State should support all business, regardless of race, Tito Mboweni says
Union Solidarity is appealing against a high court ruling allowing the tourism department to use BEE as a consideration when handing out state relief funding
The government needs to support all enterprises in its Covid-19 relief funding, regardless of the race, finance minister Tito Mboweni said on Tuesday.
“I think that we need to support all enterprises, black and white, as long as they are able to remain viable to support our people, create jobs, Mboweni told parliament’s two finance committees regarding the Treasury's strategic and annual performance plans.
The lockdown has brought SA's economy to a near standstill, leading to businesses either being shut down, or to the brink of closing their doors.
Trade union Solidarity is approaching the Constitutional Court to appeal against a high court ruling allowing the tourism department to use B-BBEE as a consideration when dishing out R200m in state relief funding to cushion the sector from the effects of the Covid-19 pandemic.
The union has also laid a charge of perjury against small business development minister Khumbudzo Ntshavheni for allegedly contradicting herself over her department’s decision to use B-BBEE as a criterion to help distressed companies affected by the coronavirus.
Mboweni said he had had a discussion with a white hotel owner whose business was successful in good times and whose employees were 95% black. The hotel, which was in a tourist area, was closed because of Covid-19 and the owner told Mboweni that he could not get money from the government because he was white.
Mboweni told him he was sure he was wrong and that he had misunderstood the position but would discuss the issue of the tourism relief fund with minister Mmamoloko Kubayi-Ngubane.
“There will always be a bias towards emerging black businesses because they were discriminated against for a long time, but let’s pull together and build a SA of our dreams, nonracist, nonsexist, and democratic and prosperous.”
Kubayi-Ngubane has said that the relief scheme does not discriminate against white business people as long as their businesses are B-BBEE compliant.
Mboweni emphasised on Tuesday the urgent need for the economy to open up from the lockdown.
“The quicker we are able to reach level 2, the better, but at the same time we must not be careless about it as we have to balance the needs of the economy with the health status of our people.
“There is no doubt, in my view, that the opening of the economy is urgent but this urgency must be tempered by the need to protect the lives of our people. We need to have a balance — it is not an either-or situation.”
In terms of the government's R500bn stimulus package, government departments will have to implement R130bn in budget repriorisation to cover the cost of Covid-19 programmes.
This, and other cuts will be reflected in the supplementary budget, which the Treasury will table in parliament in June or July to reflect the decline in anticipated revenue, the expenditure and funding for Covid-19 and the changes to the budget deficit and debt ratios.
Mboweni said that he was no longer interested in funding dysfunctional state-owned enterprises, though he fully supported functional ones such as partially state-owned Telkom.
He was in favour of arms manufacturer Denel getting help but it needed to get its business case operating properly, he said. The company supplied both the domestic and international markets and had the capacity to assist in the transformation of the military-industrial complex.
With regard to the creation of a state bank and sovereign wealth fund, Mboweni said the situation had changed since that was announced in February, but the Treasury was nevertheless committed to their creation and had completed work on this. It would be a challenge for the state to capitalise a state bank at the moment.
The minister said the question of structural reform had become more important, particularly as government might be approaching the International Monetary Fund for Covid-19-related funding. The question had been raised about whether that assistance would be tied to structural conditionalities or not. The Treasury had begun to propose economic structural reform long before the emergence of Covid-19.
Questioned about his statement supporting the direct purchase of Treasury bonds by the Reserve Bank, deputy finance minister David Masondo, who was also briefing the committees, once again defended his comments, pointing out that making a comment on the SA Reserve Bank was different from taking a decision on its behalf.
The Reserve Bank would not allow any challenge to its independence, he said.