OPEN LETTER TO PRESIDENT RAMAPHOSA BY RITA ZWANE
South Africa is burning, Mr President. Please #FreeOurPensions
General background
On 15 March 2020, President Cyril Ramaphosa declared a State of Disaster in South Africa; under the guidance of Act No. 57 of 2002: Disaster Management Act, 2002. Whilst we recognise and support all efforts to ensure the safety of all our compatriots and comrades, South Africans, guests, and visitors – the extent of Lockdown Regulations announced for the Tourism and Hospitality, Leisure, Food and Beverage sectors have been far too restrictive and devastating for the livelihood of both owners and the workforce.
Indeed, since the announcement and enforcement of the regulations restricting the general day-to-day economic activities, life has never been the same.
We can debate the efficacy of the various Lockdowns – to reduce and constrain the COVID-19 pandemic – for days. Many Health Specialists have provided tremendous background and support to both Government and the broader public regarding the safety protocols, social distancing, and sanitizing requirements that are essential to facilitate and safeguard each other’s safety.
The devastating and desperate reality
Here is what we do know: the economic impact and losses of the on-going applicable regulations as pertaining to the Disaster Management: Lockdown Regulations in response to the COVID-19 pandemic have been disastrous for millions of fellow South Africans, many of whom are struggling to put food on the table, let alone meet their monthly commitments.
Mr President, the devastating and desperate reality is noted:
Unemployment is increasing at an alarming rate from 28.48% in 2020 to 32.6% in the first quarter of 2021: As unemployment rises to record levels, and we lose our lives and livelihoods, our famous optimism and resilience is fast being depleted and replaced with an overwhelming helplessness and hopelessness.
The Social Relief of Distress, the initial Food Relief Packages for the most vulnerable communities have come and gone:
The Temporary Employee Relief Scheme is depleted without achieving the desired outcome of assisting those it was intended for. The latest lockdown has left thousands more people without an income again.
The current violent unrest and looting of malls and SMMEs is utterly despicable (since the 8th of July 2021) it has more to do with our country’s desperate state of poverty, hunger, unemployment, and desperation due to Lockdown regulations, and less to do with the COVID-19 pandemic itself or the recent imprisonment of former President Zuma. The current situation is doing little to instil and build investor confidence in our economy, not to mention the township economy in which the majority of South Africans live.
Moreover, with specific reference to the SMMEs in the Tourism and Hospitality, Leisure, Food and Beverage sectors, there is a desperate and urgent need to review the Regulations to be more supportive of struggling SMMEs, without compromising the necessary Health and Safety protocols. There simply must be a more proactive and effective approach to ensuring the sustainability and continuity of these SMMEs. One must wonder about the broader impact that this will have on the South African tourism sector, I mean, where will tourists visit when the dust finally settles? If we continue this path, it would not surprise me if we see once vibrant malls, shopping centres and waterfronts turn into ghost towns overnight.
The SMME – Debt Relief Finance Scheme
The Department of Small Business Development (DSBD) gave the Small Enterprise Finance Agency (SEFA) the mandate to administer the SMME Debt Relief Fund as a direct lending facility, for which R513 million was allocated.
On the 17th of March 2021, at the Parliament Oversight Committee; chaired by Ms V Siwela (ANC); stated that the number of SMMEs benefiting from the COVID-19 Debt Relief Fund was exceptionally low: – Quoted: “of the 35,865 applications SEFA (Small Enterprise Finance Agency) received, approximately 14,800 were fully complete applications of which 1,497 were approved.” This is a mere 4.17 % of applications were successful.
At this rate of compliance and approval, one can estimate that only between 4% and 8% of such SMMEs may survive the ongoing suffocating Lockdowns.
There needs to be an urgent review of the failures of the Debt Relief Fund to reach the desired SMMEs. Moreover, there needs to be a dedicated Debt Relief Fund that is specific to the Tourism and Hospitality, Leisure, Food and Beverage sectors – allocated to each Province and accompanied by a transparent process of publishing (in public gazette) of any assistance granted to such SMMEs. The value of the SMME sector cannot be exaggerated, it is a vital contributor to the country’s GDP and well considered to be the backbone of our economy feeding into big business. SMMEs are critical to the rebuilding of our economy as they are one of the biggest engines of job creation in our economy.
Allow Access to Pension and Provident Funds #FreeOurPensions
Desperate times, call for desperate measures! you need to give ordinary South Africans a lifeline and release our pension funds– and it does not have to come from public coffers. What needs to be done, as a matter of urgency, is to allow South Africans once-off tax free access to 50% of their pension and their Provident Funds without people having to resign their jobs or wait until they are 55. For many, this is already too late.
Doing this will not only provide immediate financial relief to the millions of people who are struggling to survive under the relentless grip of the COVID-19 Lockdown, but will also be a vital cash flow injection into our ailing economy? It is quite possible that a new generation of young entrepreneurs will rise from the ashes.
In an article titled “3 changes coming to retirement funds in South Africa” (Ref: https://businesstech.co.za/news/finance/446024/3-changes-coming-to-retirement-funds-in-south-africa/) published in BusinessTech on 15 November 2020; new tax rules regarding the annuitisation of provident funds came into effect on 1 March 2021. Furthermore, in terms of the annuitisation rules, members of retirement vehicles, irrespective of whether the vehicle in question a pension fund, provident fund or RA will be subject to similar rules regarding access to cash on retirement.
With specific exceptions provided in the ‘grandfathering’ provisions, from 1 March 2021, members of all retirement funds will only be able take one-third (⅓) of the total value of their retirement fund interest by way of a lump sum with the balance being taken as an annuity.
This is further subject to an exception where the total retirement interest does not exceed R 247,500, in which case the full amount may be taken in cash. Provident funds and their administrators will need to keep accurate member records indicating the pre-March 2021 contributions and growth, and post-March 2021 contributions and growth. This is in addition to the work that will be required as a result of several legislative changes affecting the retirement fund industry, such as the Conduct of Financial Institutions (CoFi) Bill, which are currently being considered.
Mr President, this call to access our pension funds is not made lightly.
The fact is businesses continue to close more so under the current unrest in SA. People are losing their homes and cars, everything they have worked so hard to build, for many like myself, since 1994. The COVID-19 pandemic and economic meltdown has all but evaporated the legacy that we were hoping to leave for future generations. People no longer have any options when it comes to meeting their financial commitments, like medical aid, funeral policies, and school fees, to the point of not knowing where to get the next meal yet, for many their monies are sitting with big insurance companies.
At the same time, freeing up existing pension fund money will breathe new life into our economy at a time when South Africa’s overall GDP is expected to decline by up to 7.9% in 2020, according to the United Nations Development Programme (UNDP). This will lead to major setbacks in our efforts to address poverty, unemployment, and inequality.
Postponement of Tax Obligations
It is estimated that SMMEs employ between 50% to 60 % of SA’s workforce and contribute 20% of GDP; further contributing 6% of Corporate Taxes.
With the tremendous burden of debt experienced by SMMEs; we request that tax obligations by SMMEs be postponed to 2024 to permit SMMEs to be granted a lifeline of additional cash flow. This will also allow SMMEs to qualify for funding as many could not pay their tax obligation in 2020 and now 2021.
We need hope Mr President!
We need oxygen, we are suffocating, our businesses are dying, and our livelihoods are going up in flames, the legacy we have worked so hard for is disappearing before our eyes. Most importantly, as mothers we need to be able to look our families and children in the eyes and say we did not keep quiet, we did ask what happened to 500 Billion Rands that was intended to mitigate some of the financial burden that our country faces? We did ask what happened to the easing of pressure on our existing hospitals and the promises to build new hospitals to treat patients with COVD-19. Where was the promised relief to South African businesses who are still struggling to survive whilst still navigating the devastating impact of this pandemic? Yes, please Mr President, we are still waiting for answers. Asikhohliwe.
We, as women of today, look up to and honour the women of 1956 – Omama u Winnie kaMadikizela Mandela, o Ma Sisulu, Helen Joseph, Victoria Mxenge – who stood side by side, unwavering and fought for our political freedom. Drawing inspiration from these heroines of freedom who forever changed the course of history in South Africa.
We were just starting to see the early glimpses of real economic gains, which we fought so hard for during our struggle for political freedom, only to have this dream of economic liberty torn from us by first, Covid-19 pandemic and ongoing Lockdown and restrictive regulations. Now our youth, whose anger and frustration have reached a tipping point, are the ones who are destroying the very country that we fought and paid for with our freedom, our blood, our families and with our lives.
Mr President, I am a 52-year-old woman, whose businesses reside mainly in townships. I have cultivated and actively contributed to the township economy for the past 25 years. The despair, anxiety and hopelessness in people is increasing exponentially. Every day I see young people who walk up and down the streets, totally defeated, having given up any hope of employment and I see children with eyes that once smiled now consumed by hunger.
We know Mr President, that you have the power to amend the necessary legislation under the management state of disaster act, which will allow us access to our pension funds, and which will help the majority of South Africans – the working class who are actively contributing to the growth and development of our economy and who are losing everything as we speak. These monies are sitting with insurance companies for those of us who once wanted to retire without becoming a burden to the state. Adding to this, most insurance policies have lapsed which compounds our stress as parents as we are starting to realise that we probably leave nothing for our children, not even a roof over their heads.
In Closing
I cannot help but wonder, after our parents fought so hard for our political freedom, for so long, what exactly, more than two decades into our democracy, is our generation going to pass on as a legacy to future generations? Is it going to be a broken, destroyed, poverty stricken, shadow of the country we love facing yet another enemy – a culture of dependency? Enough, Or can we unite once again, black and white and say THIS IS IT, Together as One People, can we change the course of history in South Africa? where the next two generations will see no colour other than another human being.
Most Respectfully Yours,
Phumlaphi Rita Zwane
From Rita Zwane, Author of Conquering the Poverty of the Mind, and Founder of Imbizo Shisanyama – From a shipping container to Busy Corner
About Author
