South Africa: Covid-19 exposes bankruptcy of ANC’s capitalist policies

President of South Africa Cyril Ramaphosa (Wikimedia Commons)

The 26 March countrywide lockdown South African President, Cyril Ramaphosa, announced in an emergency attempt to contain the spread of the coronavirus, has been hailed as the decisive intervention the pandemic required. Worldwide the number of infected is rising to half-a-million. The death toll has passed 20,000.  New York City, the “Big Apple” of the wealthiest country in the world, has now become that country’s epicentre of the pandemic, reaching speeds its Mayor has described as that of a bullet train. SA has had its first two deaths – two women aged 28- and 48-years-old respectively.

The pandemic has had a devastating impact on the world’s most powerful economies, the US, China, and especially Italy, Spain and France. It has also thrown the world economy into the biggest turmoil since the 2008 global financial crisis from which it never fully recovered.

The Guardian (UK) 25/03/2020 reports that according to economist Nouriel Roubini, amongst the few who predicted the 2008 financial crisis, the “Coronavirus pandemic has delivered the fastest, deepest economic shock in history. The financial crisis and Great Depression took three years to play out, this crisis has taken three weeks. The Greater Depression beckons.”

The editorial headlines in the prestigious bourgeois Financial Times show what lies ahead for the former colonial world in particular.  “Coronavirus risks calamity for the emerging world.” (23/03/2020). “Africa faces a catastrophe that will dwarf all others.” (20/03/2020)

ANC’s Covid-19 Strategy

Business Day (23/03/20) reports that according to a projection model developed by a team of Wits University researches, up to one million South Africans could contract Covid-19 within just forty days unless the government takes drastic action to avoid the country reaching a tipping point of 100 locally acquired cases. As fears of the pandemic grip society, these measures will be accepted as an unavoidable necessity and even welcomed.

Despite its restrictions on civil liberties, the majority of people, horrified by the rapid increase in the number of deaths in the advanced capitalist countries, and television pictures of coffins with dead bodies parked outside overburdened mortuaries in Italy, have resigned themselves to the 21-day lockdown as an unavoidable necessity. There is hope that it will flatten the curve and bring forward the end of the pandemic. Everyone rightly wishes that, given the already disease-stricken, unsanitary, overcrowded conditions in townships and informal settlements, hundreds of thousands could be saved from illness and death.

It has been praised across the board as the actions of a government that has learned from the experience of other countries where such measures have had success in flattening the curve of infection and transmission, like China and South Korea.

At the same time, there is also deep scepticism. Governance under the ANC has become synonymous with corruption, incompetence, as well as indifference, even animosity, towards the working class and the poor.

Will the lockdown succeed?

Whilst hoping for the best, it is necessary to prepare for the worst. It cannot be assumed that the ANC government’s measures, on their own, and in their present form, will defeat the pandemic. They are nowhere near adequate. On the contrary, the conditions for a pandemic with the potential to devastate the lives of working class people in particular – prepared over the entire twenty-six years since the ANC came to power – are a virtual invitation to Corona to sweep through working class communities like a Tsunami. The pandemic is lapping at the country’s shores to take up the offer of being hosted by a population whose health is already severely compromised by the highest HIV/Aids infection rate in the world, by TB and the ravages of hunger that sees 15 million go to bed hungry every night.

The World Health Organisation has described SA’s actions as “too little, too late. These measures should have been taken a month ago”.  The action of the ANC government is a study in total incomprehension of, and indifference towards, the economic social and health situation in SA and globally.

The government’s 2020 budget was announced on 26 February, the very day the German Health Minister declared an epidemic, and just fourteen days before the World Health Organisation declared a global pandemic. It made provision for brutal social spending cuts of R260 billion, including of the health budget. R160 billion of these cuts would entail not paying this year’s public sector wage increase – the last of the three-year collective bargaining agreement signed in 2018. The government chose this moment to launch an attack not just on workers, but on the right to collective bargaining – a fundamental right won through struggle against the apartheid regime whose defeat cleared the way for the ANC to come to power. (Read our full analysis of the 2020 Budget here.)

The 2020 budget did not fall out of a clear blue sky. It is but the latest offensive in a war again the working class that began in earnest when the ANC adopted its neo-liberal Growth Employment and Redistribution (Gear) strategy in 1996. However, even without Gear, the capitalist policies the ANC has always stood for would have made it impossible for its government to meet the basic expectations of the masses. Gear was merely the accelerator of the capitalist vehicle the ANC always was.

The adoption of Gear served two purposes simultaneously: firstly to enable the ANC government to march in step with the neoliberal ideological drumbeat of the dominant capitalist powers and their institutions, the World Bank, IMF and the rating agencies; secondly to open up state-owned enterprises, and social service provision to the ambitions of the aspirant emerging black capitalist class to enrich themselves.

If the capitalist ANC has governed as the servant of the wealthy for more than a quarter of a century of post-apartheid democracy, it should be no surprise that it is failing the masses now in the face of the greatest global health and economic crisis since World War Two.

Financial measures

The financial measures accompanying the lockdown merely confirm the class character of the ANC as the quislings of big business. If the government’s claims that the interest of the working class and the poor are its primary concerns, then that should have been reflected in their measures they have taken towards the pandemic. In particular, those imprisoned in the squalid conditions in informal settlements, ideal for the spread of the virus, should haven prioritised. Instead, the lockdown measures, presented as if they are directed at the poor, small businesses in distress and the informal sector, in fact, prioritise the interests of the wealthy.

The fact that the key vehicle, the Unemployment Insurance Fund (UIF), is in surplus is itself an indictment on the government in a country with 10 million-plus unemployed. Even the UIF’s R60 billion investments housed at the Public Investment Corporation have now declined in value following the fall in JSE shares. But the fact that the UIF is funded by both employer and worker contributions means that workers’ savings are to be spent, not on the purpose for which it was created, that is, when workers lose their jobs, but to save the bosses the expense. It will cost the bosses nothing as they have already budgeted for this and have spent the money. The bosses’ profits remain intact.

Theft of workers’ contributions is widespread. Bosses deduct contributions from workers, wages but don’t pay it over to the UIF. They will get off completely scot-free because the Department of Labour, understaffed because of budget cut, has done very little or nothing about this.

UIF payments are in any case for a limited duration – twelve months. The limit has not been lifted. So those already claiming will not be able to claim beyond the twelve months regardless of when the lockdown ends. The economic consequences of the pandemic are going to result in companies closing as has already happened with Edcon, which is closing 1,000 Edgars and Jet Stores, sacrificing 1,800 jobs. The UIF is already under pressure to pay out to the thousands of workers dismissed before the pandemic, in what is now commonly described as a jobs bloodbath.

All the workers jobless after Stuttafords’s liquidation; the 151 Edgars stores already shut before the total closure of Edcon; the 263 Standard Bank branch closures; job losses at Massmart, which owns DionWired, Builders Warehouse and Game; ArcelorMittal’s Saldanha Bay closure, and; Telkom and the big four banks’ retrenchment plans, with Absa already giving thousands of employees notices, threatens the UIF with rapid exhaustion.

Other measures include assistance to employers and employees through the tax system and additional funding of R3 billion from the Industrial Development Corporation and R200 million from the small business department for small companies in the tourism sector.

The government also intends to establish a national disaster benefit for employees who were laid-off, either temporarily or permanently, who would be able to access support at the level of the R3,500 monthly minimum wage for three months. But Labour and Employment Minister Thulas Nxesi refused to be drawn on the size of the fund to avoid “raising expectations”!

If an employee is ill, temporarily laid-off, or unemployed for longer than three months, the normal UIF benefits will apply. Those who fall ill through exposure at their workplace will be paid through the Compensation Fund.

For distressed companies there are the UIF reserves through the existing training lay-off scheme, which ordinarily removes workers from the payroll for six months, while they access funds equivalent to part of their salary.

Employees of businesses in distress who earn below R6,500 will be assisted with a tax subsidy of up to R500 per month for the next four months, using the government’s Employment Tax Incentive — or wage subsidy programme. The government claims this will help more than four million workers.

The SA Revenue Service will work towards accelerating reimbursements under the Employment Tax Incentive from twice a year to once a month to get cash into the hands of compliant employers as soon as possible.

Tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their pay-as-you-earn liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months. The common feature is to protect the capitalist class whose system has caused this crisis.

Hawkers, the self-employed and those scratching a living together, like rubbish collectors and recyclers, remain out of the loop of the economic support measures, from debt relief and resilience funds for small businesses to the R500 tax break for those earning less than R6,500 a month.

Many of these measures have no detail yet. The government had time to prepare for this calamity. But it spent all its time devising an austerity budget to cut social spending and wages. What is worse is that the government is completely unprepared for the economic fall-out from the pandemic. The economy could contract by as much 7%, prolonging the recession that started in the last quarter of 2019 throughout 2020. Capitalist experts are telling them that the February budget is as dead as a Dodo and even the Moody’s downgrade would be a sideshow compared to what is lying ahead. Everything has to be recalculated. More savage spending cuts will be demanded.

The government has gone on its knees in gratitude to the Oppenheimer and Rupert tycoons, whose wealth was accumulated through the exploitation of the labour of the working class. Their donation of R1 billion each to a proposed Solidarity Fund is an insult. It confirms the grovelling master-servant relationship the ANC elite has with the capitalist class.

Health measures

There is no question that social distancing and the washing of hands, for example, are absolutely necessary measures to combat the virus. But how can the estimated 1.4 to 1.7 million resident in SA’s 2,700 informal settlement practice this? They live in shacks accommodating families of at least five, and often many more, which are separated from each other by less than the required two metres.

As Community leader Sibongile Nyalela told Groundup (25/03/202): “It’s hard to wash your hands when 380 families share three taps as is the case in Madiba Square, Khayelitsha, Cape Town. If I use the one bucket of water to do laundry then I remain without water to cook and wash hands.”

Astonishingly, the government is determined to carry through its attack on public sector workers’ wages and has rejected the unions’ demands to abide by the three-year agreement. It is deaf not just to the needs of the workers themselves but the working-class public they serve in highly pressurized conditions in a dysfunctional health service.

Lockdown enforcement

The main instrument of enforcement of the lockdown regulations is supposed to be police. The army is supposed to provide only support. But is clear that the deployment of the army is calculated to send a message particularly to the working class masses that force will be used, as Defence Minister Nosiviwe Mapisa-Nqakula made clear. The army she say, “… will only ‘skop, skiet en donder’ when circumstances determine that. For now, we’re a constitutional democracy.”

But the Police and Transport Ministers appear to relish this as an opportunity to display apartheid-style kragdadigheid in the tone in which they explained the ‘dos’ and ‘don’ts’ of the regulations without the necessary preparations. There is little policed visibility in the informal settlements and no education on the coronavirus at all.

The army is being deployed against the background of a disastrous failure to root out gangsterism in the Cape Flats, where 3,000 murders took place right under its noses. This deployment is of an entirely different order of magnitude. The army’s deployment is intended to restore the ANC’s and Ramaphosa’s standing in the eyes of the public as capable of taking measures in the interests of the people. The army is normally for defending the country in times of war and insurrection, Commander-in-Chief Ramaphosa told the soldiers on the evening before the lockdown was to begin.

But the problem of enforcement is already evident on Day 1. It is impossible to enforce social distancing and handwashing in the informal settlements. There was no coordination of payday so many have been forced to go and do shopping during hours they are supposed to be off the streets to ensure they have enough for the 21 days.

As the regulations decree that taxi ranks and bus depots are closed to the public, it is unclear where commuters would be allowed to catch the taxis and the buses. As many shops only open at 8 am or later, and close at 5 pm or 6 pm, it is not going to be easy for people depending on public transport to do essential shopping.

Housing Minister Lindiwe Sisulu drew gasps at her press conference when she explained how overcrowding and lack of basic amenities would be addressed. “We will need to urgently move some of our people for the de-densification to be realised. Land parcels to relocate and decant dense communities have been secured. This will not be far from the current place of residence. We appeal to our people to recognise that the threat posed by Coronavirus in our informal settlements is real. It is, therefore, in their best interest to avoid this risk by co-operating with the government as we relocate them to healthier and safer homes.”

These measures are the equivalent of apartheid-style forced removals and are likely to be met with resistance. For years demands for decent housing and sanitation on land close to workplaces have fallen on deaf ears and claims that there is no land. Land occupations have been met with assault, kidnapping and murder orchestrated by corrupt councillors in collusion with the police. Community organization Abahlali Base Mjondolo has been a regular victim of these, receiving no police assistance.

Residents in informal settlement have for been left with no alternative but to make the settlements at least semi-tolerable to eke out an existence in. The proposals announced, for which there is no budget, no identified land, and therefore no prior site preparation, no guaranteed food and water supplies, amounts to dumping people.

In these circumstances, the army may well resort to force. Ramaphosa has had a taste of blood – that of the martyrs of Marikana whose strike action he infamously denounced as a “criminal act which should be dealt with concomitantly”. Will he place SANDF soldiers in a position where if the force of argument is legitimately rejected, he will order them to resort to the argument of force in the name of keeping SA safe?

The declaration of a State of Disaster is only one step away from that of a State of Emergency. Is this Ramaphosa’s fall back plan if protests spread throughout informal settlements and spill over into townships as people forced to look for a source of income feel they have no alternative but go out onto the streets?

What should the government have done?

The government should have immediately established a relief fund of the billions needed to:

  • Deploy thousands of water tankers to all informal settlements and drought-stricken areas like the Northern Cape, Western Cape, Free State
  • Requisitioned personal protective equipment, masks, sanitisers, soap and testing kits
  • Requisitioned food supplies to continue the feeding schemes during the compulsory closure of schools, for the unemployed, the poor and the elderly
  • Initiated a mass recruitment campaign of adequately equipped volunteers, on at least the minimum wage, for training in the provision of mass education, the administration of basic health care in the diagnosis, testing and  at least the initial treatment of corona infection in communities
  • Engaged in mass testing and tracing of potential corona infected patients
  •  Conducted a rapid needs audit of all hospitals and clinics and requisitioned the necessary supplies  and equipment
  • Issued an  order for all big companies to continue to pay workers for at least the duration of the lockdown, whatever its duration
  • Requisitioned the R1.5 trillion on corporate bank accounts to finance the Relief Fund
  • Introduced a basic income grant immediately for all the unemployed
  • Lift the twelve-month limit for UIF claims

The handling of the pandemic by capitalist government worldwide have demonstrated like no other crisis before the irreconcilable conflict between the private interests of the capitalist class and those of the working class, the obsolescence of capitalism, and the necessity to overthrow it and replace it with a democratic socialist order under workers democracy.

This understanding should underpin the approach of the working class towards this crisis. Tragically, in SA and internationally this understanding and the strategies and tactics that flow from them, are completely absent from the position taken by the leadership of the trade unions and political organizations that have their origins in the working class. In the next in this series of articles, the MWP will outline what we believe to be the way forward.

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