Next year will be defined by the race among countries to reach herd immunity. What level that is in terms of share of the population is still greatly contested, but let’s take 60% as an order of magnitude. Currently the government seems to have no firm plan when to reach that point nor the facilities or funding to make it happen. The private sector will ultimately have to do it — but this key point could well be reached only at the end of 2021 or into 2022.
A number of possibilities exists for taking the blame for the messy and delayed vaccine procurement process and confused communications — but a debate over making room for about R10bn of on-balance-sheet funding should have started in the government back in April, to allow for speedy decisions on a variety of different providers with clear targets for rollout.
Equally, the costs being cross-subsidised from private to public sector is an elegant solution but a unit tax on private medical schemes could have been paid for by the cancellation of the SAA bailout.
The first quarter of 2021 will be a challenging time as the Covid-19 support grant ends in January. Politically it is easily extendable, although the Treasury seems to be holding the line for the moment. The Unemployment Insurance Fund (UIF) schemes will end too while other facilities such as support grants for small, medium and micro enterprises (SMMEs) and tourism never really got off the ground and are forgotten.
The UIF scheme should be extended to cover businesses in hotspots with registered addresses given (as Business4SA has shown) that the UIF has enough liquid assets to finance such a scheme. Banks should put their heads together for a well-advertised scheme for hotspots and the Treasury should consider what reallocations of money sent down to lower levels of government can be reallocated for things such as rates relief for SMMEs.
These are just ideas, but ideas are lacking at the moment on how to offset the economic impact of not only the second wave now upon us but also a possible third and fourth surge in 2021 before widespread vaccination has been carried out.
Also lost is a sense of the scale of need. As with load-shedding, maybe the public has become immune to stories about unemployment or GDP data still well below the highwater of end-December 2019. There also exists an inability to compute the effects of inequality on bad headline data — in the National Income Dynamics Study-Coronavirus Rapid Mobile Survey (Nids-Cram) and elsewhere — data that isn’t bad enough to properly signal the economic pain of much of the population
R2m Porsche
Indeed, the fact that excess savings and access to credit allowing a rich South African to buy a R2m Porsche can offset the loss of income and consumption in a poorer neighbourhood of say 500 households — is the kind of reality that is very much South African yet underappreciated.
The second wave Nids-Cram study showed 11% of households reporting child starvation and 37% running out of money for food in June — down on April, and likely to have come down again in September but still unacceptably high.
At Breadline Africa, a Cape Town-based early childhood development charity where I am a trustee, we saw a shift from our usual early childhood development (ECD) infrastructure and partnership focus towards emergency feeding earlier in the year. In Cape Town alone demand was met for 1.5-million children’s meals from the end of March to September. But crucially it still has had to support the provision of 25,000 meals a week even before the new lockdown. This is just one corner of the country — the scale is underappreciated.
Indeed, it puts things such as the public sector wage bill and state-owned entity (SOE) bailouts into perspective.
The fiscal cliff edge cannot be ignored but equally meeting our evolving needs within the fiscal framework and how those needs must be ranked and categorised not with a recovery in mind but subsequent surges and lockdowns — will require an important debate and shift in mindset. February isn’t far away at all — decisions have to be made now.
Monday night’s address should be the start of a new debate. For now, we largely seem to be on autopilot to (and beyond?) the February budget.
