Amid the plague of corruption, facilitated by cadre deployment and BEE, a different type of plague has been laid bare by the pandemic.
This ‘plague’ is the consequence of government decisions during the pandemic which have turned an economic crisis into a catastrophe.
Hypocrisy and lack of logic characterise the formulation of lockdown regulations.
The ongoing ban on cigarettes is not just ruinous for the legal tobacco industry and jobs, but has been proved to be scientifically unjustified. Yet the minister in charge of managing the disaster, Dr Nkosazana Dlamini-Zuma, stubbornly persists with the ban.
The beyond idiotic ‘clothing’ ban drawn up by our trade and industry minister Ebrahim Patel was parody that Monty Python’s Flying Circus would have been proud of.
Said Patel was also responsible for the now forgotten ‘roast chicken’ ban.
Covid-19 vectors such as the taxi industry, churches and funerals are permitted while tourism and the restaurant trade are still severely limited if not prohibited.
The irony? These are the very industries the government desperately needs to absorb unskilled people, of whom we have many.
Glass manufacturer Consol has become the latest company to suspend planned investment due to the alcohol ban. Consol decided to suspend construction of a R1.5 billion plant in Ekurhuleni. The day before this announcement, Tuesday 4 August, South African Breweries, owned by AB InBev, announced it had cancelled R5 billion in planned investments: R2.5 billion in planned infrastructure upgrades this financial year, and a similar amount for next year being placed under review. Heineken Breweries too has said it is rethinking its ‘expansion ambitions’ in South Africa.
This makes a bitter mockery of President Cyril Ramaphosa, who made attracting investment a centrepiece of his presidency when he took office in 2018.
Consol Glass CEO, Mike Arnold, said that the decision to halt a project that the company had expected would create 120 direct jobs and about 2 600 along the value chain, would hurt the country’s industrial capacity. The legal liquor industry was by far its biggest customer and accounted for about 85% of sales in the glass-packaging industry.
Still looking to hold a ‘dialogue’
Even now, over four months into a lockdown that has included an almost uninterrupted ban on the alcohol industry, the big players in the industry are still looking to hold a ‘dialogue’ with the government. The industry contributes R140 billion to the fiscus.
The alcohol industry supports over one million jobs. The wine sector alone faces a loss of 83 000 direct jobs and 290 000 across its value chain.
Yet, even as tens of thousands of taverns face closure, the alcohol industry has not been moved to stand up to a weak and corrupt government: it still wants to talk. The industry says the ban has already cost at least 100 000 jobs and R18 billion in revenue. The liquor industry contributes 3% to our GDP.
‘Legal action is something of a last resort, and we are not considering it right now,’ SAB CEO Ricardo Moreira said during a liquor industry discussion on Tuesday. ‘There is a conversation [with the government] and we are discussing alternatives so there will be no need for legal action.’
How many more jobs have to be lost and how much new investment has to be shelved before the liquor industry does something courageous?
Much earlier in the lockdown, Consol Glass tried, without success, to explain to an uncomprehending Patel that 27 000 direct jobs and many more down the value chain were at risk.
Consol explained that it was spending R8 million a day in energy costs to keep its furnaces warm, despite the company not producing effectively or supplying its products to market. If they are not kept warm it will take the company 18 to 24 months to get those furnaces back if it has to take ‘the drastic decision of draining and closing’ them.
Urgently lobbying the government
The glass industry is urgently lobbying the government for certainty regarding the duration of the alcohol ban in order to formulate measures to protect assets and jobs, and safeguard livelihoods.
Heineken has cancelled a R6 billion brewery near Dube Trade Port in KwaZulu-Natal. ‘It is clearly a tremendous disappointment and a considerable loss to South African industrial capacity. It was a difficult decision to make, but unavoidable given the significant impact of the pandemic and the second ban on alcohol sales in South Africa.’
The National Liquor Traders Council, which represents the interests of taverns, said that about half of taverns could not resume operations even if the ban was lifted. There were 34 500 taverns, mostly in the townships, contributing R40 billion to R60 billion a year to the economy.
The SA Liquor Traders Association said many traders were likely to go out of business because their trading licences were linked to valid leases, and some would be forced to write off expired stock.
The estimate is that jobs lost across the industry will soon reach 120 000 and excise tax lost from the first ban is over R12 billion.
At the weekend, scientists advising the government on the Covid-19 response, suggested lifting the ban on liquor sales as it had achieved its objective. SA Medical Research Council president and CEO, Dr Glenda Gray, urged the government to be ‘nimble’.
The problem for Ramaphosa is that no one believes any longer that he is capable of making a decision or exercising decisive leadership to save this country.
It’s arguable that Ramaphosa has been the most insincere president we have had. He allowed an impression to be created that he was a ‘business’ man who understands business. He kept saying he would reform the economy, and big business and much of the mainstream media believed him. The IRR was almost alone in warning that he was an indecisive but committed socialist, bent on helping the ANC to turn us into a command economy.
Enough popular support
His supporters too easily argued that his reforms were being stymied by opposition within the ANC. The IRR said that this wasn’t true, and that, as a socialist, Ramaphosa had no intention of promoting the reforms many imagined he was committed to. This was despite Ramaphosa having enough popular support, had he been a real leader, to defy ideologues in the party.
What have we been bequeathed by Ramaphosa? The adoption of expropriation without compensation, the National Health Insurance scheme, and prescribed assets; arguably the swiftest and most comprehensive move down the path of national democratic revolution to a ruinous socialist society embarked upon in 26 years of ANC rule.
The government loathes capitalism, but it really understands very little about it. It doesn’t understand that every industry is interconnected to other industries and that one cannot ‘close down’ one industry and leave other industries open.
This ignorance led to the most damaging miscalculation of all: that our near-ruined, developing economy could be shut down for any reason. The lives likely to be lost to Covid-19 cannot be measured against the destitution wrought by shutting down the economy. This is the brutal reality.
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Image by Somchai Chitprathak from Pixabay