EDITORIAL | SA has some junk choices to make if it’s to keep the economy afloat

Whether you support it or not, there is no denying the booze ban is having a devastating impact on the jobs and livelihoods of many in SA.

The alcohol, hospitality and tourism industries have been hit hardest by Covid-19 and government is once again under pressure to come to the table to assist individuals and businesses in these sectors.

While lockdown level 3 lite means there is more economic activity than during the first level 3 lockdown last year, it has brought substantially less economic assistance from government.

Yesterday, business and labour were in talks with government about possible relief measures, including reintroducing the Temporary Employer/Employee Relief Scheme (TERS), which ended in October. Whether the UIF has the reserves to absorb this cost depends on who you ask.

SA’s alcohol industry has called for a deferment of excise duty, which would amount to about R2.5bn a month, in a bid to keep business closures and job losses at bay. Vinpro, which represents 2,500 local wine producers, says the industry is facing an enormous financial crisis and that its capacity to make these tax payments is severely constrained. 

Added to that, the R350 monthly Covid-19 unemployment grant ends in January, which will leave those already living on the breadline even worse off, a sad indictment of SA’s ability to care for its most vulnerable.

Will hard choices have to be made between keeping businesses afloat and buying vaccines?

Cosatu wants the Reserve Bank to cut the repo rate by 50 basis points at its policy meeting next week. But with the rate now at its lowest in five decades, some economists say there is “extremely limited” room for further relief.

Several big hotels have closed their doors — the latest being the Hilton in Durban, which suspended online bookings on Monday. It is unclear when it plans to reopen, but the KZN government says it is working with the hotel to get its doors open again as soon as possible. Don’t hold your breath — exactly what it can do to return the hotel to profitability is a mystery.

As Sunday Times Daily reports on Wednesday, several luxury game lodges, which derive the lion’s share of their turnover from foreign tourists, are also floundering. Steep pay cuts for staff have had a painful knock-on effect in local communities, which show no sign of abating.

To stave off a humanitarian crisis in the region and halt increasing poaching, one lodge, Singita, worked with NGOs and the private sector to set up soup kitchens and provide food parcels to communities surrounding its Kruger area lodges.

It is natural for South Africans to look to government for bailouts and solutions in these desperate times. But the harsh reality is that government’s input is limited due to fast-diminishing resources and a budget that was already flailing before Covid-19 came calling.

Will hard choices have to be made between keeping businesses afloat and buying vaccines? Probably, yes. So the pie needs to be cut carefully. Every cent SA spends must be accounted for. The country cannot afford to fund non-essentials now, because if this pandemic is not brought under control soon, SA’s economy will languish in junk status for decades to come.

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