Flash Briefing: SA tourism lost R164bn in 2020; BUSA warns against basic grant; SA scores first primary surplus since 2018

  • South Africa can’t afford to implement a basic income grant, South Africa’s biggest business organisation said, wading into an argument that has divided the ANC. The country should instead consider an “unemployment insurance type product,” Business Unity South Africa said in a statement. Even then it should only be put in place if labour market reforms are enacted to boost employment, the fiscal deficit does not widen as a consequence and payments are to those in need and are not universal, the group said. With the impact of the Covid-19 pandemic pushing South African unemployment to a record, calls for a basic grant to be implemented have increased. President Cyril Ramaphosa has said it could be necessary and Lindiwe Zulu, his social development minister, has backed the concept. Finance Minister Enoch Godongwana has said he doesn’t favour the idea.
  • South Africa recorded its first quarterly primary budget surplus since 2018 in the three months through June, a sign that the National Treasury’s efforts to bring spending in line with revenue are succeeding. According to the South African Reserve Bank’s Quarterly Bulletin.the government’s primary balance swung to a surplus of R9.8bn, or 0.6% of gross domestic product, in the first quarter of the 2022 fiscal year, compared with a deficit of 2.2% of GDP in the previous three months. A primary surplus, which excludes interest costs, suggests the state can extract resources from the economy necessary to service debt.
  • New data shows how South Africa’s tourism industry was completely hammered by lockdown in 2020, losing approximately R164bn in tourism spending and around 1 million jobs tied to the industry. According to the Bureau for Economic Research, the jobs lost are not only in the tourism industry but many other sectors that are tied to it, all across the value chain. Currently, any recovery in the sector is being driven by local and regional travel and hospitality, with much of the international market still unable to travel to South Africa. Occupancy is down, and the SA tourism industry’s contribution to GDP is a third of what it was pre-lockdown.
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