Tuesday, May 6, 2025

Economy

Ramaphosa announces historic R500bn economic rescue package

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By Skylar Thoma

MAIN IMAGE: SA President Cyril Ramaphosa has announced a plan for R500 billion in government spending to address the economic effects of the coronavirus pandemic. SOURCE: Twitter @PresidencyZA

South African President Cyril Ramaphosa announced the largest economic relief package in South Africa’s history, amounting to approximately 10 percent of the country’s Gross Domestic Product, in a televised address Tuesday evening.

The R500-billion stimulus package includes increased spending on health care, additional social grants, and loan guarantees.

Explaining the plan to the nation, Ramaphosa defended the current nationwide lockdown as “absolutely necessary” but acknowledged that measures to combat the virus have severely damaged the country’s economy, which had already been struggling prior to the outbreak of the epidemic.

“The pandemic requires an economic response that is equal to the scale of the disruption it is causing”, he said. 

As part of the massive surge in spending, R20bn will go to health care interventions, R200bn will be spent on loan guarantees, R100bn on job creation and support, and R20bn on supporting municipality spending.

Social grants will also be increased for a six-month period. Recipients of child care grants will see their grants go up by R500, and people who are unemployed and not receiving any social grants can apply for a temporary R350 monthly grant.

Ramaphosa also announced tax deferments and certain tax holidays for companies, including a three-month holiday on carbon taxes. In total tax measures will amount to an additional R70bn in relief.

The government will pay for R130bn of the package by transferring funds from other government departments. 

The remaining money will have to be borrowed from external sources, such as the International Monetary Fund (IMF) and the World Bank. The IMF had announced on Tuesday that South Africa could be eligible for $4.2 billion USD (R80 billion) in loans under certain conditions, according to Bloomberg.

Finance Minister Tito Mboweni is scheduled to announce details of how the plan will be funded, and is due to present an adjustment budget for the country. However, a time for this has not yet been specified.

Opposition parties generally welcomed Ramaphosa’s announcement. The DA said the president’s plan, “if executed correctly, could be the kick-start our economy needs to recover from the effects of Covid-19 and the lockdown”.

The EFF released a cautiously optimistic endorsement of the president’s stimulus package, calling the increases in social grants “a step in the right direction”. But the party asked for further details of how the relief will be implemented before they fully embrace the government’s strategy.

Some worry the stimulus package will not be enough. Reuters reports that COSATU, which participates in the National Economic Development and Labour Council, had demanded a stimulus package of 1 trillion Rand.

University of Witwatersrand economist Gilad Isaacs raised a number of concerns in an opinion piece about Ramaphosa’s plan. For instance, he suggested the amount that would be needed for the additional social grants would exceed the amount that had been set aside for that purpose.

Isaacs also pointed out that South Africans are generally skeptical of international financial institutions like the IMF which he said were “notorious for accompanying loans with anti-poor, pro-market measures of deregulation and slashing government and social spending”.

Ramaphosa promised that details of further relief efforts will be announced in the coming days. Plans to ease the lockdown in order to restart the economy in a phased way are expected to be announced on Thursday night when Ramaphosa is due to address the nation again.

South Africans face extended coronavirus restrictions

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By Skylar Thoma and Ayinde Summey

MAIN IMAGE: Minister of Cooperative Governance and Traditional Affairs Nkosazana Dlamini-Zuma speaks at a press briefing Thursday, announcing that some lockdown regulations “will remain in place for a long time”. SOURCE: Screen grab from Twitter @PresidencyZA

South Africa is facing an extended period of coronavirus restrictions – even if the country’s lockdown is partially lifted on April 30.

This was the message of Minister of Cooperative Governance and Traditional Affairs Nkosazana Dlamini-Zuma on Thursday as she announced details of a two-week extension of the country’s lockdown which has been in place since March 26.

In a publicly broadcast briefing of the national command council (NCC) on COVID-19, Dlamini-Zuma said that when regulations are eventually lifted, this would have to be done gradually. “When we do stop the lockdown, we cannot do it abruptly – that today it’s complete lockdown and tomorrow it’s open completely”, she explained. “We have to phase it in, so that there is an orderly move towards normality.”

Many of the regulations that have been in place since the start of the lockdown are being extended, the NCC announced. These include the existing ban on cigarettes and current restrictions around funerals, which limit the number of attendees to 50 people.

But some amendments have been introduced. Dlamini-Zuma said the government is expanding the ban on liquor products by banning the transport of alcoholic beverages. Earlier this week the Gauteng Liquor Forum threatened legal action against the government if it did not ease restrictions on alcohol sales. The government asked the organisation to wait until Friday for an official response. The Forum has not yet responded to the announcement of the extension of the liquor ban. 

The government is also beginning to open up the mining industry, allowing many mines to operate at 50 percent capacity. Dlamini-Zuma added that “all the mines that supply Eskom must be fully operational”.

“Some [regulations] will remain in place for a very long time”, Dlamini-Zuma said, although she did not specify which these would be.

As of Thursday South Africa had 2605 confirmed cases of the coronavirus. Worldwide there are now over 2 million cases with over 140,000 deaths. 

Other countries are contemplating how and when to relax their measures to combat the virus. Japan announced Thursday that the government is extending lockdown measures to the entire country, intensifying its State of Emergency which was introduced less than two weeks ago in some of the country’s prefectures. Prime Minister Shinzo Abe has said he wants to limit contact among the public by 80%,” reported Kyoto News. 

In the United Kingdom, foreign secretary Dominic Raab has said that stay home orders will be in place for at least another three weeks to avoid damage to the economy and public health.

Raab told reporters that according to research done by Sage, a company advising the UK government,  the infection rate in the country is below one per person, meaning each infected person is passing on the virus to one or less than one person. The government wants the rate to reduce further and is concerned that lifting the restrictions might cause another peak.

“We have been very clear that we will take the right decisions at the right moments based on the evidence. And they may well involve a transition out of the current measures. And, of course, they could be calibrated in different ways.” The Guardian reported Raab saying.

Five conditions will have to be met before restrictions can be lifted.

Among these are whether the NHS is able to handle the infection load; whether the death rate is consistently falling (to indicate whether the peak has passed throughout the country), and that there are sufficient testing spaces and PPE to account for future demand.

The Guardian quoted Sir Patrick Vallance, the UK’s chief scientific advisor saying that to disrupt transmission and avoid a second wave, it would likely be necessary for people to prepare to work from home for a long period of time. Medicines and vaccines that are also essential have not yet been identified and, there is currently no way to tell when that will arrive, he said.

SA government considering new budget to tackle coronavirus

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By: Laura Peterjohn

The SA government is considering the possibility of temporarily increasing social grants during the lockdown period. SOURCE: Twitter @ANCLimpopo

The South African government has moved to try to reduce the economic impact of coronavirus by lowering the country’s repo rate to it’s lowest level in a quarter century.

At the same time Finance Minister Tito Mboweni announced that the government would be revisiting the national budget for the year, to make more money available for government spending and to boost the economy.

In addition to this, Sunday World reports that Mboweni has indicated social grants may be increased temporarily to assist struggling South Africans. An announcement on this would likely be made tomorrow.

“Government, through National Treasury, is exploring all funding avenues to finance all COVID-19 related programmes and measures aimed at addressing the pandemic,” Mboweni reportedly said in a call to reporters..

The Reserve Bank’s announcement on the repo rate – the rate at which the Reserve bank leads out money to banks dropped it to 4.25%, lowering the national leading rate to 7.75%, reported fin24. 

The Monetary Policy Committee of the bank voted unanimously to make the cut in an attempt to increase spending and boost small businesses. The unexpected move caused the Rand to weaken to R18.30/$, reported fin24. 

This decision came just after Business For South Africa (B4SA) revealed that preliminary modelling of the economy suggested that over one million more South Africans will face unemployment, in part due to the estimated 8%-10% contraction of the SA economy expected in 2020.

Across the globe countries are facing similar predictions of economic turmoil. The International Monetary Fund has warned that the world faces it worst recession since the Great Depression. The global economy is expected to contract by 3%.

https://twitter.com/WandileSihlobo/status/1250040619482955781

Separately, UK chancellor Rishi Sunak has warned that Britain could see a 35% drop in GDP by June, a direct consequence of the three month lockdown that the country has imposed.

The IMF has predicted that in South Africa the economy will contract by 5%.

https://twitter.com/WandileSihlobo/status/1250042409939087361?s=20

Tensions rise over ban on cigarette and alcohol sales

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By Skylar Thoma

MAIN IMAGE: The sale of alcoholic drinks is currently banned in South Africa under the nationwide lockdown. The lobby group Gauteng Liquor Forum has demanded that government lift the ban or face legal action. SOURCE: Pexels.com.

More than 20,000 liquor license holders will have to wait until the end of the week to know whether their appeal to the government to be allowed to restart sales of alcohol will be approved. 

The traders, all members of the Gauteng Liquor Forum, have lobbied the government’s to lift its ban on the sale of alcohol, and has threatened to go to court if the government does not take action on the issue by Thursday. 

On Tuesday, the Office of the State Attorney in Pretoria issued a response to the demand, requesting an extension until Friday for an official decision.

The government has acknowledged that the lockdown restrictions are creating economic hardship for business owners across the country and talks are under way to considering what steps can be taken to alleviate the situation. It is widely believed that this may include a partial easing of some restrictions.

https://twitter.com/AdvoBarryRoux/status/1250037338417369088

The economic impact extends beyond alcohol traders. Tax Justice South Africa claimed on Twitter that the government has lost 650 million Rand in taxes that would have been charged on alcohol and cigarette products.

Despite outrage among some drinkers and traders, the Minister of Police Bheki Cele has been adamant that the ban will not be lifted. Cele expressed his anger when the Western Cape provincial government suggested it might lift the ban on cigarette sales in its province.

“What happens in Limpopo is expected to be done in the Western Cape”, he stated at a press briefing on April 2. 

The ban was instituted on March 27 as part of the lockdown regulations – in an attempt to reduce social gatherings involving alcohol, and thereby contribute to South Africa’s efforts to ‘flatten the curve’ of its coronavirus infection spread. In a statement to SABC News on April 7, Cele said the ban had led to a decrease in crime. 

Instances of violent crime have indeed declined during the lockdown, especially for murders and rapes, reports The South African.

Looters raid a Spar Tops liquor store in Cape Town. SOURCE: eNCA.

But there has also been an increase in looting of alcohol stores and illegal trading of liquor and tobacco products. IOL reports that 17 liquor stores had been looted in Cape Town alone as of Tuesday this week. Minister Cele has also expressed concern about reports that police officers have been caught and arrested for participating in illicit trading, according to Reuters.

The top five Google searches in South Africa on Tuesday all connect to making alcoholic beverages at home. SOURCE: screen grab.

Some South Africans are trying to find a way around the ban by brewing their alcohol at home. A search on Twitter for “pineapple beer” turns up numerous recipes that people have developed while under lockdown.

The issue of the ban on alcohol and cigarettes has divided South Africans, with people taking to Twitter to express their views. A petition has also been started in opposition to the movement to un-ban the sale of alcohol. It had about 2700 signatures as of Tuesday. 

https://twitter.com/IamStacy_Lee/status/1250049130052964354

Coronavirus: A Pandemic of Unemployment

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As nations around the globe are placed in lock down, enforcing polices of social distancing and government “stay at home” orders to slow the spread of COVID-19, millions of businesses are being deemed ”non-essential to daily life” forcing their doors to close.

This has prompted the layoff of millions of workers, who are seeing their jobs all but vanish overnight. With many countries extending their restrictions beyond the initial date, more and more people are facing the new reality of unemployment. 

In the United States 6.6 million Americans filed for unemployment in the last week, with New York Times reporting that 10 million jobs have vanished in the last two weeks. This leaves the US unemployment rate at around 15%, a rate that is three times higher than during the 2008 recession, and a rate that hasn’t been seen in the country since the stock market crash and the great depression that followed it in 1929.

There are predictions that the worst is yet to come. Economists at the University of Oxford suggest the United States could see 20 million more jobs lost, pushing the unemployment rate to 35% – a rate the nation has never seen before, reports the country’s National Public Radio. 

In Germany, finance minister of the Hesse region, Thomas Schaefer, committed suicide, reportedly after being deeply worried about the economic effects the virus would have on the global economy. 

The New York Times reports that in Spain, 800,000 Spanish workers lost their jobs in March, pushing unemployment rates to 14%. Despite strict orders from the government for citizens to remain in their homes, hundreds of people have been lining up outside social security offices daily in attempts to collect unemployment benefits.

The BBC reports that British Airways is in talks to suspend 32,000 members of its staff, and the American-based airplane manufacturer Boeing has announced its own layoffs after a large number of countries issued travel bans, greatly decreasing demand.

One Man’s Trash – Another Man’s Treasure

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By Aisha Hauser

With the help of The Appliance Bank, one impressive Cape Town resident  has gone from living on the streets to owning his own business.

“He refurbishes used and broken appliances and sells them at an affordable price.

Qagana found his niche thanks to The Appliance Bank, a programme run by the non-profit organisation The Clothing Bank.

The appliance programme gives unemployed men the opportunity to run their own businesses by offering them appliance repair training and business skills.”

See the full story here:

November 2, 2017. Cape Town. Mthunzi Qagana fixes broken electrical appliances and sells them in the township. Photo by Ruvan Boshoff for TimesLive.

https://www.timeslive.co.za/news/south-africa/2017-11-03-beating-lifes-dirty–laundry/

News of the Day: September 27, 2017

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Cosatu strikes take over downtown Durban today in the spirit of anti-corruption, anti-state capture, and of course political advancement for the upcoming ANC elections.

According to this Sunday Times article, (https://www.timeslive.co.za/politics/2017-09-27-cosatu-gets-moving-on-its-ambitious-national-strike-against-state-capture/), Cosatu is marching for the president to appoint a judicial commission to look into state capture, and for the proceeds of state capture to be funneled into projects for helping the poor.

However, according to an article by Mercury, (https://www.iol.co.za/news/south-africa/kwazulu-natal/cosatustrike-durban-march-gains-momentum-11373968), many Cosatu affiliates at the marches have been seen wearing shirts supporting Cyril Ramaphosa’s presidential campaign today.

It is probable that the accumulation of Cosatu’s and the general public’s discontent with state capture naturally flows hand in hand with Cyril Ramaphosa’s political platform. In that case, today’s events are more than just political presence at a march to promote an upcoming election, but perhaps the surfacing of a widespread discontent with the current state of the economy which transcends political, and even trade union lines.

 

Cabinet reshuffle puts fizz in the sugary drinks tax fight

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By Sealy McMurrey

The Beverage Association of South Africa is hoping that the cabinet reshuffle will bolster its efforts to oppose government’s plans to tax sugary drinks.

Former Finance Minister Pravin Gordhan proposed a tax on sugar-sweetened beverages‚ as part of government’s efforts to tackle obesity.

But during the budget meeting in February‚ the proposed implementation date of a sugar tax was shifted until later in 2017.

The beverage association‚ which represents the interests of the non-alcoholic beverage industry‚ is hoping to take advantage of Gordhan’s axing in favour of new Finance Minister Malusi Gigaba. Legislation to introduce the tax is yet to be finalised.

Speaking on behalf of the association‚ general manager for corporate services Tshepo Marumule said‚ “We have recognized the change in ministry and see it as an opportunity to take action forward against the tax”.

The cabinet reshuffle has fueled speculation about whether the sugar tax will still be implemented.

“Parliament convened on the taxation because in its current form‚ the tax is too complex and complicated and it can’t be proven that the tax will actually help South Africans’ health. We appreciate the further consultation on the tax and would like to see the best solution for the country‚” said Marumule.

The World Health Organization supports the imposition of a sugar tax. WHO South African representative Dr Rufaro Chatora said‚ “By implementing a tax on sugary drinks to increase the prices of these beverages‚ South Africa will be taking a proactive step to reduce the intake of sugars‚ which contribute to unhealthy weight gain and other diet-related NCDs [non-communicable diseases]‚ including diabetes”.

What lies ahead for the war on sweet beverages is uncertain but there appears to be some fizz left in the fight against taxing them.

– TMG Digital/The Times

Visit the published story here.

I Care: A Safe Place for Durban Street Children

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I Care is a non-profit organization based in Durban, South Africa. Their mission is to help solve the problems of street children. This is an interview with Donation, an I Care employee. His job is to attempt to convince the children to experience the safety and comfort that is I Care and to get off the streets. I Care provides a get-away for the children. They are served meals, provided beds for naps, books to read, and games to play. The kids can even do arts and crafts or listen to music. But I Care hopes to eventually get the children in school or back living with a family member. Today, Donation tells us what it’s like to be a child begging on the street, and how we can help as citizens. Listen to the audio piece on sound cloud below:
https://soundcloud.com/emily-rizzo-659593274/donation

If you want to get involved or just learn more, check out I Care’s website:

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