The South African government has asked the International Monetary Fund (IMF) for $4.2 billion. The money would come from a facility that provides financing to countries
facing an urgent balance of payments need, without the need to have a full-fledged program in place.
According to the IMF managing director this means that the recipient can spend the money freely but should keep the receipts. Nevertheless, reports that South Africa has been negotiating a letter of intent with the IMF suggests that at least part of the financing will be linked to tougher IMF conditionalities.
The letter of intent is a letter from the government to the IMF in which it sets out the policies that it intends to implement to correct the macro-economic problems that caused it to seek IMF support. The IMF board decides to provide a country with financing on the basis of this letter. Its contents are the core of the conditionalities attached to IMF financing.
South Africans will learn the actual terms of the IMF financing at the end of July when its board of directors considers the country’s request for financial assistance.
But many have already made up their minds about this transaction. Some see it as a humiliating defeat in which the country will be forced to surrender its sovereignty and accept demeaning and immiserating economic policies. Others see it as the first step back from the abyss. They expect the IMF to force the country to take its medicine, as bitter as it may be, and regain economic health.
Both these views are overwrought and ultimately misleading. South Africa has more bargaining power in its relationship with the IMF than either view suggests. In the end, the terms of the IMF arrangement will depend on how effective the government was in its negotiations with the IMF.
To understand this, we need to answer three questions: Will South Africa have to surrender part of its sovereignty to the IMF? Is the IMF a particularly unreasonable negotiating partner? What responsibilities does the IMF have in negotiating the conditions?
The three questions
Will South Africa have to surrender part of its sovereignty to the IMF?
Sovereignty is a complicated and sensitive issue. It raises concerns about a state’s autonomy and ability to control its own destiny. One manifestation of sovereignty is a state’s decision to sign an international agreement. It shows that it is an actor on the international stage capable of reaching binding agreements with other subjects of international law – states and international organisations like the IMF.
Nevertheless, most international agreements restrict the sovereign’s freedom of action.
Consider, for example, the African Continental Free Trade Agreement. This agreement obliges South Africa to open – and keep open – its economy to trade with the rest of Africa. Before agreeing to this limitation on its freedom of action, South Africa negotiated with its co-signatories to minimise the cost of its commitments and maximise the benefits it expects from the arrangement.
South Africa’s arrangement with the IMF is similar. It is exercising its sovereign prerogatives when it decides to enter into an arrangement with the IMF. Before doing so, the country should negotiate for the best possible deal with the IMF.
Is the IMF a particularly unreasonable negotiating partner?
No bank, charitable foundation or international financial institution provides large amounts of financing without attaching conditions designed to ensure that the recipient uses the funds responsibly and pays them back as agreed. These conditions can range from demanding collateral to requiring promises that restrict the recipient’s future conduct in some way, such as limiting the ways in which it can use the funds.
The IMF conditions its financing on policy measures rather than on collateral or promises about the use of the funds. Historically, these conditions were ideologically driven and controversial. They included reducing the economic role of the state, making economies more market friendly and more globalised.
More recently the IMF leadership has incorporated issues such as inclusiveness, sustainability, social safety nets and gender parity.
It is not easy to predict what the exact mix of conditions will be in any particular case. The experience of other countries suggests that the actual mix is a negotiated outcome. Consequently, the conditions’ content and wording will depend on the country’s economic situation, its willingness to engage in tough negotiations with the IMF and on how effective it is in convincing the IMF of the validity of its positions.
What responsibilities does the IMF have in negotiating the conditions?
The IMF’s Articles of Agreement states that it should help countries
correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.
Thus, the IMF should demonstrate that whatever conditions it attaches to its funding are consistent with the recipient’s prosperity over the medium term. It must also show that it is not helping one IMF member state at the expense of its responsibilities to other member states.
In addition, the IMF, like any international organisation, should comply with applicable customary international law principles.
First, it must respect the sovereignty of its member states, including their laws. Second, it must respect their international legal obligations and not undermine their ability to meet these obligations. Third, the IMF, which is a specialised UN agency, should, pursuant to the Universal Declaration of Human Rights, [contribute to securing the
universal and effective recognition and observance" of human rights.
Based on these principles, the IMF has three responsibilities in regard to its arrangement with South Africa. First, it must ensure that the conditions attached to its financing are consistent with the South African constitution. In particular this means that the IMF must ensure that its conditionalities are consistent with the bill of rights in the constitution.
Second, the IMF must make sure that it does not require anything that is inconsistent with South Africa’s treaty commitments. These includes the state’s international human rights and environmental obligations. Out of respect for South African sovereignty, the IMF must defer to South Africa’s interpretation of these commitments, provided they are not inconsistent with international law.
Third, the IMF should explain how it has determined that the effect of its conditionalities is consistent with the applicable international legal principles. It is important to note that this requirement does not mean the IMF cannot require the state to take such actions as cutting its budget. But it does mean that the IMF has a responsibility to show that these cuts are the least cost way of achieving its objectives.
South Africans should not view the IMF either as the protagonist in its nightmares, or as its saviour. Instead the country should treat it as it would any other financial institution. It should demand that it live up to its own international responsibilities and demonstrate why it thinks its agreement with the government will benefit all South Africans.
When it comes to public transport, there is a responsibility both on operators and on commuters to make the required changes to their travel and commuting behaviour. This is the only way in which we can hope to keep coronavirus infection rates under control.
The comment comes from a manufacturer and distributor of cleaning products INDUSTROCLEAN, following an announcement made by President Ramaphosa on Sunday night on the regulations and limitations for long and short distance taxi journeys.
Emma Corder, Managing Director of INDUSTROCLEAN, says the reality is that public transport is a high-risk environment because of the number of people in a confined space with limited ventilation. There is also little if any access control to identify potentially sick commuters as well as a variety of common surfaces to touch such as handrails and doorknobs.
“All parties involved in public transport – taxi operators, bus companies, train operators and commuters – have to take the necessary precautions,” she says.
It starts with the wearing of a mask, explains Corder.
“This is a critical way to protect yourself and others, and it is equally important to wear it correctly. Masks block droplets from your sneezes and coughs and minimizes the likelihood of you touching your face and either spreading or coming into contact with the virus from other people.”
Eating requires removing the mask in a high-risk situation, so change habits and eat and drink before or after the ride. It will benefit others just as much as it helps you stay safe and virus free, she adds.
Secondly, it’s important that commuters sanitize their hands before and after each trip. Most transport operators provide hand sanitizers but having your own on hand is always advised.
“Carrying your own hand sanitizer will not only keep you safe but also provide peace of mind during your commute,” commented Corder. It is important that the sanitizers contain 70% alcohol.
Other tips include:
“We all have to remain vigilant as the number of coronavirus infections continue to rise. By following these simple daily guidelines we can all work together to keep the infection number as low as possible,” says Corder.
It has become common to point out that COVID-19 has highlighted South Africa’s inequalities. It is less common, but just as important, to recognise that inequality shapes how the country is governed, ensuring that, while South Africa is located in Africa, those who govern it may be closer to their counterparts in Latin America.
The first reason South Africa has been unable to stem the tide of infections is that its strategy always assumed a severe epidemic was inevitable. It is hard to fight anything if you assume you are bound to lose. This followed advice from South Africa’s medical scientists, almost all of whom embrace this view despite the fact that scientists in other parts of the world have helped to prevent great damage.
Why is this? Possibly because their points of comparison on the pandemic were not Asia and parts of Africa where infections were curbed, but the rich countries of the global North, many of which were overwhelmed. They also probably assumed that while some countries might be able to prevent a severe outbreak, South Africa could not.
If so, this would reveal a common way of thinking in South Africa: the belief that the country must compare itself to the rich countries of the North – but that it will never match up.
This pessimism is born of the view that South Africa’s government has very limited capacity. The failure to curb COVID-19 does show glaring capacity gaps. But the problem is not, as critics usually assume, a lack of technical know-how. It is, rather, a particular view of the world and the difficult relationship between those who govern and the governed.
Despite appearing to give up before the fight began, South Africa could have contained COVID-19 had it done what its government said it would do: create an effective testing and tracing programme which would identify people with the virus, trace their contacts and isolate them if they were infected.
The government likes to boast about the large number of tests its many community health workers have conducted. It talks much less about why testing has not stemmed the virus: a bottleneck at the National Health Laboratory Service, which supports provincial and national government health departments.
In May, doctors complained that it took on average a week to receive COVID-19 test results for outpatients and three to four days for patients in hospitals. Other doctors reported cases in which it took weeks to receive results. At the end of May, Gauteng, the country’s economic hub, was waiting for test results for over 20,000 people.
Testing can contain COVID-19 only if results are received speedily so that the contacts of infected people can be traced. The laboratory backlog meant that testing and tracing could not work no matter how many tests were conducted and how many health workers were hired.
This seems to be an obvious technical failure. Some test results were, according to doctors, lost, which seems to show that the lab was simply not up to the task. But the real problem may be that the government put far too much faith in a high-tech laboratory which was, because too much was expected of it, simply overwhelmed (hence the lost results).
By contrast, Senegal, a far poorer country, knowing that it had no laboratory service that could have coped, developed a test which cost only $1 and produced results very quickly.
So, South Africa believed it had capacity which it lacked. It also assumed that a laboratory which operated like those in rich countries was the most effective way to test for COVID-19. And so, unlike Senegal, it failed to come up with a solution fitted to its needs. Again, the desire to be like the North made it impossible to contain the virus.
The second problem is that the behaviours which are needed to stem COVID-19 are very difficult for most South Africans – those who live in the formerly blacks-only urban townships and in shack settlements. Overcrowding makes physical distancing very hard, clean water may not be available for hand washing and people are forced to travel in full minibus taxis.
The government could have overcome these problems if it had chosen to work with people in these areas to find ways to protect themselves. But it did not try – it relied on instructing people to do things they clearly could not do.
To South Africa’s elite, of which the government is now a part, people in low-income townships lack sophistication and maturity: poverty is confused with inability. And so there is no point in working with them.
The problem here is the government’s lack of political capacity, its inability to form a relationship with voters which would enable them to work together against a common threat.
Why is South Africa governed this way? Unlike other sub-Saharan African countries and like several Latin American countries, South Africa is both “First World” and “Third World”. A significant section of its people lives like, and measure themselves by the standards of, the affluent in North America and Western Europe.
This is why it has facilities other African countries lack and why it insists on relying on them.
People who live in “First World” conditions also find it much easier to lobby politicians. That is why the government’s claim that it would be guided only by the science of COVID-19 collapsed as lobby groups persuaded it to open activities which allowed the virus to spread.
But most people live in the same conditions as the poor of the “Third World”. Facilities designed for the “First World” one-third of the population cannot meet the needs of the other two-thirds. The elite’s deep admiration for the “First World” ensures that the government always wants to rely on what works only for the one-third because only this is “respectable”.
The issue is not that many South Africans are wealthy and live well – so do elites in other African countries. It is that the country is divided into two worlds. An entire economy and social system serves one-third of the people and excludes the rest from its benefits. This shapes attitudes as well as who gets what. The government may be elected by people outside the charmed circle but it is a product of it, hence its response to COVID-19.
Another consequence, common to South Africa and much of Latin America, is that those who live in “First World” conditions tend to see those who don’t as people who have not attained their exalted standards: they must be told what to do and controlled if they do not listen. Working with the majority to fight the virus isn’t possible when they are seen as “backward” embarrassments.
Many South Africans like to think the country is unique in sub-Saharan Africa. Its contrasts of wealth and poverty certainly are one of a kind. Its response to COVID-19 shows how much this prevents the government from doing what it needs to do.
President Muhammadu Buhari has urged African leaders to ensure the immediate actualization of the Common African Position on Assets Recovery (CAPAR), as the continent celebrates Anti-Corruption Day, July 11, 2020.
In a letter to South Africa’s President, Cyril Ramaphosa, Chairman of African Union, the Nigerian leader asked for a re-commitment to the anti-corruption war by leaders on the continent to engender an “integrated, prosperous and peaceful Africa, driven by its own citizens, representing a dynamic force in the international arena.”
The President laments that “the massive corruption being perpetrated across Africa’s national governments has created a huge governance deficit that has in turn created negative consequences that worsen the socioeconomic and political situation in Africa.”
The letter by President Buhari reads in part:
“As Your Excellency is aware, the continental fight against corruption has been premised on an irreducible minimum that can pave the way for Africa’s transformation. In this effort, the emphasis has been on the continent’s collective determination to forge resilient partnerships among our national governments, civil society organizations and other interest groups, such as women, youth and the physically challenged, to ensure improved socio-economic, political and security development and ultimately, the improvement of our continent.
“The concern of the African Union is that the massive corruption being perpetuated across our national governments has created a huge governance deficit that has in turn created negative consequences that have worsened the socio-economic and political situation in Africa.
“Your Excellency may recall that these continental concerns led our colleagues at the African Union, to appoint my humble self as the African Union Anti-Corruption Champion. I believe that the efforts and focus of the Nigerian Government at home, partly informed this decision as well as the need for Africa, as a continent, to recommit herself to the fight against corruption and the imperative to free resources for meaningful development.
“I am, therefore, in full support of the call for the issuance of a continental message to commemorate this day, on July 11, 2020, to re-commit the African Union to the continental fight against corruption, including through a robust approach to assets recovery, hence the need for a strategic framework on a Common African Position on Assets Recovery (CAPAR).
“Happily, in February 2020, at the 33rd Ordinary Session of the Assembly of the African Union in Addis Ababa, CAPAR was adopted. In my view, the African Union must go beyond the mere annual celebration of the Africa Anti-Corruption Day by moving swiftly to operationalize the African Common Position on Assets Recovery by all member states. This is an excellent way to drive Africa’s Agenda 2063, for an ‘integrated, prosperous and peaceful Africa, driven by its own citizens, representing a dynamic force in the international arena.’
“As current Chair of our Union, I sincerely commend to you, this suggestion that seeks to call our leaders in Africa to recommit ourselves to this very important task of reclaiming our continent from the vice of systemic corruption.
“Please accept, Your Excellency and Dear Brother, the assurances of my highest consideration.”]
Credit: Daily Post
Despite a statement from the the Botswana government that President Cyril Ramaphosa had sent Intelligence Minister Ayanda Dlodlo as his envoy to Gaborone, News24 has learnt that the trip has been called off.
The Botswana government said in a statement on Monday that President Mokgweetsi Masisi would meet with Dlodlo on Tuesday afternoon. The statement was further posted on Masisi's official Twitter page.
However, prior to the confirmation by the Botswana government, Ramaphosa's spokesperson Khusela Diko denied that an envoy had been appointed.
"The president has not and has no intention of appointing an envoy to Botswana in relation to the cases involving Bridgette Radebe," she said.
Diko said no minister had been tasked to deal with the matter.
News24 understands the trip was called off after we posed questions to the presidency.
The now cancelled meeting comes as the Botswana government had approached AfriForum to assist it in tracing millions of Pula allegedly laundered from the country.
Botswana's Director of Public Prosecutions (DPP), advocate Stephen Tiroyakgosi, last Tuesday bemoaned the lack of response from South Africa's Department of International Relations and Cooperation (Dirco) after its request for mutual legal assistance in the matter.
Motsepe-Radebe is implicated in allegations of money laundering.
Last week the Botswana government announced it had enlisted the services of AfriForum's Gerrie Nel to get the Department of International Relations and Cooperation to respond to its request made last September.
The move by Gabarone is expected to cause diplomatic tensions between it and Pretoria.
Speaking to City Press, Motsepe-Radebe had challenged the Botswana government to "produce evidence that such a large amount of money left the country in the first place and how and if the Reserve Bank of Botswana has no records of that".
She also bemoaned the fact that the names of her relatives – Ramaphosa is her brother-in-law and Patrice Motsepe is her brother – come up whenever the case is mentioned.
Motsepe-Radebe has denied the accusations.
She further stated that she would "welcome the South African government assisting the Botswana government with its request for mutual legal assistance … These allegations are harmful to my reputation and to all the other citizens that have been referenced in the affidavit".
Late last year, she was named as a co-signatory in two South African bank accounts holding more than $10 billion (R170 billion) allegedly stolen from the Botswana government.
Nel further told the media that: "Money originating from the Bank of Botswana was illegally laundered through various international accounts and pertinent to this particular account, $48 billion found its way to bank accounts in South Africa."
Leaders of Sudan, Ethiopia and Egypt said they were hopeful that the African Union could help them broker a deal to end a decade-long dispute over water supplies within two or three weeks.
Ethiopia, which is building the Grand Ethiopian Renaissance Dam (GERD) which worries its downstream neighbours Egypt and Sudan, said it would fill the reservoir in a few weeks, as planned, providing enough time for talks to be concluded.
Tortuous negotiations over the years have left the two nations and their neighbour Sudan short of an agreement to regulate how Ethiopia will operate the dam and fill its reservoir, while protecting Egypt’s scarce water supplies from the Nile river.
Ethiopia’s water minister, Seleshi Bekele, said that consensus had been reached to finalise a deal within two to three weeks, a day after leaders from the three countries and South African President Cyril Ramaphosa, who chairs the African Union, held an online summit.
Billene Seyoum, a spokeswoman for Ethiopia’s prime minister, said that in Friday’s agreement there was “no divergence from Ethiopia’s original position of filling the dam.”
The Egyptian presidency said in a statement after the summit that Ethiopia will not fill the dam unilaterally.
The Grand Ethiopian Renaissance Dam (GERD) is being built about 15 km (9 miles) from the border with Sudan on the Blue Nile, the source of most of the Nile’s waters.
Ethiopia says the $4 billion hydropower project, which will have an installed capacity of 6,450 megawatts, is essential to its economic development.
Ethiopia’s Prime Minister’s Office said that the three countries agreed that the Nile and the Grand Renaissance Dam “are African issues that must be given African solutions.”
Friday’s round of talks brokered by the African Union, is the latest attempt to move forward negotiations which have repeatedly stalled due to technical and political disagreements. They also signal an intention to solve the issue without foreign intervention.
Ethiopia’s statement said the African Union, and not the U.N. Security Council, will assist the countries in the negotiations and provide technical support.
Cairo had appealed to the Council in a last-ditch diplomatic move aimed at stopping Ethiopia from filling the dam. The Council was expected to hold a public meeting on Monday to discuss the issue.
South African banks and the government are looking for ways to boost take up of an up to 200 billion rand ($11.58 billion) loan scheme to help coronavirus-hit businesses, two bank executives and a source close to the discussions told Reuters.
Possible amendments being discussed include encouraging banks to ease their lending conditions, the source close to the discussions said.
"There are minor issues around the design," the source continued, including wording in the terms that has led to banks applying their standard credit procedures and rejecting more applications than anticipated.
The scheme, launched in May, was meant to encourage banks to lend more, on more favourable terms, to small businesses struggling with the effects of the pandemic.
But concerns arose that the money -- 40% of President Cyril Ramaphosa's 500 billion rand economic stimulus package -- was not being fully used after big banks approved only a few billion rand of loans in the first few weeks.
Lenders, the treasury and the central bank are in regular talks on the issue, the source said, with finance minister Tito Mboweni keen to announce changes to the scheme in his emergency budget on June 24.
Goolam Kader, business banking managing executive at Nedbank (NEDJ.J), said the lender is working closely with the Banking Association South Africa (BASA) to identify potential improvements.
He added that Nedbank did not apply credit criteria that are different from usual when assessing loan requests made under the scheme, but that various factors affected take up, including its other efforts to help customers.
Standard Bank referred Reuters to BASA, which declined to comment. FirstRand and South Africa's treasury did not provide comment by a deadline.
Jaco le Roux, chief risk officer of relationship banking at Absa's retail and business bank, said it did apply different criteria as well as imposing requirements like a bond over property less often.
Other features being discussed include raising the turnover threshold for eligible companies from 300 million rand, expanding the list of things businesses can spend the money on and the type of loans banks can extend, and lengthening the term of payment holidays, le Roux and the source said.
Take up has already accelerated to around 7 billion rand and could double within days, the source continued. There may have been a lag as businesses considered their options.
Stuart Theobald, chairman of Intellidex, which presented to government on how to design a scheme, said it did not seem to be working as intended, citing issues like the banks often requiring personal guarantees for the loans, as is standard in South Africa.
"This is not meant to be banking as usual," he said. "You want banks to behave as if they are in the best of times ... but the design of it is such that they can't actually do that."
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.
South Africa begins to gradually loosen its strict coronavirus lockdown on Friday, allowing some industries to reopen after five weeks of restrictions that plunged its struggling economy deeper into turmoil.
The lockdown has had a devastating impact on the economy, but a top government adviser on the pandemic said it has slowed transmissions.
"The lockdown has had quite an effect," infectious disease epidemiologist Salim Abdool Karim told AFP.
"We have got quite clear evidence that we have flattened the curve and that the number of cases we are seeing - and the number of infections probably occurring - has declined quite substantially," he said.
The country's number of confirmed infections has risen to 5 647 since 5 March when the first case was detected. It also has recorded Africa's highest Covid-19 death toll, with 103 fatalities.
The economy of Africa's most industrialised nation was already teetering when the lockdown kicked into gear on 27 March to contain the spread of infections.
To combat the economic destruction, the government has adopted a gradual and phased approach to reopen the country from 1 May.
Around 1.5 million workers in selected industries return to work in the next phase under strict health conditions, according to Trade and Industry Minister Ebrahim Patel.
Cooperative Governance Minister Nkosazana Dlamini-Zuma warned "companies that breach regulations will be forced to close".
President Cyril Ramaphosa took the decision to stagger the easing of the lockdown restrictions in a bid to strike a balance between protecting public health and the economy.
"Our people need to eat. They need to earn a living," Ramaphosa said.
"Companies need to be able to produce and to trade, they need to generate revenue and keep their employees in employment."
South Africa's economy was in recession and reeling from low growth and high debts before the pandemic arrived.
On Wednesday S&P downgraded the country's credit rating further into junk.
After shrinking in the second half of 2019 due partly to severe rolling power blackouts, "South Africa's already contracting economy will face a further sharp Covid-19-related downturn in 2020," the ratings agency said.
To help cushion companies and individuals, Ramaphosa last week unveiled an unprecedented R500 billion economic stimulus and social relief package, amounting to about 10 percent of the GDP.
Finance Minister Tito Mboweni said the country will seek coronavirus relief aid from the International Monetary Fund and the World Bank, where it is eligible for up to $4.2 billion.
An industry body that represents 320 member organisations in the solar PV industry has written an open letter to President Cyril Ramaphosa, in which it calls on him to remove limitations to private power generation as a way of supporting efforts to kick start the economy post COVID-19.
The letter, by the Chairperson of the South African Photovoltaic Industry Association Mr Wido Schnabel was sent this morning (Tuesday 28 April 2020). In his letter, Schnabel writes:
“We are living in unprecedented times when our economic systems, our relationship with nature and our resilience as a global community are tested — all at once. We commend you Mr President, on the leadership you have shown and the difficult decisions taken to delay the spread of Covid-19, hopefully giving our healthcare systems enough time to prepare for a peak in infections.
Tough yet necessary restrictions on trading, social gatherings, and travel have dealt a massive blow to our fragile economy. To recover from the economic impact of the pandemic, we agree with you Mr President that we need a “new social compact” to “forge a new economy”. We agree that “we can no longer work in the way we have before” and it’s time to “adjust to a new reality”. We stand with you in your resolve to build an inclusive economy. In order to achieve this goal, we call on your government to relax certain electricity regulations that have made it difficult for businesses in our sector to grow and create jobs.
Our economic recovery depends on the sustainable, affordable and reliable supply of energy. If we are to –– as you say –– “forge a new economy” then we cannot allow a return to the dark days of load shedding. Since the rolling blackouts of 2008, Eskom’s inability to provide a stable supply of power has throttled economic growth and battered the country’s credit rating to junk status, siting energy as the number one contributing factor.
Mr President, let us use this opportunity to fix yesterday’s problems, starting with our electricity supply woes. As an industry, we support both the state-run utility model and the integration of Distributed Generation methodologies, although the latter delivers electricity at a faster rate with no cost to the Government. The Distributed Generation approach provides additional capacity to the grid, promotes broad-based participation in the energy sector, and aligns with the tenets of a just energy transition. In fact, the Distributed Generation space plays a strategic role in balancing the country’s sustainable development needs with employment security.
To assess the potential of the sector to create jobs, we partnered with the Council for Scientific and Industrial Research (CSIR). According to our study, there are approximately 400 SMMEs (and growing) in the Distributed Generation space with the potential to create more than 100 000 jobs over the next 10 years. Unfortunately, the growth of the Distributed Generation market has been stymied by three factors linked to Schedule 2 of the Electricity Regulation Act (ERA). These problematic amendments came into effect in 2017.
There are three main issues:
Under normal circumstances, NERSA can take more than four months to process applications for registration; licensing can take between six months to a year, despite the 120 day period described in the Act. As a consequence, many companies are incentivized to reduce the size of their projects to avoid a lengthy application process.
Although we support the goals of the ERA, the legislation’s generation licensing requirement does little to ensure that connections to the network are safe and orderly. In fact, there are other legal mechanisms in place to regulate the operation of electricity infrastructure. For instance, over and above the distribution code, most municipalities would have established electricity by-laws to protect their local networks. In addition, the Department of Mineral Resources and Energy (DMRE) has a registration system to determine how many megawatts of Distributed Generation are allowed to enter the network.
The limitations imposed by Schedule 2 of the ERA are weighing heavily on our industry at a time when the country is in the midst of a crisis. Nevertheless, we are confident that by working together with the Government, we will be able to power the economy back to life. This is precisely why we are calling for an urgent meeting with your administration to plot a way forward.
Mr President, we urge you to consider the following proposals:
Mr President, we need urgent interventions from your government to drive growth in the energy sector. The Solar PV Industry stands with you to fight the COVID-19 pandemic and commits to positively participate in the recovery of the economy. As an industry we’ll continue to engage with you so that we can get our economy moving again.”