South Africa announces $26 billion to help struggling nation

People armed with spears, batons and axes in Johannesburg’s Katlehong Township during a new wave of anti-foreigner violence. CreditCreditGuillem Sartorio/Agence France-Presse — Getty Images

JOHANNESBURG (AP) — South Africa’s president on Tuesday announced an “extraordinary budget” of $500 billion rand ($26 billion) to address the huge socioeconomic effects of the coronavirus pandemic, saying that “our country and the world we live in will never be the same again.”

President Cyril Ramaphosa in a national address said the “historic” amount is roughly 10% of the GDP of sub-Saharan Africa’s most developed country. The top priorities are combating the virus and relieving “hunger and social distress” as millions of South Africans struggle to survive under lockdown, he said.

One-tenth of the new special budget will go toward the country’s most vulnerable people over the next six months in one of the world’s most unequal nations. The pandemic has exacerbated inequalities, Ramaphosa said.

“We are resolved not merely to return our economy to where it was before the coronavirus, but to forge a new economy in a new global reality,” he said, adding that “our new economy must be founded on fairness, empowerment, justice and equality.”

Poverty and food insecurity have deepened dramatically since the lockdown began on March 27, Ramaphosa said, and he acknowledged that government food distribution has been unable to meet the “huge need.” Some 250,000 food parcels will be distributed over the next two weeks, said the president, who strongly condemned reports of officials diverting aid.

Local media reports have described in stark detail how families are trying to practice social distancing in crowded shacks in informal settlements. Some communities have been in the dark for weeks or months, unable to meet electricity payments, Clean water often comes from shared community taps, if at all.

Ramaphosa said other priorities for the new budget include the protection of companies and workers in a country where the economy had been struggling even before the pandemic. The lockdown has halted most economic activity, with only essential service workers in sectors like food and healthcare allowed to operate.

A large part of the workforce is in the low-income informal sector. Ramaphosa announced special increases to the monthly social grants upon which about 16 million of South Africa’s 57 million people rely for survival.

The virus and measures to contain it will continue to take a severe toll “in the weeks and months to come,” with many people losing their jobs, the president said. Unemployment already had been 29%. The central bank now projects that GDP will fall by up to 6.1% this year.

South Africa’s lockdown is set to continue until May 1. While painful, it has been “absolutely necessary” to save tens of thousands of lives, Ramaphosa said.

South Africa has the most confirmed virus cases in Africa with 3,465.

“If we end the lockdown too soon or too abruptly, we risk a massive and uncontrollable resurgence of the disease,” the president said. The loosening of the lockdown will take a “risk-adjusted approach,” he added.

He will address the nation on Thursday with details on a “phased approach, guided by the best available scientific evidence, to gradually lift the restrictions on economic activity.”

Other African countries are implementing relief and social welfare programs for their citizens, although none on the scale of South Africa.

Nigeria’s government has announced it will expand its social welfare register from 2.6 million households to 3.6 million, in addition to food distribution, cash transfers and loan repayment waivers.

Namibia is offering emergency income grants to workers who have lost their jobs, and Cape Verde has offered cash transfers and food assistance.

Egypt has reduced taxes for industries and postponed taxes on agricultural land, while Ghana has pledged to fully absorb the cost of electricity bills for the “poorest of the poor” and 50% of the cost for all other consumers for the next three months.

Through the African Union, the continent’s leaders have appealed to the international community for at least $100 billion to help Africa fight the virus. The International Monetary Fund this month approved $500 million of debt-relief funds for 19 of Africa’s poorest nations.