Lives depend on reigniting SA’s economy – PSG Group

Time is of the essence: we need to act faster to relax restrictions.
Image: Getty Images

We would like to make the following points on Covid-19:

Firstly, please note that these are the current thoughts of the PSG Group Board. Even though we have read numerous articles, have listened to experts from both sides, are constantly thinking about the consequences of the pandemic and obtain input from all those around us, none of us have a medical background. We are also aware of the fact that the president may address certain or all of our concerns this evening (April 23).

PSG Group is a company that employs more than 20 000 people throughout various industries within our group. We pay salaries, we pay taxes and we have contributed positively to our economy for the past 25 years. We as PSG Group lie awake at night, as we have a major responsibility to all our employees and their families, to our clients, our suppliers, our bankers, our government and ultimately to the people of our country.

To remain quiet during this crisis is unfortunately no longer an option for us and silence will certainly not be of benefit to anyone.

We must start by congratulating President Cyril Ramaphosa and his cabinet on the quick and decisive way in which they acted to address the pandemic. It is great to see that our leadership and country can act swiftly and with purpose. That we can stand together to achieve a common goal. We understand from various medical opinions published in the media, that we have potentially bought enough time to be as ready as one can be to face what may come.

Mr President, whatever we say hereafter is not to criticise your administration or question your actions. You are between a rock and a hard place and we do not envy your position. It is not an easy task to balance different concerns.

But here is the issue as we see it – the lockdown and especially the potential extension or failure to adequately relax restrictions are causing severe damage to what is left of our fragile economy. The longer it takes to come out of the lockdown, the worse it will be going forward for every citizen of South Africa. Alternatively, if we have a system whereby we move in and out of lockdown depending on the number of infections, this too will have a similar disastrous effect.

The only option is a continued lockdown of the elderly and frail until the virus is contained or a vaccine becomes available, while the economy operates as close to normal as possible.

Please understand us correctly – we are not arguing economy over lives. But the truth is that lives are inextricably linked to the economy. Our survival and wellbeing depend on whether and how quickly our economy recovers.

Our economy is struggling, and we are running at a significant budget deficit with already-worrying levels of debt, high unemployment and struggling parastatals.

We do not have the means to provide meaningful relief packages on a sustainable basis without further loading the debt burden to such an extent that we may never be able to repay it, or struggle to do so.

South Africa has recently been downgraded to junk status and has been assigned a negative outlook – so any new debt will become even more expensive. We entered this Covid-19 war already wounded.

Government’s primary source of income to address the pandemic, drive relief and provide stimuli for economic growth is one of the things that is under attack…namely tax collection.

More than 80% of tax revenue is derived from personal tax, corporate tax and VAT.

Many businesses earn no revenue at the moment, while others do very little:

  • As a result, significant less VAT and corporate tax will be collected:
    • Businesses have stopped paying their rent and other suppliers as they simply cannot afford to – resulting in a very negative economic spiral and ever-decreasing VAT and income tax revenue.
    • As far as individuals are concerned, they too have stopped paying rent, servicing debt and consumer spending is down significantly as a result of the lockdown. Again, less economic activity means less VAT.
  • We can expect most companies that survive the lockdown to make significantly lower profits, if any, for the year – so very little corporate tax will be collected. Similarly, tax losses will also have a negative impact on future year tax revenue for government.
  • According to Statistics SA, 42% of formal sector business surveyed fear they will not have the financial resources to survive and 85% have already seen a decline in revenue.
  • There will be significant job losses – which translates to the loss of personal tax revenue, loss of spending power for the individual and an increase in government grants to be paid.
  • Most of our small and medium enterprises (SMEs) do not have surplus reserves – many of them will close forever with a consequent loss of jobs and tax. Relief funds may assist a few, but most will unfortunately not make it.
  • The decrease in interest rates is understandable given the state of the economy, but it will not be enough to assist most SMEs and will do very little for the man in the street – and again tax collections will suffer.

It is therefore clear to us that government will experience a significant decline in tax revenue resulting in the already noteworthy budget deficit widening even further. We must ask ourselves realistically – where is the money going to come from to reinvigorate the economy and pay for an ever-increasing social bill? Less people will be able to contribute to the South African treasury and far more will become utterly dependent on it. Yes, the Solidarity Fund, to which we also contribute, is a worthy initiative to assist, but it may not be enough.

According to a recent study, the economy is losing R13 billion per day during the lockdown, and we will still lose billions even if we partially open or totally open up the economy. On Tuesday evening, Ramaphosa announced a R500 billion economic support package representing 10% of South Africa’s GDP.

This will comprise various measures and will seemingly be funded by the likes of the World Bank, the International Monetary Fund and the BRICS Development Bank, as well as the reallocation of previously-set budgets and the utilisation of Unemployment Insurance Fund reserves. Although it is an admirable effort, realistically we need to be clear it will in the end mainly be a relief intervention directed towards preventing a full-blown  humanitarian disaster, rather than an economic stimulus. Again, a further increase in debt of this magnitude will unfortunately have dire long-term consequences for our economy and our country.

We understand that Covid-19 will be part of our reality for the foreseeable future. In the president’s announcement on Tuesday, he hinted at a phased relaxation of the lockdown restrictions, of which the details will only be announced later today. We don’t want to deter from the president’s message, but we are trying to convey a reality as we see it and to emphasise that South Africa cannot afford to revert to normal activities too slowly.

My father, who I greatly admire, taught me that you cannot just sit back and complain if you don’t have a better solution. Furthermore, it is of no use that I nod my head to everything proposed by government, but behind closed doors differ as so many people in the business community do. No one wants to make unpopular statements and become a target on social media for those who will later also be the first to claim what should have been done. This has never been our style.

We therefore publicly request government to carefully consider the extent of further restrictions and the urgency to return to economic activity.

We believe South Africa should act much faster in lifting restrictions to rejuvenate the economy.

We agree with scientists that we should protect the elderly and those with compromised immunity with continued isolation protocols in place for them. We too have elderly loved ones, as well as friends who suffer from cancer and other diseases that make them especially vulnerable – and we want them protected.

The rest of us, however, need to get back to work. We agree with government that a lot more testing should be done as we move forward. Further, we need to understand that in the absence of any vaccine for the disease in the short- to medium term, we need to obtain herd immunity sooner rather than later.

We acknowledge that this means more people will be infected and that some may become very ill. There will undoubtedly be lives lost, but we’re afraid that if we are bluntly honest with one another we are heading for an immense amount of lives lost in any event. If not from Covid-19, from starvation, social unrest, crime and a myriad of other chronic diseases which will follow.

The fabric of our society will also be severely affected and damaged – polarisation of people will be driven to the extreme. Just one example where it is very evident, is the closing of schools – those with digital means can home school to some extent, while the poor are again left behind and exposed – and an educated youth is our future. The consequences are severe no matter which way we argue it.

Please do not consider our abbreviated opinion as being heartless – it is exactly because we care about the well-being and the future of our citizens, our children, your children and our country which we all love that we’re speaking up. It will not help if we sugar coat our message today to appease a specific group or endear ourselves to the popular view.

We need to be honest about what lies ahead if we want to win the war – not just against Covid-19, but against the hardship that will follow.

We are a South African company heavily invested in South Africa. We continue to invest our shareholders’ money, to support government efforts, to create jobs and to assist in growing the economy for the benefit of all stakeholders. In theory and on paper one can therefor plan a release of restrictions over several months, but in practice, given the state of our economy, we unfortunately do not have the luxury of time to do so.

South Africans are resilient, entrepreneurial and hard-working human beings. Together with government we can overcome Covid-19, we can get our economy going again, we can lessen the impact of future hardship and the future cost of lives…. But we need to act faster to relax restrictions and reignite our economy on which all of our lives ultimately depend.

Piet Mouton is CEO of PSG Group


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When the SARB drops interest rates it does not mean that the Banks will lend when they know the future looks uncertain. The banks are unwilling to lend when they fear that a borrower will not be able to repay. The idea of lowering rates to stimulate the economy has utterly failed.

Being honest about what lies ahead is one thing but we are more reliant on the following:
– Good governance and leadership;
– Right strategic economic decisions;
– Preventing a collapse of economic activity.

I am willing to lose. Let’s bet you’re not in the camp of those who almost always say lowering interest rates helps the economy.

Yip. It is having no effect and will have no effect. Just decimate savings and stop the carry trade into SA Rand.

How does it not help when my delivery business *hypothetical by the way* which is made up of 5 cars I own and 5 that I’m financing through bank business financing? I’m paying less during this period. All that’s necessary is that I have the money for the last 2 months or so. PSG being a financial services company thrive on telling people to have 3 months saving and sometimes even six. Anyone who has been able to do that can now dig into those savings.

It is about whether it is good for stimulus. New business.

Good and sensible points, but alas, sense and good advice have never been factors in government decisions about finances or economic matters. The point of departure of this article is therefore sadly missing the mark. It assumes the government has the best interests of the people and the economy at heart. Regrettably, as is the case in all socialist regimes, this is not even close to the truth. The cadres are looking out for themselves, and there are those in the Party that even see this as a golden opportunity for deliberate destruction and the creation of a new socialist paradise. Welcome to Venezuela, comrades.

What exactly is the point Piet? A long winded letter telling everyone what we already knew weeks ago? How about a much shorter letter saying that PSG cares about peoples retirement funds, and as such will lower your ridiculous fee’s. Maybe also attach a short sentence mentioning millions of rands PSG will allocate/donate to alleviate the poor’s suffering via feeding initiatives, housing assistance etc. A letter along those lines would be worth reading, and display PSG’s REAL commitment to the people of this country. Not this drivel….

Where’s your letter?

exactly! Where is his letter and where are his donations and where is his cut in his salary or fees? And why does he write such al long meaningless comment, which is mostly drivel?

I understood the point to be that a relatively small number of tax payers will have to pay enough taxes to support the R500 million billion hundred handout. And there is only one way to make this possible, which is to get the economy going ASAP. But I agree that this line of thinking is quite abstract!

HS ( whatever that means) , you are nothing but a faceless couch critic. Go on record, show your face, make a youtube video and state your case. Otherwise your opinion is worthless.

Why is it that the first things that “my dear fellow South Africans” always look for is the “free lunch”?

Why is it that that the focus is on statistical COVID-19 PROJECTIONS and not the statistical COVID-19 FACTS? Including the evaluation against other major illnesses?

Mr Mouton I laud you for making a stand as a key player in SA business and for bringing to the fore where the greater risks actually lie.

“My dear fellow South Africans” the facts are on the table, it is time to be the resilient nation that we are! It is time to look at the facts, to stop burying our heads in the ground or finger pointing, to stop looking for “free lunches” and to start looking to stand together as one nation, like we did in 2010, to rebuild a broken country.

Very capable young fellow. Objective article. We are not Austria or New Zealand. Cannot stayed closed for this long with our limited resources.

We don’t have limited resources, they are just beneficial to a limited number of executives. That Kumba dude got a little over R46 million.

The president said in his last message to the nation, no return to the old way of living. Listening to friend Gates, not mine, in many online video, explaining his vision and how. With the approval stamp of the WHO. The body of lock down instructions. They praise South Africa doing the right thing on the road to. Again, listen to Gates,finding out the end goal.

Put the meth down Bas…

Finally a SA CEO prepared to show leadership. Upstanding man, this Piet Mouton.

….that’s a good joke …right?


Indeed, but as we see, no one took any notice, so we continue to bleed.
Small business has no voice in this country, but big business does and it’s time for those captain’s of industry to make their voice heard and stop been nodding heads in public and crying in the board room.

A ZERO cost way to reignite the economy dramatically is simply to scrap all labour laws and ensure a reasonable min wage per hour for unskilled workers.

Do that and you’ll get 5%+ GDP growth and a more competitive labor force.

Need to keep in mind that lockdown or no lockdown business activity will not be the same. I think Spur has already said they would not reopen their restaurants even if the lockdown was lifted since there would be too little demand. Same across tourism – very little domestic tourism likely and no international. Export demand also all screwed up. So lifted lockdown is still only a portion of the activity of pre-lockdown. Plus most private and public health provision collapses under the no lockdown scenario – and would probably take at least 6 months plus to recover. So that portion of GDP must be figured in.

I coulndt agree more.

I’ve said it a few times in my comments.

We must quarantine those that are actually at risk. The rest of us must work.

No use in us following what the world is doing, our circumstances are too unique.

We must let everyone and anyone young and healthy go out there and GET THE VIRUS!!! That would build up heard immunity with VERY LOW RISK.back to normal.

Managing risk with a blanket approach is a terrible strategy. You must manage the risk aggressive when its high and less aggressively when its low.

If we do this, the R will be less than 1 and we can get

Good letter.

I am in agreement with the view. Especially that the R500 billion is mostly for welfare. That’s not going to get the economy going. R20 billion to fight the virus makes one think that plenty could have been achieved with R50 or even R100 billion fighting the virus and not destroying the economy.

I also agree with the longer its shut or half shut the deeper and longer the economic hardship. Flattening the curve does not mean less infections. It means it is going to take a lot longer to deal with the virus. So what we go in and out of Lockdown??

No man that’s not going to work.

Here we see the difference between the two opposing parties. The state on one hand and the free-market capitalist on the other hand.

PSG came into existence because of consumer demand. PSG serves the consumer, educates students, creates jobs, invests capital, empowers individuals, enriches pensioners and adds value to society. This entire process is a voluntary exchange for the mutual benefit of both parties.

The government, on the other hand, uses its coercive monopolies in the supply of violence and justice to enforce the exploitation of society through taxation and corruption. The state exists at the expense of consumers. The state is in direct competition with consumers and a powerful state, leads to disempowered consumers. There is no competitive force within the government that ensures that the consumer will get the best product at the best price. The opposite is true. The internal forces in the government enable those individuals who will exploit society at the maximal rate.

The state impoverished society while free enterprise enriches society. That is why we need more free enterprise and a smaller state.

“Every entrepreneur and every owner of means of production must daily justify his social function through subservience to the wants of the consumers. The management of a socialist economy is not under the necessity of adjusting itself to the operation of a market. It has an absolute monopoly. It does not depend on the wants of the consumers. It itself decides what must be done. It does not serve the consumers as the businessman does. It provides for them as the father provides for his children or the headmaster of a school for the students. It is the authority bestowing favors, not a businessman eager to attract customers.”
― Ludwig von Mises, Omnipotent Government

Good man, you must have had to re-write that 10 times, removing what you really wanted to say and the profanity you had inadvertently left in your first few drafts – a great letter, showing amazing restraint.

Your 3rd point last line is the most telling and sums up the stupidity of government … “… what may come.”

The ANC has enforced the worlds most brutal lock down – even before their first death. Based on a model by Neil Ferguson that remains shrouded in secrecy that he and Imperial College refuses to release for peer review – which is standard practice and the fact they refuse is utterly bizarre and needs to be urgently investigated, as all world governments are basing their lock downs on it and it is further propagated by WHO/ John Hopkins and CDC (ALL COMPLETELY PRIVATE INSTITUTIONS). FERGUSON has told Africa that 3,3 million people will die – however, i would assume much to his alarm/ dismay, so far we are on around 1,400 only, remove Algeria/ Morocco (North African suburbs of France :)) and Egypt and the number is under 600, for well over 1 billion people – could it be just maybe that most of Africa for decades has had mandatory as far as is logistically possible – a BCG vaccination programme in place – where every where else that has one are only getting 10% deaths, of those that did not, without exception. Look at Portugal with BCG, only 850 deaths (10.2m pop) next door to Spain without BCG, 22,000 deaths (46m pop). Add in Africa average age in the mid 20`s and abundant relative warmth and excess sunshine for vitamin D…

One would have thought that maybe waiting for your own data, or taking a 2nd opinion from a GIANT like OXFORD EPIDEMIOLGY was a good idea!? Someone like Pro. Sunetra Gupta who makes Ferguson look like an academic dwarf and states that only 1 in 1,000 will require critical care. She has an incredible reputation and a great track record – unlike your track record, which can only be called a cluster f#ck of BIBLICAL proportions – H1N1 would infect 2 billion people and kill hundreds of millions in 2009 – really – the final death toll was a fraction of a fraction of 1% – but you never gave your consultancy fees to GLAXO, Novartis, Sanofi etc back did you, the ones that produced $18b in H1N1 vaccines never used and now expired …

R500B – 10 years ago was $50B, now only $25B. Essentially a band aid on an axe wound. I find it slightly ironic that R500B is actually only just enough to settle Eskoms current debt, not even enough to get it back to an 80% functioning machine – that alone tells you everything you need to know about how short term and cosmetic the R500B will be. We are losing R13B a day – that equals R500B in only 38 days – on the 30th April your pretend lock down end day (why have 70,000 troops been deployed?), is day 34 of lock down. So you will have barely covered the loss lock down has caused!

Splice that R500B up some more, R130B is redirected budget, which will cause suffering elsewhere, so actual is R370B. Maybe 30% of that will come from offshore, but will be held as reserves and not immediately available to monetize into ZAR. What about capital destruction due to the market crashes we have had and the next wave coming shortly. How many billions have been wiped off the GEPF, that you will shortly be digging into? I would hazard not less than R700B – R1T. The further lock down extension that you have not admitted yet and from what we can see in leaked documents (were you balloon floating?), will be a very painfully slow process and might be a stop start affair. What about opportunity cost etc etc etc. All in all, if we are back to normal by end of June – the country will have lost a minimum R3 trillion maybe closer to R4 trillion – now maybe you can see just how pathetic the R500B is – cosmetics only!

This is why 70,000 troops are rolling across RSA as i type this – because you know what is coming.

…your comment, a very good read. Thank you

Great post. I agree. The rollout of the military is in preparation for something that I am not allowed to say under the current regulations.

Considering the damage to the economy and because these excessive measures are based largely on pseudo-science, a wise observer will tend to question the logic and motivation behind lockdown. If a well-orchestrated and synchronised act on such a global scale does not make sense to well-informed individuals, then it simply implies that we do not have all the relevant information. I am not talking about the naive and ignorant majority who fell hook, line and sinker for the “pandemic” idea.

There is only one way for leading nations to handle the record-high levels of debt. World debt is at 350% of GDP. It is impossible to repay. Default on a global scale is imminent. Now governments can default outright and refuse to repay loans, or they can default in real terms through currency devaluation. The first option is politically unacceptable, while the second option is invisible, and therefore acceptable. Currency devaluation raises nominal GDP while the debt levels remain the same in nominal terms. Debts will be repaid in nominal terms but governments will default in real terms- in terms of purchasing power that is.

Governments need an exceptionally good reason to enter into unprecedented levels of money-printing otherwise the electorate will overthrow the ruling elite. This is where the pandemic narrative enters the picture. The recipe is to make people believe that the government is protecting them against a deadly enemy or a deadly virus. When people live in fear of an enemy they can’t even see, hear, touch or smell, they will be more conducive to the idea of the devaluation of their salaries. Plant the idea that it was the virus that caused the devaluation and nurture that idea with constant fear-mongering and you have your ticket to unrestricted money printing on a global scale.

This solution comes all the way from the IMF through the WHO to every member of the IMF. If we fail to make sense of the situation, then simply follow the money.

Sensei, Your post is the best assessment of the situation I have read in 5 weeks anywhere in local or global news. I wish I could make contact with you and hear more of your views. Oliver

Oliver, you are the sunshine in my life. I try to make sense of events, not to present a convoluted conspiracy theory, but to find an opportunity to make a profit. If my assessment is incorrect, I will make a loss. I put my money where my mouth is, so to speak. It is my job description to find opportunities. I look for ways to profit from events, and the opportunity is huge.

Coronavirus is an excuse for lockdown which is a convenient scapegoat for devaluation. We have already experienced all the steps. The printing presses are running on Nitrous Oxide and jet fuel.

“We have seen that if a government is not in a position to negotiate loans and does not dare levy additional taxation for fear that the financial and general economic effects will be revealed too clearly too soon so that it will lose support for its programme, it always considers it necessary to undertake inflationary measures. Thus inflation becomes one of the most important psychological aids to an economic policy that tries to camouflage its effects. In this sense, it may be described as a tool of anti-democratic policy. By deceiving public opinion, it permits a system of government to continue, which would have no hope of receiving the approval of the people if conditions were frankly explained to them.” – Ludwig von Mises. 1923 – just before the hyperinflation took off in Germany.

Research on youtube especially… latest talks by David Icke, Robert Kiyosaki, Alex Jones, Brian Rose, Dr Rashid Butter…. you will get many many more answers.

This has got to be a parody, right?

The picture sums up the country’s prospects!

End of comments.



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