RESPONDING TO THE NEW NORMAL
The COVID-19 pandemic is not just a health crisis and “an economic blip that will pass”, but also a turning point in history. All spheres of government need to respond in proportion to the massive impact the pandemic will create for decades to come, reports Jermaine Craig LOCAL GOVERNMENT PUT UNDER PRESSURE
The township economy was hard hit by COVID-19.
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he COVID-19 pandemic has devastated governments and economies worldwide and South African municipalities – already ravaged by strained cash flows – have been hard hit. “The country and world at large faces a threat of epic proportions, one that has decimated even the biggest economies and, by extension, livelihoods. Though the world has previously experienced economic setbacks – such as the 2008 financial crisis – they pale in comparison to the novel COVID-19 pandemic. What makes the current crisis peculiar is that, unlike the previous events, it is not a typical economic cycle – like a recession, where economies contract and later rebound – but a far worse and cataclysmic event in history,” says Gaethijwe Letlhaku, senior advisor Economic Development for SALGA Gauteng, as he seeks to take stock of this unprecedented time. Letlhaku says what made matters worse is that even before the pandemic reached South African shores, the country’s economy was already in the doldrums. “As such, the pandemic has not created a new problem, but simply exacerbated an already existing and deeply entrenched crisis of chronic poverty, unemployment and inequality. It is safe to say that the legacy of this pandemic will live with us long after it is defeated. Any response should thus be proportional to the magnitude of the problem at hand and should not trivialise this period as another economic blip that will pass easily, for this is a catastrophic event and a turning point in history that will have far-reaching implications not only for the economy, but also for the future of humanity. Furthermore, the COVID-19 pandemic has somewhat levelled the playing field as it relates to economic challenges wherein countries can develop new economies within their borders and be less reliant on imports,” says Letlhaku.
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Municipalities have had to step in during this time of crisis, even performing functions outside of their usual scope, when the communities they serve have most needed their help. “As a frontline sphere that carries the hopes and aspirations of many South Africans through the provision of lifesupporting services, local government has had to bear the full brunt of the pandemic. Communities in desperate need of assistance – from shelters to food parcels – turned to local government for support, mainly due to proximity. This led to the sector performing functions outside of its legislative mandate, such as providing shelter for the homeless, to mention just one,” says Letlhaku. He says other challenges have directly impacted local government, some precipitated and others exacerbated by the pandemic. These include: • A sharp decline in revenue has impacted the ability of municipalities to deliver services. This will have a knock-on effect on addressing infrastructure backlogs. • Low revenues will affect the liquidity of municipalities. This will further lead to a rise in bad debts provision and thus a decline in municipalities’ operating balances over the foreseeable future. • An increase in the number of indigent households, further eroding the municipalities’ revenue base. • Despite the plummeting revenues, municipalities are still faced with rising costs stemming from the response efforts to the pandemic, for example, interest-free incentives for overdue rates and taxes, shelter for homeless people and food parcels. Leadership mattered most right now and Lelhaku says that municipalities need to be guided through a post-COVID-19 transition to
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2021/06/30 5:47 PM
