South Africa Considering Payment of Relief Grant After Riots

(Bloomberg) -- South African government, business and labor leaders are discussing the payment of a relief grant to alleviate suffering after the worst unrest since the end of apartheid.

While labor and business leaders recognize the need for some assistance after the riots, there is a debate over whether the stipend should be temporary or the start of a form of a basic income grant. The violence that began after the imprisonment of former President Jacob Zuma left at least 234 people dead, devastated businesses and put jobs at risk.

“A grant needs to be sustainable and affordable within our constrained fiscal environment,” said Martin Kingston, vice president of Business Unity South Africa, a lobby group that represents many of the biggest companies in the country. “We therefore think there needs to be a reprioritization of expenditure as well as an acceleration of implementation of structural reform. The reconstruction and recovery plan needs to be adjusted.”

Acting Minister in the Presidency Khumbudzo Ntshavheni said the government and business had agreed on a post-protest recovery plan, but declined to comment on whether the grants would form part of the package. The Treasury said it would comment later.

Expenditure Cuts

South Africa’s Treasury in February slashed planned expenditure on everything from welfare and education to defense, after the economy last year contracted the most in a century because of the coronavirus pandemic.

President Cyril Ramaphosa on July 18 raised the possibility of a basic income grant in a speech, without giving any details. Last week’s violence could cost the country about 50 billion rand ($3.4 billion) in lost output and jeopardized at least 150,000 jobs, the presidency said on Tuesday, citing estimates from the South African Property Owners Association..

The Congress of South African Trade Unions, the biggest labor federation, urged the government to restart the payment of a 350-rand a month grant that it had paid out for a period during the earlier stages of the pandemic.

“We’re confident it will happen,” said Matthew Parks, the parliamentary coordinator for Cosatu. “The 350 rand Covid-19 grant is a central pillar. It needs to be reinstated across South Africa. It is a basic income grant in essence. It can be improved, enhanced, gremlins addressed once it’s implemented.”

The cost of reinstating the grant at that level would be 24 billion rand a year, he said.

READ: South African Basic Income Grant May Lift Debt/GDP to 100%: Barclays

Ramaphosa may announce the aid in coming days, Business Day reported, without saying where it got the information. Talks are being held between the presidency, the Treasury and the Department of Social Welfare about how large the payments would be, how long they would last and who would receive them, the Johannesburg-based newspaper said.

Monthly payments of as much as 595 rand, the food poverty line, and as little as 350 rand, the amount that was paid for a while during the pandemic, are being debated, the paper said. There is concern among some government departments that once started, the payments would be difficult to stop and would be the beginning of a basic income grant, it said.

South Africa remains stable after the army was deployed to help the police restore stability, Ntshavheni told reporters in Pretoria, the capital, on Wednesday. Measures have been taken to safeguard regional logistics, all ports are fully operational and food supplies have normalized, she said.

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