COVID-19: South Africa announces new $26bn budget to relieve hunger and social distress

South African president, Cyril Ramaphosa has announced an "extraordinary coronavirus budget" of $500 billion rand ($26 billion) to direct resources towards fighting the pandemic.

President Ramaphosa in a national address on Tuesday said the fund which is roughly 10% of the country's GDP, will be channeled into combating the virus and relieving "hunger and social distress".

South Africa has been on a lockdown for 26 days, just like in NIgeria and other parts of Africa where lockdown has been imposed, it has taken a severe toll on citizens struggling to survive. As millions of South Africans struggle to survive under lockdown, he said the top priorities of the new budget will be to address the huge socioeconomic effects of the coronavirus pandemic.

"Poverty and food insecurity have deepened dramatically since the lockdown began on March 27," Ramaphosa said, and added that 250,000 food parcels will be distributed over the next two weeks acros the country.

Other measures announced by the President include:

1. A temporary six-month Coronavirus grant will be given to the most vulnerable families in the country.

2. Child support grant beneficiaries will receive an extra R300 in May and from June to October they will receive an additional R500 each month while all other grant beneficiaries will receive an extra R250 per month for the next six months.

3. R40 billion has been set aside for income support payments for workers whose employers are not able to pay their wages, while loans, grants and debt restructuring is being provided to SMMEs, shop owners and other informal businesses.

4. Support for artists, athletes and technical personnel, as well as to waste pickers and public works participants in the environment sector.

5. Introduction of a R200 billion loan guarantee scheme in partnership with the major banks to assist businesses with operational costs, such as salaries, rent and the payment of suppliers. The scheme is expected to support over 700,000 firms and more than three million employees.

6. Taxpayers who donate to the Solidarity Fund will be able to claim up to an additional 10
percent as a deduction from their taxable income.

Meanwhile, the Nigerian government through the Central Bank of Nigeria (CBN) has also rolled out a series of measures to support citizens and the economy. One of the measures include the introduction of a N50 billion Targeted Credit Facility (TCF) as a stimulus package to support households and micro, small and medium enterprises (MSMEs) affected by the COVID-19 pandemic.

Ghanaian President Akufo-Addo has also announced that government will absorb the electricity bills of poor citizens in a bid to alleviate the economic impact of the Coronavirus pandemic and the lockdown. He said 50% electricity bills will be absorbed for other consumers for the next three months.

The electricity subsidy is expected to cost the country 1 billion Ghana Cedis, the Energy Minister, John Peter Amewu revealed.

A South African financial expert, Zwelakhe Mnguni has commended the government's action and suggested that it would strenghten the country's currency.

"Government has focused on supporting the most vulnerable, and that was essential and is welcomed," says Zwelakhe Mnguni, the chief investment officer at Benguela Global Fund Managers told Daily Maverick SA.

Opposition party, the Economic Freedom Fighters (EFF) led by lawmaker Julius Malema, in a Twitter statement, welcomed the core of the aspects announced on social relief but said they would be waiting for the details on economic measures Ramaphosa would announce during the week.

The EFF stated they would like to see the distribution of food be facilitated out of political hands to prevent corruption.

Congress of South African Trade Unions (COSATU) also welcomed the measures, but called for big corporations to match the amount that the government has announced.

"Nothing less than a R1-trillion stimulus plan will be sufficient to turn our already bleeding economy around and save workers from the pain of skyrocketing unemployment levels," COSATU said in a statement.

The post COVID-19: South Africa announces new $26bn budget to relieve hunger and social distress appeared first on Neusroom.