Economic growth vital to ease Covid-19 'double crisis' – IRR

Institute says everything that stood in way of economic growth should be cleared from the path

Economic growth vital to ease Covid-19 'double crisis'

9 April 2020 

South Africa cannot afford to let the private sector alone continue ‘taking the pain’ of the devastating economic consequences of the Covid-19 pandemic – urgently needed reforms must include reducing state spending and cutting the huge public service wage bill.

So said renowned economist DawieRoodt in a media briefing hosted this morning by Institute of Race Relations (IRR). Roodt was in discussion with IRR analyst Nicholas Babaya. (Watch the briefing here:

Roodt said: ‘We must reduce state spending and cut the wage bill. We cannot expect the private sector to continue taking pain and the civil service not.’

The crisis presented an ‘opportunity … to restructure fiscal accounts’. This should include ‘getting rid of SAA’ and restructuring Eskom ‘once and for all’.

‘We must have money for important things, and we cannot keep the airline alive while people are starving. We also need to address the size of the civil service. We cannot afford it. Everyone must take pain, and the civil service must take pain, too.’

With the country facing the prospect of losing more than a million jobs and ‘many thousands of businesses’, everything that stood in way of economic growth should be cleared from the path. This included immediately scrapping ‘immoral’ race-based so-called empowerment conditions on government relief measures, and rethinking the scale of the lockdown.

South Africa was in ‘bad way’ and would likely ‘take years to recover’.

This meant the primary focus should be on efforts to enable economic activity and growth. It was not a choice ‘between lives and the economy’, because poverty was the ‘biggest killer on the planet’.

‘We should seriously consider changing our approach. There are some vulnerable people, the old and those with underlying conditions, but we have to open the economy and get it growing as soon as we can. If not, it will lead to poverty, and poverty is a death sentence to many people.’

Roodt rejected as ‘completely and totally immoral’ the imposition of BEE conditions on relief efforts, which counted as just another barrier to stimulating economic growth.

‘If you define things in terms of race, you are missing the plot,’ he said. ‘We are in crisis and it’s immoral to talk about race-based policy. Let’s deal with the crisis.’

Roodt acknowledged that President Cyril Ramaphosa seemed to be ‘finding that he is a powerful person’ and was ‘growing a backbone’, but said there was good reason to be ‘very concerned about the extra powers given to bureaucrats’.

The ban on alcohol was an example.

‘The risk is that if we give them more power, will they give it back? It’s our responsibility to get these powers back,’ Roodt said.

Issued by Michael Morris on behalf of IRR, 9 April 2020