Somewhere north of 700,000 South Africans woke up on Monday morning to find that their jobs, or a large part of their jobs, had disappeared. On Sunday morning they had them. On Monday they didn’t.
Source: Financial Mail
PETER BRUCE: Ramaphosa and his cabinet have lost control of the pandemic inside our borders
It is instructive that the president chose to consult the taxi industry on his Sunday night announcement, but not the liquor industry
Somewhere north of 700,000 South Africans woke up on Monday morning to find that their jobs, or a large part of their jobs, had disappeared. On Sunday morning they had them. On Monday they didn’t, after President Cyril Ramaphosa banned outright, again, the sale of alcohol anywhere in the country, ostensibly because victims of alcohol-related crime and accidents have been clogging up hospital space needed by victims of the coronavirus.
A previous ban, from the end of March to June 1, had been imposed to prevent alcohol-related occupation of hospital beds. That did a lot of damage to the industry, despite the fact that there were relatively few Covid-19 patients in hospitals during that period, meaning there was no clogging.
Guesswork by the government can be expensive if you’re in the wrong business.
And I may be underestimating the numbers. Research published by SA Breweries (SAB) about 10 years ago claimed that the company and its value chain – bottle makers (which have to make expensive calls about shutting down furnaces), top makers, can makers, water suppliers, hops farms, maize suppliers, energy suppliers, distributors, warehousers, micro distributors, taverns, bars, restaurants, hotels, bottle stores and the like – sustained more than 350,000 jobs back in 2009. If that was true, then it would be a bigger number now. That is just one company.
And that is just in the formal economy. SAB’s biggest independent beer warehouse is in Mthatha. It supplies a vast network of people with a livelihood. You drive your clapped-out bakkie along the Eastern Cape’s treacherous dirt roads, and a last 20km on tar into Mthatha. Load up with plastic crates of beer until your leaf springs are flat and then you’re off again.
Once you’re in your home territory the great offloading begins. You stop at the side of the road, next to three empty crates. You replace them with three full ones and then on to the next drop. And again and again. And then, tomorrow, the same drive. Somehow the owner of the shebeen in a hut eight kilometres away, over the hills and near the river, hears her delivery has arrived and it gets picked up. Thanks to Eskom’s one great post-1994 success, rural electrification, the shebeen owner has fridges for the beer. She also sells airtime and for R5 you can charge your phone on her spotless cow dung floor for 30 minutes.
While we’re measuring the economic damage of the government’s handling of this crisis, it’s important to remember the rural, informal economy. It is unloved, unseen and unmeasured. But it is real and I suspect it’s big.
It is instructive that Ramaphosa chose to consult the taxi industry on his Sunday night announcement, but not the liquor industry. You’d expect from a guy who spent nearly five years on the SAB board that he would appreciate what shutting a company down for two months, then allowing it to trade, and then, without warning, shutting it down again might do to its future prospects.
It seems not to matter. Ramaphosa’s ability to deftly finesse even the difficult trade-offs seems to have deserted him during this crisis. His government’s handling of the Covid-19 pandemic has been a lurch from one bumble to the next. Certainly, liquor producers, from big companies like SAB, Distell and KWV, to a multiplicity of wine farms – some better and bigger than others – must now face a stark reality.
It is that this ban could be indefinite. Ramaphosa imposed his first alcohol ban at the same time as imposing a nighttime curfew. The fall in the numbers of drunk driving and crime victims at hospital emergency wards was stark. But there were not enough Covid-19 victims banging on the door yet to appreciate it and it was never clearly measured what was having the least economically damaging effect for the greatest benefit – the alcohol ban or the curfew.
And by imposing both again at the same time must mean the government never checked the not unreasonable proposition that even a drunk person can’t have a car accident if he cannot drive around or can’t get into a street fight if he isn’t allowed to be on the street.
Winemakers and brewers are now going to have to decide whether they pack it in completely, mothball plants and lay off workers (and good luck with the Unemployment Insurance Fund and other funding), or sit it out. No business can sit out not doing its business indefinitely, but that is exactly what Ramaphosa is asking of the liquor and tobacco industries. And their suppliers, and their suppliers’ suppliers.
The president and his cabinet have been panicked into the position Ramaphosa took on Sunday night. Nothing about the current state of the virus in SA should surprise them, but somehow, it has.
You may remember Prof Salim Abdool Karim, the head of the medical committee advising the cabinet on the virus, making his first TV appearance, alongside health minister Zweli Mkhize, on April 13. He was, with hindsight, wonderfully blunt. “Can SA escape the worst of this epidemic?” asked his first slide. “Is exponential spread avoidable?”
“No!” he said, answering himself. “Not unless SA has a special protective factor (mojo) not present anywhere else in the world. Our population will be at high risk again after the (initially extended) lockdown.”
So, now that case numbers have increased sharply in Gauteng and the Eastern Cape, why is the government scrambling to tighten up on its lockdown?
Because, obviously, it has understood that the time it initially won with the hard lockdown has been fabulously wasted. Money has been stolen, field hospitals have not been built (between them, Gauteng and Eastern Cape have just one, donated by Volkswagen near Port Elizabeth), protective gear has not been supplied and the virus is winning. Stupidly, cabinet ministers are still talking about flattening the curve as they “prepare”.
But prepare for what? That time has gone and the ANC is being as ineffectual as always. And this time Ramaphosa will carry the can. Jacob Zuma may have looted the country, but it will have been Ramaphosa who couldn’t supply a hospital bed with an oxygen tank next to it. Or a steady job.
It is too easy to point out the contradictions in policy. Essentially, all the regulations try to limit contact, quite reasonably. And where contact becomes inevitable, how it should be regulated. But politics have also intervened and so, while you still can’t visit your parents, you can drive in a full taxi from Cape Town to Plettenberg Bay, a six-hour journey. Even overnight to Eastern Cape to bury a relative.
The taxis have political clout. So do the churches. Business has no political clout whatsoever in SA. Black or white, they are mere supplicants at government’s table, some better at it than others. It must be dawning on many CEOs and boards of directors now that they are on their own. That would certainly be the case in the liquor and tobacco industries.
It will spread. Ramaphosa and his cabinet have lost control of the pandemic inside our borders. It was probably too much ever to expect they could control it, but it is human nature to “stand up” to adversity, or an enemy, even if you can’t see either.
When Ramaphosa says something like “We will overcome” he doesn’t really know that, or what overcoming might even look like. As this becomes clearer, he is increasingly unable anymore to rally business to his side and, at the same time, unable to help desperate Covid-19 victims because provinces run by his own party have not prepared well (or at all) for the virus.
He may believe he is “standing with” security and health hawks in cabinet, but he may, in fact, be merely appeasing them, and for the first time I have begun to wonder whether, in fact, he will, in the aftermath of this crisis, be able to hold on to leadership of the party. It was no surprise at all, given the president’s political position, to hear this week the beginning of official talk about the introduction, by the state, some time in the future, of a basic income grant for people between the ages of 18 and 59.
Ramaphosa is driven exclusively by political positioning, but when the crisis passes (some time late next year?) he is going to turn to business and ask it to join him in a grand new age, to help him craft a new and inclusive economy, to climb a mountain with him.
It is then that he might come to regret not including SAB or its main union, the South African Transport & Allied Workers’ Union, in his consultation before Sunday’s speech. Or any one of a dozen people of influence in the industry. You shut down Solly Kramer’s just like that? The Ramaphosa I know/knew would have had the political nous to at least tip off the Cosatu leadership about his immediate liquor ban so they could warn affiliates involved in aspects of the trade.
Industry insiders get that the government might have wanted to avoid a rush to buy by pre-announcing a new sales ban, but it’s a grey area. If Ramaphosa can’t be open and transparent and inclusive now, when does he start? Executives in the liquor industry say they can’t get the data the government claims it has to prove hospitals are being rendered helpless by alcohol-related cases. What are the numbers? Where? What time of day? They ask, they say, but they get no answers.
“If we’re part of the problem, how can we help fix it if we don’t know the detail,” asks one.
The liquor industry knows it is on its own. It’s white and male and expendable. Who does it turn to for help? Not doctors. Not Ramaphosa. The unions, possibly, but like most of SA business, labour’s stake in it is negligible. If labour had 12% of SAB, were on the board and working to save the company from a wrecking government, something might happen. But to the extent that the liquor industry reflects the traditions and history of SA capitalism, it may deserve what it is getting.
Why does SAB not build trauma units and hospitals throughout the country? To treat alcohol-related injuries? Along with Heineken, say, or Distell? How do these big companies relate to the government? Does the CEO know the president and are they regularly able to update the state on the industry? Or is it like “human resources”, where a young person is given stakeholder relations, a secretary and a small staff?
Whatever. What comes next with alcohol is a dead certainty. There’s a lot of stock in bottle stores and restaurants at the moment, but it will be gone in a few weeks. Then the black market switches into gear. Cigarettes have paved the way and pirated alcohol will pour into the country from Zimbabwe and Mozambique. Police minister Bheki Cele will huff and puff and catch no-one. During the last alcohol ban police were delivering booze in Pretoria, one industry insider tells me.