NO RECOVERY WITHOUT RESCUE - R342 BILLION UNUSED - Institute for Economic ...
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Only a third of South Africa’s
rescue package has materialised.
R342
BILLION
UNUSED
COVID-19 SCORECARD UPDATE – 11 FEBRUARY 2021
NO RECOVERY
WITHOUT RESCUE
The R500 billion COVID-19 rescue package announced by
President Ramaphosa in April of 2020 held hope and promise
for many. It came at the start of a period of serious economic
devastation. Unfortunately, in addition to the shrinking size of
the package, there has been a systematic failure to implement
the rescue measures stipulated. Our estimates show that only
about a third of the package has been utilised to date.
This updated rescue package scorecard by the Institute
for Economic Justice unpacks this slow progress, building
on an earlier scorecard published in June 2020. Many of
the promises within the rescue package were not kept
and millions are suffering as a result. Unfortunately,
a number of important relief measures have expired
while South Africans struggled through the second
wave of the COVID-19 pandemic with less support.
If the government does not urgently step up and
provide the rescue and relief required by households,
small businesses and other vulnerable groups,
thereFOR
INSTITUTE is ECONOMIC
no chance
JUSTICE of economic recovery.
COVID-19: South Africa’s COVID-19 Rescue Package Scorecard Update – 11 February 2021
P R O T E C T R I G H T S . S E C U R E L I V E L I H O O D S . S U P P O R T B U S I N E S S E S . R E S C U E T H E E C O N O M Y. 1SCORECARD SUMMARY
Providing funds to pay wages
While this is one area where money has been spent through C
the Temporary Employee Relief Scheme (TERS), the difficulty
of accessing this support, the mismanagement of funds by
employers, and the halt of the support before the second
wave will have negative consequences for jobs.
Job creation and protection
The Employment Stimulus design is commendable but the allocation
of spending has been much lower than promised. Many more jobs
are required in the short term, not the medium term. Reallocation D
of money towards grants should not count towards job creation.
Supporting households and communities
The interventions made until October 2020 through social
grants (and the Social Relief of Distress (SRD) grant until
January) saved lives and reduced hunger, however they D
should have been extended. The crisis is not over.
Supporting businesses through tax deferments and loans
There has been disastrous underspending in this area
with only 12% of the loan guarantee spent. F
Providing additional health and municipal funding
There has been a lack of transparency on expenditure and
significant gaps remain in access to sanitation and health support.
F
The R500 billion relief package has failed in important respects and should
be re-launched with a clear plan on how the remaining funds will be spent,
and where necessary, new measures introduced to fill the gaps.
RELIEF AREAS PROMISED USED1
Social security R50 billion R43.6 billion A THIRD
SPENT
Job creation and protection R100 billion R12.6 billion
?
Wage relief (TERS) R40 billion R55.6 billion
Credit guarantee scheme R200 billion R18 billion
Tax relief R70 billion R15.3 billion ?
Municipalities R20 billion R0.2 billion
?
?
Health R20 billion R12.5 billion
R500 billion R158 billion
1. Data compiled from latest publicly available information as outlined in the below detailed table.
?
INSTITUTE FOR ECONOMIC JUSTICE
COVID-19: South Africa’s COVID-19 Rescue Package Scorecard Update – 11 February 2021
P R O T E C T R I G H T S . S E C U R E L I V E L I H O O D S . S U P P O R T B U S I N E S S E S . R E S C U E T H E E C O N O M Y. 2WHAT WAS
PROMISED AND
WHERE DID IT WHAT IS
COME FROM? CURRENT STATUS ASSESSMENT NEEDED?
SOCIAL SECURITY
R50 billion After public pressure, the The ending of the SRD is An extension and
towards new and SRD grant was extended likely to cause increases in increase of the SRD
existing grants (cut to 31 January 2021, and hunger. Research has found grant to at least the
to R41 billion in has since ended. The other that the combination of food poverty line of
the Supplementary grant increases ended on the TERS scheme and the R585 per person per
Budget). Only R25 31 October 2020. SRD Grant contributed to month.
billion from new In November 2020, 6.9 the decrease in levels of Unduly harsh and
allocations. million beneficiaries hunger between May and narrow criteria for
of the SRD grant were August of 2020. Researchers accessing the grant
1. Social Relief of estimated that ending the
Distress (SRD) grant approved and paid. By end need to be reassessed.
November a total of R13.5 SRD and Caregivers grant
- R350 per month alone would plunge 5.8 Inclusion of caregivers
(May - October billion rand had been spent for the SRD Grant
on the grant million people into hunger.
2020). regardless of whether
2. Caregivers top-up As of October 2020, The end of the Caregivers they are receiving a
grant - R300 in May there were more than top up grant has been child support grant on
2020, R500 per 7 million beneficiaries of particularly devastating behalf of their children.
month thereafter the caregivers grant. to women who
overwhelmingly provide Urgent progress
(until October
As of 30 September 2020, care to children in South towards
2020).
76% of the R41 billion had Africa, and benefit less from implementation of the
3. All other grants -
been spent. other relief measures such long overdue Universal
increase of R250
as SRD and TERS. Basic Income Guarantee
per month (May -
(Grant) for those aged
October 2020).
18 to 59 years.
JOB CREATION AND PROTECTION
R100 billion Ongoing; aims to be a Given the number of jobs The full R100 billion
to job protection and 3-year programme. lost during 2020, and the must be allocated to
creation schemes. Only R6.1 billion was role of unemployment in immediate emergency
allocated from this in the poverty and hunger, it is relief spending and a
2020 MTBPS towards small unacceptable that so little plan on its use should
and informal business of this relief package has be urgently tabled.
support, and job creation been spent thus far. The full Public
and protection. The Public Employment Employment
Treasury claims the October Stimulus, part of this Stimulus should
amounts of R12.6 billion and broader programme, is be implemented,
R7 billion allocated to Public intended to provide 700 including the
Employment Stimulus and 000 opportunities across 11 social employment
extending the SRD grant, departments. programme and a
respectively, come from As of January 2021, Youth Service.
this fund. However, it is not a reported 433 167 The use of the R100
clear that this is the case opportunities have been billion must include
and these funds may come created. new industrial policy
from the reprioritisation of Thousands of teaching measures to assist
existing expenditure. assistants in this programme in the targeting of
were not paid in Kwa-Zulu labour intensive
Natal. industries.
INSTITUTE FOR ECONOMIC JUSTICE
COVID-19: South Africa’s COVID-19 Rescue Package Scorecard Update – 11 February 2021
P R O T E C T R I G H T S . S E C U R E L I V E L I H O O D S . S U P P O R T B U S I N E S S E S . R E S C U E T H E E C O N O M Y. 3WHAT WAS
PROMISED AND
WHERE DID IT WHAT IS
COME FROM? CURRENT STATUS ASSESSMENT NEEDED?
WAGE RELIEF (TERS)
R40 billion The TERS scheme was The TERS system was in
many cases difficult to access
Extension of the TERS
to pay wages and ended unilaterally (without scheme.
employer and union for formal business. It was
avoid job and income Improve
consent) in October 2020. even more inaccessible
losses, financed for informal workers and administration and
from Unemployment TERS applications for the reduce delays.
period up to October 2020 undocumented migrants,
Insurance Fund those most vulnerable to
closed on 31 December Increase the level of
surpluses. job loss. The amount paid
2020. compensation.
out, dictated according
According to the Dept. of to a sliding scale, was Launch investigations
Employment and Labour, untransparently applied and into reports of
R55.6 billion was paid too low to compensate for corruption, and
out by mid-December the full income lost. payback for those
to 1.1 million applicants The end of this programme, short-changed.
(employers). However, how shortly before the second
many workers benefited is wave of COVID-19 hit South
unclear. Africa, means that many of
those who have permanently
lost their jobs or have been
temporarily unable to work
due to Level 3, especially
those in the hospitality
industry, were left without
support.
Despite the amount of
money paid out, and the
reportedly high beneficiary
figures, there have been
numerous reports of
employers not paying
employees and high levels of
corruption within the system.
CREDIT GUARANTEE SCHEME
R200 billion Remains in place. This scheme has largely
failed. Businesses have
Set up a business
to provide loans to By 16 January 2021, only rescue fund to provide
accessed less than 10% of the bailouts and grants, as
business, substantially R18 billion in loans had available amount. loans are not always
guaranteed by been given. Of the 48 366
government. Heavily indebted firms have appropriate.
applications, only 27%
been reluctant to accumulate
were approved and paid Reduce eligibility
more debt but early in the
out. programme banks also used criteria to improve
traditional credit-worthiness uptake.
checks. These checks should Outreach strategy to
not apply to applicants as promote access.
a requirement for the loan
is that the business should Rework the terms of
be in financial distress. the scheme to remove
While some changes to the restrictions on use of
requirements were made proceeds and improve
in July 2020, the scheme terms of repayment.
remains inaccessible and the
support it can be provide is Capitalise
limited. development finance
institutions to
Administrative issues have
also led to delays and made rapidly scale up their
it very difficult for small financing.
businesses to access these
funds.
INSTITUTE FOR ECONOMIC JUSTICE
COVID-19: South Africa’s COVID-19 Rescue Package Scorecard Update – 11 February 2021
P R O T E C T R I G H T S . S E C U R E L I V E L I H O O D S . S U P P O R T B U S I N E S S E S . R E S C U E T H E E C O N O M Y. 4WHAT WAS
PROMISED AND
WHERE DID IT WHAT IS
COME FROM? CURRENT STATUS ASSESSMENT NEEDED?
TAX RELIEF
R70 billion All tax relief measures have There is little reporting Extend tax relief
in tax deferments, now come to an end. and data on the efficacy measures for small
including: There is limited data about and uptake of these businesses and
uptake. In April and May, programmes. However it employees. These
1. Four-month would be appear that most businesses are trying
16 000 firms used the PAYE
holiday from skills businesses, particularly to re-open and cash
deferral option, with the
development levy SMMEs, have not made use flow remains a serious
total relief estimated at
contributions; of the programmes. constraint.
R750 million.
2. Fast tracking VAT
refunds; The skills development levy In some cases, conditions, Make certain forms of
3. Three-month delay holiday of four months such as not having any tax relief automatic for
for filing and the from May 2020 cost about debt, would exclude many small businesses.
first payment of R6 billion. of the most vulnerable Develop tax relief
carbon tax; Only 434 small, medium small businesses. For the measures for
4. Increase of PAYE and micro-enterprise programmes that required households.
deferral to 35%; (SMME) vendors made use an application, it is likely
that businesses with in- Additional tax revenue
5.Expansion of the of filing VAT returns on
house finance teams were must be raised
employment tax a more frequent basis to
able to benefit, while through increasing
incentive; and access VAT refunds sooner.
smaller businesses would be taxes on the wealthy
6. Deferrals in the Deferrals in the payment left behind. and high-income
payment of excise of excise duty on alcoholic earners.
duties on alcohol beverages and tobacco
and tobacco products and the fuel levy
products and the amounted to R7.5 billion
fuel levy by July 2020.
The total cost to the R1 billion was also paid
fiscus is estimated at out for relief on a “case-
R26 billion. by-case” basis for 167
applications.
MUNICIPALITIES
R20 billion Remains in place. As of 30 There is a lack of The rapid scaling up of
to support September 2020, only 1% transparency around emergency measures
municipalities in of this money had been municipal funding so it to provide water and
providing proper spent. is unclear whether these sanitation.
water and sanitation, funds have in fact been A system of
sanitary public allocated to municipalities transparency for how
transport, food and whether and how money has been spent
provision, and municipalities have spent and will be spent in
accommodation for them. future.
the homeless. Lack of sanitation A model instituted
Financed from a R11 and water provision whereby poorer
billion increase in remain endemic to poor municipalities receive
local government communities, particularly in necessary funding.
funding, and a R9 rural areas.
billion reprioritisation
of existing municipal
budget expenditure.
INSTITUTE FOR ECONOMIC JUSTICE
COVID-19: South Africa’s COVID-19 Rescue Package Scorecard Update – 11 February 2021
P R O T E C T R I G H T S . S E C U R E L I V E L I H O O D S . S U P P O R T B U S I N E S S E S . R E S C U E T H E E C O N O M Y. 5WHAT WAS
PROMISED AND
WHERE DID IT WHAT IS
COME FROM? CURRENT STATUS ASSESSMENT NEEDED?
HEALTH
R20 billion Remains in place. As of 30 Ongoing COVID-19 health Adequately funding
(revised to R21.5 September 2020, 58% of spending will be required the vaccination
billion in the the R21.5 billion had been throughout 2021/22, programme is
Supplementary spent. including between peaks. essential and the
Budget). The net However, a recent report National Treasury has not costing plan must
increase to the health suggests that a significant made public plans for urgently be made
budget was R2.9 proportion of this was lost funding of the vaccine available publicly.
billion. in corruption associated programme. Estimates of Further transparency
with the procurement the cost range between is required for the
of PPE, as well as other R12 billion and R20 billion, vaccine programme
medical services and which is a small amount, processes and logistics.
products. given the anticipated Continued lobbying
benefits of the vaccines. for a waiver of
Treasury’s reported Intellectual Property
reluctance to fund this rights on COVID-19
programme is therefore vaccines and
odd. medication.
Increased investment
in local medical
manufacturing
capacity.
Continued testing and
quarantining capacity.
Filling of vacant
posts and increasing
hiring to cover sick
and overworked
healthcare workers.
Improvement of
health care facilities.
The government’s rescue package has failed South
African citizens. Urgent action is required to support
incomes, give relief to destitute households, advance
access to healthcare and sanitation, rescue businesses
and prevent further economic and social collapse.
INSTITUTE FOR ECONOMIC JUSTICE
COVID-19: South Africa’s COVID-19 Rescue Package Scorecard Update – 11 February 2021
P R O T E C T R I G H T S . S E C U R E L I V E L I H O O D S . S U P P O R T B U S I N E S S E S . R E S C U E T H E E C O N O M Y. 6REFERENCE LIST
SOCIAL SECURITY CREDIT GUARANTEE SCHEME
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to-give-government-must-increase-and-extend-not- scheme.pdf
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https://theconversation.com/south-africas-covid-19-
hunger-relief-efforts-are-working-why-they-must-
continue-147698 TAX RELIEF
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PROTECTION
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MUNICIPALITIES
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WAGE RELIEF HEALTH
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inititatives%20-%20FINAL%20PDF%20(interactive).pdf
INSTITUTE FOR ECONOMIC JUSTICE
COVID-19: South Africa’s COVID-19 Rescue Package Scorecard Update – 11 February 2021
P R O T E C T R I G H T S . S E C U R E L I V E L I H O O D S . S U P P O R T B U S I N E S S E S . R E S C U E T H E E C O N O M Y. 7You can also read
