GIULIETTA TALEVI: Ghost town of dead restaurants a monument to government failure
In SA, erratic or nonexistent government support is almost to be expected. But for the private sector, in the form of SA’s short-term insurers, to turn its back on customers is truly a travesty of justice
If you needed reminding of the real-time economic devastation taking place around us, and you live in Joburg, take a drive down Melville’s once buzzing 7th Street.
It’s a ghost town. The latest restaurant to fold also happens to have been one of the strip’s most successful: the highly rated Pablo Eggs-Go-Bar, famous across Joburg for its Yemeni flatbread.
This week, Pablo Eggs-Go-Bar announced that “in these uncertain times, we have decided to consolidate our financial exposure and simply lack the financial [means] to reopen”.
As Gilad Isaacs, the Wits academic engaged in a heated battle with the National Treasury over its R500bn “stimulus” package, points out: “This was a restaurant that was always full. It must have employed 25 people. The only thing that could have prevented this is adequate and effective government support. This is infuriating.”
Infuriating yes; frightening, more so. It’s not just the 25 people employed directly by that restaurant that will be affected, but its suppliers too. Now multiply this by hundreds of thousands of businesses in a similar position. It hardly bears thinking about.
Yet there has been at least some good news this week for a sector that has suffered the brunt of Covid-related lockdowns.
In SA, erratic or nonexistent government support is almost to be expected. But for the private sector, in the form of SA’s short-term insurers, to turn its back on customers is truly a travesty of justice.
In what will hopefully be a precedent-setting judgment, the high court in Cape Town this week ruled in favour of Cape establishment Café Chameleon against its insurer, Guardrisk. As Sasha Planting writes in this comprehensive piece, the judge ruled that the Covid-19 outbreak “is the legal and factual cause of Café Chameleon’s loss resulting from the interruption to its business”. As a result, Guardrisk must pay up.
David Raad, a partner in Café Caprice in Camps Bay and Hudsons Burger Joint, said: “At a time when everyone is coming together – even the government with its Ters [temporary employer/employee relief scheme] programme – the people we relied on the most to cover us have turned their backs on us. This is the right result.”
Let’s hope this ruling forces Santam, in particular, to reconsider its decision to leave restaurants in the lurch. Because if there’s one thing nobody likes in SA, it’s an insurance company coy about lending you an umbrella when it’s raining.
SA’s creativity deficit
What would be even better is if President Cyril Ramaphosa’s well-fed government were to cast their eyes over the bonus scheme introduced by the UK government this week. The centrepiece of measures rolled out by the UK’s treasury chief, Rishi Sunak, is a massive tax cut on the sale of food and drinks, accommodation and admission to attractions – from 20% to just 5%. Read the Associated Press story here, and the Financial Times’ take on it here.
The measures even include an “eat out to help out” discount: a 50% discount for meals and nonalcoholic drinks in cafés for the month of August.
“The final measure I’m announcing today has never been tried in the UK before, this moment is unique, we need to be creative,” said Sunak on Wednesday.
There are other interesting measures too. For example, for UK companies that have furloughed people during the crisis, the British government will give them a £1,000 bonus for each employee they take back.
If only our government and private sector displayed that sort of creativity. But then, at this point, I’d probably settle for them just showing up at all.
*Talevi is the FM's Money & Investing editor.
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