as poverty bites

Lebohang Motloung, a grade 11 pupil, lives in Tembisa, the sprawling township on the East Rand. He stays in a single room shack and cares for his sick mother and father.

At 19 years old, he’s at an age when young men feel invincible. But right now, Motloung tells the FM, he’s afraid. Not of Covid-19 — that’s a distant, almost abstract concern. Rather, his family has no food, and he’s heard talk of the brutality of the police and soldiers patrolling the township. So he’s worried about stepping outside to find food.

"What if they arrest me for leaving the house?" he asks. Neither of his parents has any income — and his mother is particularly frail, bed-ridden with back problems.

"My mother has been advised to go to the clinic as she will qualify for a grant," he says. But amid a brutal lockdown, this may not be the time to venture out.

It’s a measure of the response to Covid-19, with SA enduring a five-week lockdown under the jackboot of police minister Bheki Cele’s brook-no-dissent leadership.

Motloung is just one of the 6.8-million South Africans who experience real hunger. Almost 20% of SA households had some form of food shortage in 2017, according to the most recent numbers from Stats SA.

The family has been relying on food parcels from the NGO, Life4U. But the day before the lockdown began, no food parcels arrived.

It’s not as if food isn’t available. The problem for Motloung’s family is money — and as the Covid-19 lockdown continues, and more than 1-million jobs are lost, there’ll be far more people in his position.

"Spaza shops are open from 5am to 9am and from 4pm to 6pm, but that doesn’t help us — there is no money," he says.

No-one is prepared

It’s an arresting insight into the lives of millions of South Africans whose lives have been upended by Covid-19, even though, at this point, there are just 3,465 confirmed infections and 58 deaths.

The lockdown, which President Cyril Ramaphosa announced five weeks ago to stem the spread of the virus and prevent SA’s frail health-care system from being overwhelmed, has had a more direct brutal impact on townships like Motloung’s.

Martin Kingston, an investment banker who chair of the local arm of Rothschild & Co, says the country needs to prepare for conditions that will be worse than the Great Depression of 1929. "None of us is prepared," he tells the FM.

Kingston has estimated the country’s GDP will shrink between 8% and 10% this year — worse than either the International Monetary Fund (IMF) or the National Treasury has predicted. And the impact won’t be a phenomenon lasting just a few months. "It will take several years to recover," he says.

SA’s poorest citizens are the most exposed. About a third of the 15.2-million people classified as "employed" work in the informal sector, running spaza shops or working as backyard mechanics, artists or street vendors. This often overlooked part of the economy contributes 5.% to SA’s GDP.

Yet, by Kingston’s estimate, at least 1-million people will lose their jobs thanks to Covid-19 and the economic lockdown. That will push the unemployment rate from 29% to north of 33%. Others have more apocalyptic job-loss scenarios.

Either way, these job losses will cascade down the economic chain, hurting informal traders and household incomes.

At this point, many of the economic estimates are woolly — especially when it comes to the informal sector.

But Mike Rogan, an associate professor in the Neil Aggett Labour Studies Unit at Rhodes University, says: "All we can say for sure is that it will be a crisis if 5-million South African informal workers can’t earn a living."

Historic stimulus

The government, at least, seems to realise what’s at stake.

On Tuesday night, Ramaphosa unveiled an unprecedented, and immense, R500bn spending plan, designed to cushion the blow the virus has had on the economy, and the poor.

"Millions of South Africans in the informal economy and those without employment are struggling to survive. Poverty and food insecurity have deepened dramatically in the course of just a few weeks," he said.

So, Ramaphosa set aside R50bn to boost welfare grants for six months. Child support grants will roughly double from R445 a month now, to R945 a month by October.

It’s a smart move, and a response to a letter sent to him by the University of Cape Town Children’s Institute and other organisations, which argued that the child support grant would reach 80% of the households who have lost their income from the informal sector. That grant reaches 12.8-million children — two-thirds of all children in SA — and contributes to the income of 5.7-million households. "The child support grant is the simplest, quickest and most effective way to get cash into millions of poor households that will otherwise face food insecurity and debilitating poverty," those organisations wrote.

But Ramaphosa announced other measures too, including the delivery of 250,000 food parcels over the next two weeks.

"The coronavirus crisis will lead to many people losing their jobs. An additional R100bn will be set aside for protection of jobs and to create jobs," he said.

His new measures appeared to be recognition that over the past four weeks of the lockdown, the government hasn’t done nearly enough to help the most vulnerable.

While Ramaphosa said that over R100m has been provided to small businesses, spaza shops and informal businesses in loans and grants recently, this hasn’t touched sides.

"An additional amount of R2bn will be made available to assist SMEs and spaza shop owners and other small businesses," he said.

These are welcome measures, but it should never have taken so long.

Weeks ago, small business development minister, Khumbudzo Ntshavheni, promised a "safety net" for informal businesses. She said there’d be a three-day turnaround on outlining that strategy.

Asked repeatedly by the FM for details in recent weeks, her spokesperson simply said: "Measures will be announced."

It illustrates that as welcome as Ramaphosa’s measures are, these are just words until support actually gets into the hands of those who need it.

Take the Unemployment Insurance Fund (UIF), which is a central weapon in Ramaphosa’s arsenal to cushion the blow for those who’ve lost jobs in recent weeks.

It too has dragged its feet. To date, more than 55,000 employers had lodged claims on behalf of 1.6-million employees affected by Covid-19.

Yet on Tuesday night, Ramaphosa said: "By the end of today, the UIF’s special Covid-19 benefit has paid out R1.6bn, assisting over 37,000 companies and 600,00 workers."

That means that more than 60% of the people hoping for assistance from the UIF haven’t received a cent yet.

The president did also announce a new "unemployment benefit" of R350 a month for the next six months for those people who won’t get UIF or other grants.

At this stage, says Intellidex’s Peter Attard Montalto, the cost of this new unemployment benefit is impossible to price.

"It could be around R10.5bn if 5-million people apply. We think this will be hugely challenging to administer and [will] be inundated with several million applicants — it could take months to set up," he says.

Attard Montalto describes the overall package as a "bazooka", but he says it creates large amounts of political risk. "There are serious questions of how [these grants] can be withdrawn from November."

He says if these support packages become permanent after that, SA will "properly fall off the fiscal cliff". This is especially so because, to finance this R500bn package, SA will have to borrow billions from various institutions, including $4.2bn from the IMF, and reprioritise R130bn away from other areas in the existing budget.

Says Attard Montalto: "We are scratching our heads how this is possible without job losses or negative effects on programmes like education and service provision."

Ultimately, this sacrifice might also end up amounting to naught unless the money gets to those who need it. As North-West University economics professor Raymond Parsons puts it: "Given the country’s poor track record on delivery, there are many issues that lie between committing money and having it effectively delivered."

Running out of savings

Qiniso Gwamada, 24, is a self-taught artist, who lives 28km outside Durban, in the township of Inanda. He tells the FM he’s prepared as best he can for the lockdown.

"I have savings, but I don’t make enough to have a large amount. I have enough for rent and food for this month," he says.

This is likely to be the toughest year he’s had since he matriculated in 2015 and, after he couldn’t find a job, began making and selling art.

Before the lockdown, Gwamada’s business was actually doing well — despite the wider economic malaise in the country. Often, he’d sell his art to the tourists who frequent Durban’s beaches, but he used other avenues too. It was, he says, ideal.

"I’ve mostly sold my work via social media, Facebook is my go-to," he says. Typically, he’d meet clients in Durban, and use couriers to transport his art.

Now, however, the restrictions on movement during the lockdown have hurt, as he can’t deliver any of his works.

"This is going to be a long month but I will make it work, I will work on producing artwork to sell after the lockdown, but if it extends beyond that, I’m in trouble," he says.

Gwamada isn’t alone in living in fear of the dreaded month-end.

Sarah Kamkam, 34, a hairdresser who lives in Midrand, tells the FM she’s already behind on her rent.

Kamkam moved to SA from Kokode, her small village in Ghana, four years ago, along with two small children. She left behind two other children in the care of her mother. "I send money home every month for food and other essentials," she says.

Now, she’s stuck in a foreign country and her work has dried up. "At least back home we have family and they can try to make do, here we have no-one," she says.

Even before the lockdown started, people began cancelling hairdressing appointments, fearful of the virus. "We all live hand to mouth, there are payments such as rent and groceries that need to be made," she says.

Both Gwamada and Kamkam’s stories illustrate the problem with the so-called "bailouts". For many of the relief packages, foreigners are excluded, while others struggle with numerous demands for documentary evidence of revenue projections and three months of bank statements.

Kingston says the government needs to cut the red tape for SMEs, which has for years stifled growth in the sector. "The registration for businesses, the accounting for tax and complying with local regulations are all hurdles [for] small businesses, which include the informal sector," he says.

Already battling

The poorest aren’t just battling an economic lockdown, they haven’t even had the basics to be able to comply with the hygiene rules to tackle the virus. This is largely due to the country’s inept municipalities, which have given Ramaphosa little room.

As part of Covid-19 relief efforts, the government had to buy 20,000 JoJo tanks to ensure that far-flung areas, as well as towns with failing water infrastructure, even had water. While the government has refused to reveal what it spent on these JoJo tanks, the FM estimates it will have cost R55m.

On Tuesday night, as part of his R500bn bazooka package, Ramaphosa said R20bn would be given to municipalities to provide an "emergency water supply, increased sanitisation of public transport and facilities, and food and shelter for the homeless".

Let’s hope the municipalities get the message, since their priorities have seemed dangerously skewed in some instances.

In Cape Town, the city government evicted residents of the Empolweni informal settlement, demolishing shacks. The city said it was "acting to prevent illegal occupation of the land", even though its decision was temporarily struck down by a court.

It created an absurd situation where, as news website Daily Maverick put it, the government on the one hand breaks down your house and, on the other, now has the power to arrest you for not being in that house.

In the townships, many are ignoring the lockdown rules as they go out and search for food, despite the soldiers on patrol.

Though the government has promised food parcels, three weeks into the lockdown protests were already growing as, in many cases, these parcels didn’t arrive.

Axolile Notywala, general secretary of the Social Justice Coalition, laments the fact that delivering basic services has been "worryingly slow". With food parcels not arriving, "we are headed for huge challenges as a country", he says.

It’s more evidence that it’s SA’s poorest who’re paying the highest price for the runaway kleptocracy during Jacob Zuma’s tenure, which led to an unmanageable debt-to-GDP ratio and looting of money meant for services. Covid-19 just pricked that bubble.

On Tuesday, Ramaphosa did his best to frame the virus as an opportunity to not just provide a Band-Aid to the economy, but to fundamentally rebuild a much fairer society.

"The scale of this emergency relief programme is historic. It demonstrates that we will not spare any effort, or any expense, in our determination to support our people and protect them from harm," he said.

It’s a warming sentiment. But if his party could do all of this from the beginning, why hasn’t it?

Expected job losses and a contracting economy will hurt SA’s most vulnerable — the poor and those in the informal sector

—  What it means

Deafening silence

Alexandra resident Lucky Mashabela is upset. The company that’s handing out free sanitiser in the township on behalf of the government won’t fill his 10l container; it’s rationing handouts to 2l per person. But Mashabela is afraid — and because of that he seems unaware that the demand to fill his huge container may be unreasonable.

In the absence of a government advertising campaign, no-one has explained to Mashabela that ordinary soap is perfectly acceptable for hand-washing, or that Covid-19 isn’t a certain death sentence.

Mashabela is wearing an old surgical mask (he doesn’t know where to get more). He tells the FM how he lives in a room with dividers that separate 12 families. "How will we survive?" he asks. "It’s so close." He’s worried that if he becomes sick, he’ll infect others. "If I go outside and get ill … there are five in my room. If someone coughs, it is going to spread there. We don’t find fresh air."

With him is George Lamola, who lives in a crowded, subdivided space with about 48 other people. "It is not a place to stay here," says Lamola. "We need RDP houses, so [that] we can distance."

But here in Alex, social distancing and isolation "can’t work", he concludes.

Residents of Setjwetla in Alexandra. Picture: ALON SKUY​
Residents of Setjwetla in Alexandra. Picture: ALON SKUY​

It’s a concern that is beginning to show in the data. Covid-19 is spreading in townships and informal settlements despite the national lockdown, suggesting that social distancing and delayed spread may not work in high-density areas or large households.

Given that about 9-million people, or 18% of SA’s population, live in shacks, this puts millions of South Africans at risk of infection. And those in formal structures aren’t likely to be much better off if they’re living in crowded spaces, as is the case with Mashabela and Lamola.

But pinning down information has proved problematic.

In a new discussion document, Wits health economist Prof Alex van den Heever argues that it will be impossible to measure the success of the lockdown in townships because of inadequate testing to establish a baseline before the government ordered restrictions on movement.

"The narrow testing regime adopted to date, designed to merely identify imported infections rather than community-based outbreaks, cannot be relied upon to confirm whether the lockdown has succeeded outside the affluent communities where the epidemic started," he says.

Van den Heever goes further, saying that if the virus is spreading in townships during lockdown due to close contact between people who live there, the exercise is largely pointless.

Countries such as Taiwan and South Korea, which have effectively controlled the virus, intervened early with a test-and-trace strategy, isolating those who were ill and monitoring anyone they would have come into contact with. But what of those living in crowded, high-density areas? How are they to self-isolate if they test positive for the virus?

It’s a subject on which the FM has been chasing the health department for five weeks, with questions that include:

  • Are there any facilities available to quarantine people living in shacks and crowded environments who test positive?
  • What modelling has the department used to show that a 21-or 28-day lockdown will arrest the spread of the virus in SA?
  • How many quarantine beds need to be available for those who are mildly ill but live in crowded conditions?

Despite numerous follow-ups, no answer has been forthcoming.

Health minister Zweli Mkhize, addressing journalists on Saturday night, finally answered one of the questions: 8,000 beds have been set aside for isolating the sick who don’t require hospital care, he said, but provided no further details.

Nicholas Crisp — a doctor, olive farmer and head of government’s poorly funded National Health Insurance office — has been tasked with finding field hospital sites. He also didn’t respond to the FM’s queries.

In the private sector, Netcare hospital group has provided isolation spaces for nurses from Amanzimtoti’s Kingsway Hospital and St Augustine’s in Durban who have tested positive for the virus. And it’s allowing staff who can’t self-isolate to stay at Highway Subacute & Rehabilitation Hospital in Hillcrest, having moved those patients elsewhere.

For Van den Heever, the lack of openness about the department of health’s readiness to manage the virus is concerning.

Prof Salim Abdool Karim, of the universities of KwaZulu-Natal and Columbia, said in a television address last week that the strategy for managing the disease in townships is based on identifying infection hot spots through widespread testing. This will allow targeted lockdowns, which are better for the economy.

Karim explained that the other homegrown approach to containing the virus could involve community health workers going door to door to screen residents for breathlessness, fever, a cough and a sore throat. Those with one or more symptoms would be asked to go to the clinic for a test.

But the government containment strategy falls flat at public transport.

The guidelines by the College of Public Health Medicine suggest taxis should be no more than 50% full, and travel with all windows open. It says commuters must be asked to clasp hands when entering a taxi so they don’t touch door handles.

"The risk of transmission is associated with: seating proximity to an infected person, the duration aboard … inadequate ventilation and the consequential recirculation of virus droplets in air," according to the guidelines.

It also says taxis and buses must be cleaned overnight with bleach, and people queuing to board public transport should stand 2m apart.

But the government, after lobbying by the SA National Taxi Council, has allowed taxis to run at 70% capacity, suggesting taxi owners’ interests trump public health concerns.

In short, despite persistent questions being asked, it remains unclear how the government will control infections in the townships, high-density areas and informal settlements. It suggests that the government itself may not know the answer.

Katharine Child

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