The cost of ignoring the catastrophe will be much higher than that of addressing it, writes John Steenhuisen.
South Africa is in the throes of a hunger crisis that is causing terrible harm. There are various
steps government should take to mitigate the risks, understanding that the cost of ignoring this crisis will far outweigh that of addressing it. A new survey by Debt Rescue has found that 81% of households are skipping at least one daily meal. while 41% say they can’t feed their families. While horrendous, these statistics should come as no surprise.
Food prices have risen sharply this year, driven by Russia’s attack on Ukraine, which sent shock waves
through global fuel, energy, fertiliser and animal feed markets.
This has dealt a harsh blow to the poorest 80% of households, for whom the prices of many staples are now 24% to 65% higher. Vegetable cooking oil is up 65%, white maize meal 26%, tinned pilchards 43% and brown bread 24%. In SA, inflation surged to 7.8% in July, the highest since May 2009, with food price inflation at a high of 8.6% in June.
Low-income households were already under severe strain from government‘s irrational lockdown policies. bad economic management. slow pace of reform and
widespread service delivery failures, all of which have caused unnecessary job losses and unnaturally high unemployment.
The result is a humanitarian crisis, with millions of people in our country suffering pain, indignity and hunger, bringing massive increased risks for society Childhood stunting affected 27% of children under the age of five even before the hunger crisis hit. Millions of hungry schoolchildren are battling to concentrate and learn. They face impaired brain development and reduced life prospects.
Increased malnutrition is leading to reduced productivity in the workplace, obesity (from shifting to a cheaper, high, carbohydrate diet) and diet-related diseases, all of which will cost the fiscus and health system dearly. Worse is the increased risk and incidence of death from starvation.
One must also consider the increased risk of social instability and food riots causing infrastructure damage, business closures, disinvestment, job and tax revenue losses, and interrupted service delivery. In July last year we saw how ANC factional infighting easily sparked destruction on a mammoth scale in KZN. Ours is a nation on the edge, a powder keg of frustration that could easily become widespread unrest.
Ours is also a nation deeply in need of caring and compassionate response by government. The DA has
consulted several economists, analysts and industry associations to assess a broad range of possible interventions. We arrived at feasible, implementable proposals, all of which would bring a degree of relief. First, cut fuel taxes which are significantly higher than in other SADC countries. The price of fuel in Botswana, for example. is R6 lower per litre. Lowering the cost of transport would enable poor households to put more money towards food budgets. It would also bring down the cost of food
because the high cost of transporting it is pushing up prices.
Depending on how deep the cuts to fuel taxes, this proposal would cost the fiscus up to R86bn. As the DA has stated, the cost can and must be covered by cutting corruption and wasteful expenditure, reallocating funds such as the extortionate VIP Protection budget and opening the economy for growth.
Second, reallocate the R50m in food aid to Cuba to feed people at home. It is incomprehensible that government would take R50m belonging to SA‘s people and use it to provide food aid for Cuba when people here are starving. Third, urgently review the list of zero-rated food items with a view to expanding it to include more products purchased by the poorest 50% of households. These include bone-in chicken and other chicken and beef categories. tinned beans, wheat flour, margarine, peanut butter, baby food, tea, coffee and soup powder.
Dropping the 15% VAT on some of these items would help households to stretch their food budgets a lot further and would enable people to purchase more nutritious food. Bone-in chicken is the most compelling case for zero-rating. In terms of lost tax revenue, the intervention would cost about R3bn, but
experts have suggested it would pay for itself through improved health, work and learning outcomes.
Bone-in chicken is a high-quality source of protein and by far the most popular one for low-income
households, making up 14% of their food budgets. Poor South Africans need an affordable source of protein to prevent them shifting to a less nutritious. high-carb diet as their budgets are squeezed. It is also versatile and quick to cook, saving on energy costs.
Fourth, cut import tariffs strategically. Food economists have suggested this can be applied to pasta and chicken categories most commonly eaten by the very lowest-income households. This will have a
negligible impact on the fiscus, but a large impact on the very poor.
The medium-term budget policy statement on October 26 is a timely opportunity for the finance minister to implement some of these proposals and avoid much social harm. SA has little room for fiscal manoeuvre. However, the cost of ignoring this crisis will be much higher than that of addressing it.
Any loss of revenue from these proposals could be recovered many times by tackling corruption and
stepping up the pace of reform to open the economy for growth and jobs. People need to get back onto their feet by becoming employed or starting viable businesses so households can be self-sufficient and resilient against future food and other price shocks.
Written by John Steenhuisen, Published by The Sunday Times, Second Edition, Page 19, 18 September 2022
*Steenhuisen is leader of the DA