Crises bring out the best and worst of politicians and populations. Folly, fear and fortitude are on display everywhere. In the main, democracies have fared better than non-democracies in handling the coronavirus pandemic.
But the record is very varied indeed. What explains this? What can be done about it?
Among democratic regimes, at the one extreme we have seen denialism, the denigration of scientific advice and an obsession with putting the economy before lives. This is especially evident in the United States and Brazil. At the other we have witnessed the organised, prudent, empathetic responses of countries such as South Korea, New Zealand, and Finland. South African president Cyril Ramaphosa initially did very well, but some subsequent decisions might damage his good record.
These two extremes of leadership style were evident even before COVID-19.
The USA and Brazilian responses to the pandemic, led by President Donald Trump and President Jair Bolsonaro, have been characterised by secretive, narcissistic, paranoid, hubristic and impulsive decision-making. These actions have endangered the lives and livelihoods of their residents, over which they have a duty of care.
The data bears this out well. Despite having arrived on their shores relatively late, the pandemic has ripped through their populations, with no sign of abating. They lead in infections and deaths.
At the other extreme, a common denominator has been a firm attempt by political leaders to “follow the science” and control the spread of the virus and fake news from the outset. A combination of transparency, prudence, empathy, timing and courage has produced excellent results in South Korea, New Zealand and Finland.
Democracy and leadership
What becomes clear is that in these fast-moving and life-defining times in democracies a great deal depends on the quality of the elected leadership. Democracies that happen to have leaders who simultaneously engage empathetically with those they govern and are informed by good science are best able to deal with the crisis.
They gather clear-eyed knowledge of their countries’ particular circumstances, and display courage and timing in making critical and sometimes unpopular decisions. They are able to overcome many of the challenges that the pandemic throws up.
Democracy helps, but it is not the deciding factor. What matters most is what kind of leader is in place, where his or her priorities lie: the well-being of the populace or the interests of a small group.
Four of the top five performing countries in terms of lives saved and control of the spread of the virus have women leaders: New Zealand’s Jacinda Ardern, Finland’s Sanna Marin, Germany’s Angela Merkel and Taiwan’s Tsai Ing-wen. These women display empathy and firm focus on the well-being of their populations.
Politicians judge best when they listen to their populations and learn from the science. That is why democracy is uniquely placed to engender good judgements, as the Indian economist Amartya Sen argued with regard to famines, and I have argued elsewhere.
Yet, it would be mistaken to think that democracy guarantees good judgement. If the purveyors of conspiracy theories and exemplars of prejudice are also your democratic leaders, democracy itself cannot resolve things. It only gives citizens the power to remove those leaders at the next election.
Bread, circuses and crises
In the current crisis, Ramaphosa has done a much better job than Trump and Bolsonaro.
Ramaphosa got off to a great start. He acted firmly, quickly, with clear justification and impressive results. South Africans have just emerged from one of the most severe lockdowns imposed anywhere in the world. This kept the infection rate nearly as low as that of South Korea, though it is now shooting up.
During this period, however, there have been at least two problematic decisions that undermine public trust and thus how people may behave.
The first is the decision to ban the sale of tobacco. Even if we could distinguish sharply between basic needs and other needs – something I dispute – the idea that addiction to smoking falls into the latter category, and that, along with the fact that COVID-19 is a respiratory disease, justifies the ban, is misguided. For an addict, the need for a cigarette may often trump even the need for vital nutrition.
The second is the decision to allow religious gatherings to resume under lockdown level 3. Having spent so long restricting gatherings, to now allow larger gatherings seems like folly. It is well known – cases abound from South Africa to South Korea – that, like funerals, large religious gatherings are super-spreading events.
Along with the ban on tobacco products and the incorrect assumption that the state could directly meet the basic nutritional needs of the population via the delivery of food parcels, the response to the religious lobby is reminiscent of Juvenal’s comment under imperial Rome some two thousand years ago that all the people really want is “bread and circuses”. This is not what people want or need. They require the power to express their actual needs and interests and the democratic means to ensure that government responds to these.
Ramaphosa’s good leadership has been undermined by a paternalistic attitude to people’s needs and seeming deference to South Africa’s powerful religious lobby.
Lessons to be learnt
Two things can be learnt from the varied responses to the coronavirus crisis.
First, we must use it to find a roadmap for how we can properly make the health and well-being of a state’s population the raison d’être of its government. The first thing to identify is that health is not the “absence of disease” but the status we each have when our ever-changing needs are optimally satisfied. For this, we need a politics that allows us to express and assess our needs, and determine who is best placed to represent us in responding to these needs, all in non-dominating conditions.
Second, given that it is no accident that those leaders who have responded worst to this crisis have also been the main sources of countless conspiracy theories and misinformation, we must learn to keep oligarchs away from political power. Under representative democracy, bar outright revolution, we do not have the power to affect the everyday decisions of our representatives, but we can keep those with exclusive social and economic interests out of positions of political power.
The Government of Nigeria plans to tax foreign digital service providers offering services to Nigerians and earning revenue in naira.
Some of these service providers which are video streaming sites, social media platforms, and companies that offer downloads of digital contents are expected to pay digital tax to the Federal Inland Revenue Service.
The Minister of Finance, Zainab Ahmed, had issued the Companies Income Tax (Significant Economic Presence) Order, 2020 as an amendment of the Finance Act 2019.
The order aimed to impose tax on a foreign entity with respect to certain services or digital transactions if it had a Significant Economic Presence in Nigeria.
It further stated that the finance minister may by order, determine what constituted SEP in Nigeria.
Netflix, Facebook, Twitter, among others are some of these foreign companies that offer digital video and advertising services to Nigerians.
Others like Alibaba and Amazon generate revenue from Nigeria by processing and transmitting data collected about users in Nigeria, provision of goods or services directly or through a digital platform or offer intermediate services that link suppliers and customers in Nigeria.
The new regulation would apply to companies with income of N25m or equivalent in other currencies from Nigeria in a year and those with a Nigerian domain name (.ng) or a website address in the country.
The SEP order mandated foreign companies with sustained interactions with persons in Nigeria and customising their digital platforms to target persons in Nigeria by stating the prices of its products or services in naira to pay taxes.
According to the Act, a foreign entity providing technical services such as training, advertising, supply of personnel, professional, management or consultancy services shall have a SEP in Nigeria in any accounting year if it earns any income or receives any payment from a person resident in Nigeria or a fixed base or agent of a foreign entity in Nigeria.
However, payments made to employees of a foreign entity or for teaching in an educational institution are exempted.
Analysts at PricewaterhouseCoopers said some of the affected foreign digital companies would be required to register for income taxes in Nigeria and file annual tax returns even if they did not have a physical presence in Nigeria.
They added that Nigerian resident businesses (as well as the fixed bases of non-resident companies) that have transactions with the affected non-resident companies would also be required to account for withholding tax on some of the payments made to these foreign companies.
PwC raised concerns as to how the FIRS would enforce compliance without international consensus, as a number of the companies affected might be outside the territorial reach of the agency.
According to the consulting firm, the problem will also be exacerbated where the companies sell their products and services directly to individual consumers in Nigeria.
The COVID-19 crisis has clearly demonstrated the vulnerability of the livelihoods of many South Africans, and highlighted food insecurity as one key aspect. Many now argue that reducing the vulnerability of the livelihoods of the poor, and associated food insecurity, must become a key focus of policy.
Some assert that structural reform, tackling these problems at their root, is required more urgently than before. Land reform has this potential. It is, in any case, a political necessity. If successful, it could play a significant role in reducing the vulnerability and food insecurity of the rural population, who are one third of the population, as well as some urban residents. Enhancing employment and thus incomes is one key thrust of pro-poor land reform.
Land reform is necessary in post-apartheid South Africa to help address inherited historical injustices, especially those resulting from land dispossession of the black majority. It involves the restitution of land to individuals and communities who lost their homes and land due to forced removals. It also creates secure rights to land held by the black majority. In addition, the process aims to create a more equitable pattern of land ownership.
Land reform since the end of apartheid in 1994 has encountered many difficulties, and progress has been slow. One problem is that elites have captured many of the benefits. Another is the limited impact thus far on poverty and unemployment.
A recent study commissioned by the government and funded by the European Union, and conducted by experts from different institutions, with me as the leader, focused on the potential contribution of redistributive land reform to employment creation.
The key questions addressed in the study were: can land redistribution be undertaken in a manner that creates jobs? If so, through which commodity mix and and what kinds of farming systems, operating at what scales? And what is the potential of small-scale farming in particular?
Despite its many limitations – such as the lack of a quantitative survey due to time constraints – the study breaks new ground by investigating the potential for employment creation in specific locations, focused on specific commodities and building on local knowledge.
The study revealed a considerable, unmet demand for land by both smallholders and small-scale commercial farmers.
The study found that land reform can assist in creating more employment-intensive farming systems by:
reducing the size of farming units, while increasing their total numbers;
changing the mix and scale of farm commodities produced; and
changing farming systems so that they become more employment-intensive.
A number of assumptions informed the study. “Employment” included both employment by others and self-employment. Potential gains are calculated in terms of net jobs – the total new jobs created after deducting the number of jobs “displaced” through redistribution of the land on which existing farms are located. These are estimated as “full time equivalents” – a job was assumed to involve working a 40 hour week.
In estimating net job gains, the study assumes that 50% of the land under large-scale farming at present will be redistributed to small-scale black farmers. This illustrates the order of magnitude of potential impacts on employment. Costs to the state involve both land acquisition (at market prices) and set-up costs.
In the four municipalities in which the study took place, net job creation amounted to the equivalent of 23 691 permanent jobs. The commodities which land redistribution beneficiaries could begin to farm included subtropical fruit and nuts in Limpopo, grapes and lucerne in the Western Cape, maize and wool in the Eastern Cape, and extensive livestock (goats and cattle) in KwaZulu-Natal. Vegetables with high levels of labour intensity are key in all four municipalities.
The cost per net job varies from R325 425 in KwaZulu-Natal to R685 311 in the Western Cape.
The findings have major implications for the targeting and selection of beneficiaries, commodities and farming systems.
It shows that that extensive livestock production, including wool, offers key opportunities. The bulk of the land surface of South Africa is not suitable for cropping, and livestock production is likely be the dominant land use on redistributed farms. Net gains in its employment intensity are thus significant at the national scale, if modest at farm level. This can be enhanced if new and more employment-intensive value chains are created (as shown clearly in the KwaZulu-Natal case).
Given expanding market demand for fresh vegetables, these crops offer important opportunities for small-scale black producers. Their potential for employment creation is particularly significant.
Challenges and recommendations
Key challenges for land reform projects include improved access to irrigation water, formal and informal markets, and effective extension and advisory services. High-value subtropical fruit, nuts and grapes by small-scale producers have great potential, but this must be balanced against their high capital and running costs, and technically demanding character.
A key consideration is how to enhance access to markets and value chains (including agro-processing). Climate change is also likely to have highly negative impacts on all scales and forms of agriculture, even though its precise nature and timing remain uncertain.
The study also considers a number of policy issues, such as the allocation of farm production units of appropriate sizes, land tenure options, and the design of effective support services.
It recommends the decentralised implementation of land reform and discusses the need for complementary policies in relation to support for informal agricultural markets, water allocation reform, environmental management and climate change, state procurement, and improved data collection.
Land policy always involves difficult trade-offs, in this case between capital intensity and employment intensity, and between creating more jobs and paying decent wages. These have to be carefully weighed up and steered in a practical manner.
Clearly, finding the funds for land reform will not be easy. But if significant reductions in unemployment through land reform focused on small-scale farming are indeed feasible, as argued in this study, then it might well be worth the effort to find the requisite funds.
When South Africa eventually emerges from the fog of the COVID-19 crisis, structural reform, including land reform, will be high on the political agenda as never before. A key question is: will policy makers be ready to grasp the nettle of farm scale, and promote the large-scale redistribution of land to small-scale producers?