BRUCE WHITFIELD: Eight lessons Covid-19 taught SA
And one lesson the government would do well to keep in mind: there are few things more powerful than a citizenry that refuses to collaborate with an incapable state
It’s hardly surprising that after nearly 150 days of lockdown, give or take half a year, our analysis of the government’s response to the pandemic is highly critical. The state hasn’t exactly covered itself in glory.
Much of its communication has been poor, enforcement petty and application patchy. How the economy recovers will make or break this government. Possibly even the ANC itself.
It would be foolish to let this crisis go to waste. In my book The Upside of Down, published the week SA went into lockdown, I wrote: “Bizarrely, a crisis might just be what SA needs to force the hand of policymakers to become more decisive. Crises that may accelerate a recovery following a collapse, however, hurt the most vulnerable in society in the short term and should be avoided.”
When I wrote that, my thoughts were centred on the slow-burn implosion of the economy. I was thinking about SA’s inability to confront the politically unpalatable choices it needed to make to boost confidence and provide the private sector with appropriate incentives to do what it does best — create economic prosperity via growth and job creation.
At the time, the pandemic was starting to emerge in China. There was no way of knowing at that point what a catastrophic effect Covid-19 would have on the local and global economy.
Covid-19 has exposed SA’s faultlines more clearly than ever before, and it is up to policymakers to seize the opportunity to drive through a reform agenda that, before this crisis, might have seemed impossible.
In the early stages of this crisis, a couple of good things did happen: spectrum was freed up, albeit temporarily, to ensure the digital economy could keep moving; and the government showed a willingness to listen to private sector advice.
But as the crisis dragged on, this waned. It now needs to be reignited.
Lesson 1: Government matters
For those fortunate enough to be able to afford medical aid, private security, estate living, insurance to protect against loss of income, and sufficient capital to have an offshore backstop, the quality of government didn’t really affect them directly before the pandemic.
The inconvenience of a visit to the department of home affairs is now largely offset with a branch visit to a bank in a big city, while car licence discs can be renewed online. If you can afford to pay a premium, you can minimise your need to interact with the state.
However, Covid-19 has shown just how much of an impact an incapable state can make.
The failure to distribute the funding it promised to poor people and struggling businesses is just a small part of the state’s failure to grasp the nettle. Its inability to drive policy reforms during a crisis to accelerate SA’s recovery is a damning indictment of its competence.
Lesson 2: Governance matters too
Integrity is non-negotiable. The litany of public sector scandals involving corruption in the procurement of personal protective equipment (PPE) should be a catalyst for a massive clean-out of corrupt officials. As of course should be the R1-trillion-plus that could have been used to mitigate this crisis but was siphoned out of the system over decades.
For the first time, however, there is a real chance it might happen — if for no other reason than the fact that following SA’s $4.3bn Covid funding package from the International Monetary Fund (IMF), it is highly unlikely that the country will receive affordable support in future unless it can demonstrate it is ruthless in dealing with abuses.
The consequences of a failure of governance in SA, the corroding of institutions and hollowing out of law enforcement have weakened the country’s institutional capacity to act satisfactorily in the interests of its citizens.
The mere fact that SA had neither the space nor the capacity to implement a smart lockdown, and instead went for the jackboot approach which created an economic crisis and searing public resentment, demonstrates why the state needs to up its skills quotient.
Covid-19 has also demonstrated the importance of a vibrant constitutional democracy characterised by strong, electable opposition. This quote is apt: “Politicians are like diapers — they need to be changed regularly and for the same reason.”
Lesson 3: People matter
While teachers’ unions forced a renewed shutdown of schools, with children losing full access to education, there has been very little resistance from health workers who, in the face of extraordinary adversity, have nursed thousands of people back to health.
As it is, nearly one in 20 deaths in SA from Covid-19 have been health workers. They have had to deal not only with the dreadful reality of facing their own fears, but with the horror of entering wards amid extraordinary suffering, and dealing with patients cut off from their families.
Lesson 4: Skills matter
Whether it be in health, education, policing or anything else, training is imperative.
There are pockets of excellence: you may have forgot, before the crisis, that SA had a chief scientist, but Prof Salim Abdool Karim’s steady resolve has been apparent since the earliest stages of lockdown.
Unfortunately, South Africans’ experience of the state has not shown the same clear precision. When a police officer is incapable of making a judgment call on a regulation, after a parent darts onto a beach to retrieve a toddler who strayed into forbidden territory, you have a problem.
Considering 230,000 people have been arrested for breaching the lockdown rules, perhaps the problem is not the people, but the rules themselves.
Little was done to get South Africans to buy into the lockdown and the rationale behind the draconian rules which ultimately destroyed livelihoods. This was an error: there are few things more powerful than a citizenry that refuses to collaborate with an incapable state. The public’s patience with petty regulations wore thin.
The often clumsy policy formulation exposed the severe weaknesses that exist in the government, but it reveals why it has failed to fix long-standing issues across the economy from energy, to telecommunications, financial services and mining.
The desire to preserve lives was noble, but the intransigence of the state, despite global best practice showing clear evidence of superior methodologies, revealed a haughty belligerence to the reality most South Africans face daily.
The lockdown was applied with the skill and finesse of a rampaging rhino. Rhinos, being notoriously thick-skinned, bad tempered, short-sighted and quick to respond furiously to provocation, aren’t what public officials should aspire to being compared to.
Lesson 5: Profit is critical
With a rapidly expanding debt burden and collapsing revenues, the government is going to have to come to terms with the fact that it needs significant private sector investment. But to get this, it will need a regulatory regime that allows industry to generate a decent profit.
This will probably require the biggest mindset shift in government. With an estimated R300bn tax shortfall this year, due to the collapse of business and job losses, the importance of a healthy and vibrant business sector cannot be underestimated.
Lesson 6: (Honest) Rich people matter
In this context, “rich” means anyone with a job who pays income tax and contributes to the fiscus. The reality is that most income tax is paid by a small, privileged elite and SA has been losing many of those people to better-governed jurisdictions.
In 2019, according to National Treasury statistics, just 121,000 individuals paid 29% of all personal taxes. These people were in an elite club of those who earned more than R1.5m per year, which put them in the highest tax bracket, where incomes are taxed at 45%.
In SA, courtesy of its progressive tax system, the more you earn, the more you pay. But a tax base is far more compliant when it believes the portion of its income it surrenders is well used. A growing number of South Africans no longer believe that to be the case — and who can blame them, considering the mountain of abuses of the fiscus?
Recent media reports and speculation about how the government is going to fund itself in light of the massive revenue losses brought about by its response to Covid are likely to unsettle wealthier taxpayers even further. Prescribed assets, wealth taxes and other measures designed to extract more from them is likely to drive more capital out the country.
It illustrates that our response to the economic hardships of this crisis will be even more important than the health response to the pandemic itself.
Lesson 7: Hope is not enough
The government cannot expect the 3-million people who have joined the ranks of the unemployed over the past five months to be satisfied with hollow promises of jobs.
President Cyril Ramaphosa took over the leadership of the country on the promise of better days ahead. But even before the Covid-induced lockdown, he had demonstrably failed to deliver on that. The president who came to power on a platform of “hope” now has to deliver, or risk losing his job next time the electorate gets its say at the polls in 2021.
Remember, it was the shock the ANC received in the 2016 municipal elections which accelerated the downfall of Jacob Zuma at the elective conference in 2017.
Lesson 8: Arrests and jail time must come
The justice system’s response to the looting of the country’s finances is one of the biggest constraints to future investment, by foreign and domestic investors alike. The flight of capital from the bond and equity markets over the past five years is testament to that.
But if you think the past five months have been hard, you’ve seen nothing yet. Unless this issue is addressed, soon, it’s only going to get so much worse.
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