National Treasury director general Dondo Mogajane on Monday said the country’s unemployment rate could reach 40% due to the impact of the coronavirus pandemic.
Some businesses have already shut their doors due to a month-long lockdown, which restricted economic activity across the country as the government tried to mitigate the spread of COVID-19.
Despite millions of South Africans returning to work on Monday, there was concern about whether the country’s economy would survive the effects of the pandemic.
Certain sectors including agriculture, forestry and fisheries, and other industries were permitted to operate under level 4 lockdown to keep businesses afloat.
Mogajane said there was a possibility that the country’s already battered economy would see a major contraction.
“…It may even reach 40% unemployment, if things go the way they are and it also depends on which sectors we are talking about,” he said.
COVID-19 EXPOSING SA’S STRUCTURAL CHALLENGES
Mogajane said that COVID-19 was showing the structural challenges in the country’s policies and it would shake the foundations of our democracy if nothing was done.
Speaking on the Eusebius McKaiser Show, Mogajane explained the thinking behind the interventions taken by government and their impact.
He said that banks and businesses must now operationalise the R200 billion government guarantee scheme to cushion SME’s, the arts and tourism sectors.
Mogajane said that government interventions like putting aside R50 billion for grants would cushion the impact and plight of the poor.
“Taking that decision was part of a broader conversation of the impact of the failure of the democratic project – so we are trying to come up with measures that will ensure that target of alleviating poverty in our lifetime is achieved.”
On the outcry from freelance arts practitioners and small and medium enterprises in the tourism sector, Mogajane said that banks and the private sector must now help government to reach where it cannot.
“We have done what we did last week, announcing the R200 billion package in the form of a credit guarantee scheme. Now the banks must come to the party and say how do we ensure that we cushion the impact, whether in terms of payment and installment deferrals.”
He said that he regretted that government won’t collect nearly R1.9 billion in taxes from wines and spirits this year but that was a temporary setback and the bigger gain was that hospital and ICU beds that would have been occupied by treatment for stab wounds could now be used for better services like COVID-19 and that he was fine with that.
For official information about COVID-19 from the Department of Health, please click here.