Hi there and welcome to The Wrap simple news updates for busy people, brought to you by Verashni Pillay and the explain.co.za team 💁🏽♀
🔹Our take: SAA is South Africa’s drunk uncle 🍺
🔹The big story: The midterm budget explained 🔀
🔹Briefs: Ramaphosa in quarantine, and relief from tired African stereotypes
🔹Looking ahead: The US and DA set to elect new leaders (or the same old suspects?)
So, let’s dive in:
▁ ▂ ▄ ▅ ▆ ▇ █ 1. OUR TAKE: THE DRUNK UNCLE
Every family has a drunk uncle, right? You know, the one who gets wasted at every family gathering and tells embarrassing stories that literally no one needs to hear. Well, SA’s drunk uncle at the moment is South African Airways (SAA). And most people agree that it needs to take its drunken self home and sleep it off, before heading straight for the nearest rehab.
Everyone, it seems, besides our finance minister Tito Mboweni’s financially challenged Cabinet colleagues. Wednesday’s midterm budget speech (more on this later) showed that Mboweni clearly lost the battle to shut down this giant drain on the public’s purse.
As financial journalist Ray Mahlaka bluntly put it on Twitter, the budget announced by Mboweni on Wednesday simply raided “government department budgets and cut social programmes to free-up funds for SAA and its business rescue process”.
We get it. The drunk uncle was so crap at managing his finances, that the rest of the family have to pay his debts.
But that means there’s less for other relatives who are frankly far more deserving. That includes crucial areas like police, local government and student funding.
We’re literally raiding the saving account for the kids’ education to prop up our drunken uncle.
And so SAA will get R10.5bn to pay off its debt. This is on top of the R16.4bn allocated in the main budget in 2020 to settle historic debt.
Now remember: This is not defined as a bailout as it’s not continuous funding. As part of the airline’s torturous business rescue process it needs a cash injection to settle outstanding obligations, which Mboweni points out government has to honour. But it still sucks.
And while some may be celebrating the cuts to public servant wages, the expenditure cuts in government will hurt our country in three significant ways: through less money for education, by reducing service delivery at local government level, and by freezing money we pay to our public servants (that includes healthcare workers during a pandemic).
As economist Jeff Schultz says: “This was possibly the easiest SOE to cut loose, and yet the cabinet fought tooth and nail to force the National Treasury to fund it.”
Government keeps talking about finding a strategic private partner to take over the airline but we haven’t heard of any success with that yet. Meanwhile, we’re dealing with a once in a generation global economic crisis. What we don’t need is a shortsighted obsession with one state owned company. It’s better to rip off the bandaid now, and take the business rescue option that will wind up the airline. This will prevent any risk to us as tax payers having to pay its debts again in future.
▁ ▂ ▄ ▅ ▆ ▇ █ 2. THE BIG STORY: BUDGET IN BRIEF ✍🏽
Welcome to The Wrap: the budget edition
What was all that ruckus about a budget this week? Honestly, wrapping your head around big numbers and economic terminology on top of everything else that’s going on is A LOT. So we did a bit of digging to bring you a special budget edition of The Wrap, with everything you need to know about the Medium Term Budget Policy Statement that finance minister Tito Mboweni presented in Parliament yesterday.
The good news
Yes, SA is in dire financial straits – but the economy is going to get slightly better in the near future. Mboweni estimates that it will recover in the next three months and that economic growth will be at 3.3% early next year. Thereafter it will decline slightly for the next three years. This comes as the National Treasury predicts that the economy will shrink by 7.8% this year thanks to Covid-19, so any recovery, small as it may be, is not to be sniffed at.
The expected recovery is part of a global trend, Mboweni said, and developing countries like SA are set to rebound faster than developed countries like the US.
So what is the government’s spending priority at the moment? All things social, it seems. Nearly half of the R6.2tn that the government is spending is going to developmental items:
🔹Over R1.2tn to education and culture
🔹R978bn to social development
🔹 R724bn to health
🔸Cyril’s infrastructure fund has some big plans
More than just relying on international trends, SA’s financial recovery depends on a huge infrastructure drive that the government is undertaking. In other words, the government plans to build its way out of the economic hole we are in.
On Wednesday Mboweni said an Infrastructure Fund, set up to do this, has some ambitious projects lined up.
The Fund and its staff are situated in the Presidency and those managing it are experienced technical people from both the public and private sector, he said.
Over the next ten years, the government plans to spend more than R20bn on subsidies for a social housing scheme to benefit poor and working class people. The fund is also supposed to go towards a huge student housing scheme, which aims to provide accommodation for 300 000 students every year once it is complete.
🔸Death, garlic and taxes
To put a spin on an age-old saying, three things are sure in life: death, Mboweni’s terrible cooking, and taxes. You just can’t escape any of them … although, there’s probably more chance of us cheating death than Mboweni taking up a hobby which doesn’t involve compromising a nation’s gag reflexes (we suggest you take up gardening, Tito). Unfortunately it looks like taxes will go up in the next three years. We’ll only know more when the big budget is presented in February 2021. TimesLive reports that the government wants to raise an additional R5bn in taxes over the next year, and R40bn over the next four years. It looks like Mboweni won’t be the only person stocking up on cans of pilchards from now on. 😕
🔸What about social grants?
We know that millions of people avoided starvation during the lockdown (the so-called “hard lockdown” when most economic activity shut down took place from about March to May) thanks to a Covid-19 special grant. (We know about this thanks to the NIDS-CRAM survey conducted by a team of academics on the effect of the grants on SA’s poorest.) Government gave these to people who’d lost their income and had no other grants coming in. Mboweni said on Wednesday that 22 million people – that’s nearly half the population – received some kind of cash grant during the lockdown.
The special Covid grant reached six million people, he said. The grant has been extended to the end of January 2021, and the government has set aside R1bn for food relief.
🔸What about Eskom?
Did we mention that not only does SA have a drunk uncle, it also has a problem child? Its name is Eskom, and it has a gaping R490bn debt problem that just keeps growing. With SA’s finances being squeezed, all eyes were on Mboweni on Wednesday to see if the government had come up with any solutions to Eskom’s financial problems yet. We’ll have to wait and see, was his answer. He said that the government’s plans for Eskom would be announced “soon”, although no timelines were given. Let’s hope he doesn’t lose that fight in cabinet too.
On the plus side, Eskom is going to start letting municipalities buy electricity from private providers, which will hopefully mean less load shedding and cheaper electricity. This is long overdue.
▁ ▂ ▄ ▅ ▆ ▇ █ 3. BRIEFS ✍🏽
🔸Ramaphosa in quarantine
President Cyril Ramaphosa is in self-imposed quarantine after a dinner guest hosted by the President on Saturday tested positive for Covid-19, eNCA reported.
🔸Back to level 3? Not so fast
Rumours doing the rounds on social media that the country will return to Level 3 lockdown are “simply not true”, Ramaphosa said. According to News24, the president said this week that while the government was seeing some “concerns” around Covid-19 infections, there was no cause for alarm.
🔸New Miss SA continues mould-breaking
Shudufhadzo Musida was crowned the new Miss South Africa last weekend. The 24-year-old International Relations student comes from Limpopo, and told radio stations Cape Talk and 702 that she plans to use her reign to highlight mental health issues. Why should you care? The pageant has been getting kudos of late for becoming more inclusive of South Africa’s diverse women. Better late than never. Musida won praise for embracing her baldness. An article by Global Citizen reports that although the pageant began in 1953, the first African Black Miss SA, Jacqui Mofokeng, was only crowned 40 years later in 1993. Since then only a handful of African Black women have won the crown. Their analysis, while leaving out the fact that many so-called coloured women may also identify as black, makes an important point. Last year’s winner and reigning Miss Universe Zozibini Tunzi broke the mould of traditional pageant ideals with her dark skin and short hair and brought renewed interest to the competition.
🔸Senzo Meyiwa/Kelly Khumalo shocker
The six-year-old case is back in the headlines after police found new evidence about former Bafana Bafana captain Senzo Meyiwa’s murder. The National Prosecuting Authority (NPA) raised eyebrows this week when it “accidentally” released a document to the media showing that the police are investigating whether his girlfriend and singer Kelly Khumalo communicated with the alleged killers. Given the heated feelings around this case, this is a dangerous mistake. The document was later withdrawn by the NPA and Khumalo has not been charged. There have been too many instances in which the NPA has bungled or been seen to mishandle important, high-profile matters – and that should scare all of us, since it raises the question of what’s happening with smaller cases that might involve ordinary Joes like us. We are avid supporters of a strong prosecutorial force: step up, NPA, and rein in those potentially very dangerous mistakes.
🔸President Zuma 2.0?
God help us. Former President Jacob Zuma’s son Duduzane says he might run for president. The former Gupta business partner told Newzroom Afrika on Thursday that he was considering a move to politics, and that we might see his face on a ballot paper in 2024. The younger Zuma has been living in Dubai for several years, and said this was because he had been “financially excluded” from doing business in SA. Honestly, we’re devastated for him.
🔸Why would you take a gun to a knife fight… with a mentally ill person?
When will it end? Police brutality in the US has again taken centre stage just days before the country’s elections, with the death this week of 27-year-old black man Walter Wallace Jr. in Philadelphia. Heartbreakingly, he was killed after police responded to a 911 call from his family, who were actually asking for an ambulance because Wallace, who had been diagnosed with bipolar disorder, seemed to be having a breakdown. He was holding a knife and slowly approached police officers who fired at him 14 times. Protests have erupted across the city.
Meanwhile, non-profit news outlet The Marshall Project reported this week that, according to a survey of over 2000 prisoners in the US, the number one thing respondents said would have kept them out of jail was mental health counseling and affordable housing.
Speaking of mental health, it’s still mental health awareness month so head over to explain.co.za to read about what not to say to someone with mental illness, and how to care for a suicidal loved one.
🔸’Her name was Reeva Steenkamp’
A controversial trailer for a new documentary series about Oscar Pistorius has been removed by the BBC after backlash on social media for not acknowledging the victim at all. The trailer did not feature Reeva Steenkamp, nor did it use her name. The BBC subsequently issued a statement apologising for the trailer, saying it regretted that Reeva’s name was not used, and adding that the rest of the series “examines in detail a number of complex issues connected to her murder”.
Still, despite his murder conviction, Oscar is held up as some sort of fallen hero and his victim – a victim of the sort of intimate partner violence that leaves thousands of women dead in SA each year – is erased. Atrocious.
🔸Relief from tired African stereotypes
UK mega fundraising organisation Comic Relief will stop its practice of creating poverty porn videos calling for donations. Their fundraising efforts usually feature white celebrities like Ed Sheeran and desperately poor Africans. After years of criticism leveled at this sort of fundraising, Comic Relief finally got the memo. While raising money is important, and appreciated, playing into the “White saviour” complex is not. As one critic noted, there are other emotions to draw on to raise money apart from guilt and pity. Hope, for example, is more powerful. Those behind the criticism were mostly within Europe and the UK itself – we’re glad we have one less battle to fight as Africans.
▁ ▂ ▄ ▅ ▆ ▇ █ ACCOUNTABILITY MONITOR: BONGANI BONGO ARRESTED
In our Accountability Monitor update this week, former state security minister and ANC MP Bongani Bongo was arrested this week for corruption. Bongo and ten others appeared in court this week on charges related to government land deals in Mpumalanga for housing.
The problem was that the land wasn’t suitable for housing.
It’s alleged the accused then wove an intricate web to pocket some of the money.
Bongo is obviously protesting his innocence and pledging to clear his name. We, on the other hand, are getting out the popcorn and waiting for the next installment of Those Who Thought They’d Get Away With It. It’s our new favourite series.
Watch with us! Check out our Accountability Monitor at explain.co.za where we keep track of the latest in the fight against corruption.
▁ ▂ ▄ ▅ ▆ ▇ █ 4. LOOKING AHEAD
🔸US heads to the polls
The US is set to vote for its next president and vice president on Tuesday. Incumbent Donald Trump is facing off against Democratic contender and former vice president, Joe Biden. Business Insider is reporting that the election may shatter all previous voter turnout numbers, as over 50% of all the voters in the 2016 election have already cast early votes. So far, Biden is the frontrunner, as far as the polls are concerned – but anything could happen on election day. Both hopefuls have been urging voters to head out to the polls next week although Trump, never one to miss an opportunity to completely miss the moment, complained on Twitter this week that Biden was not trending on the platform. If that is what’s bothering The Donald the most at this point, we’d hate to see what he will have to say should Biden trend number one among voters come election day. Time will tell. Meanwhile, people are genuinely concerned about unrest after the election, and possible violence. Let’s hope that’s not the case – maybe the US could learn from South Africa and other nations on the continent that quietly pull off free, fair elections every few years?
🔸New (or old) leaders for the DA
By the time you read The Wrap next week, the DA could have a new leader in KwaZulu-Natal MP Mbali Ntuli. But the reality is it probably won’t. The party heads to its elective conference this weekend to vote for new leadership and it’s pretty much expected that the incumbent, acting leader John Steenhuisen, will be elected as its leader. Nevertheless, the showdown is expected to be nothing less than historic for the party, which stands to lose considerable black votership if it is seen to be sidelining another competent and talented black leader, like Ntuli.
That’s it from us at The Wrap, a product of https://explain.co.za/ – simple news summaries for busy people. 💁🏾♀
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