Mboweni and Mogajane announce R36.2bn in new economic support following unrest

Finance Minister Tito Mboweni and National Treasury director-general Dondo Mogajane revealed a new financial support package of some R36.2 billion in the wake of the recent unrest and destruction to property in KwaZulu-Natal and parts of Gauteng.

The pair were joined by South African Special Risk Insurance Association (Sasria) and SA Revenue Service (Sars) bosses in a briefing on Wednesday regarding the new package.

Read: Can Sasria honour claims of up to R30bn?

It follows President Cyril Ramaphosa’s announcement on Sunday that further support measures by government were in the works for South Africans and businesses amid the continuing impact of Covid-19 and recent unrest in the country.

The overall package will not only cover insurance claims from affected businesses, but also go towards funding additional social relief for poor South Africans as well as see additional funding for the police and the South African National Defence Force (SANDF).

While Mboweni initially mentioned a figure of R27 billion in further support “needed to fund the system” during Wednesday’s briefing, Mogajane later confirmed that the overall value of the new support package would in fact total more than R32 billion.

Mboweni said that the recent riots and destruction in KwaZulu-Natal, Gauteng and certain other areas in South Africa has “had a major impact on the country’s economic recovery trajectory” especially in the context of Covid-19.

“Damage in Ethekwini Municipality [greater Durban] alone is estimated at some R15 billion,” the finance minister pointed out.

He said that the destruction has been significant with shops, shopping malls, post offices, factories, transport networks and even cellular towers being targeted.

Mboweni condemned the “violent acts of destruction” and added that government “can’t sit back and needs to do something”.

Thus, the new economic support package has been announced together with other measures to curb the unrest, including the deployment of further police and SANDF troops in the affected areas.

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“SA is fortunate to have Sasria and insurance claims are being dealt with immediately…. Some R27 billion is needed to fund the system,” he said.

“It is estimated that between R15 billion to R20 billion [in claims] between Sasria and National Treasury will be met,” he added.

Mboweni pointed out that as part of the larger overall economic support package, some R250 million in additional funding would go to the police department and R700 million for the deployment of the SANDF.

Meanwhile, Mogajane stressed that the economic package will be funded “within available resources currently”.

Most of this is expected to come from the spike in tax revenues on the back of the commodities boom.

“We are not going for borrowing at all,” he said.

“All in all… there is about R36 billion worth of support that we are putting on the table,” Mogajane added.