How Sasria will pay unrest claims

By Khulekani Magubane for News24

As the South African Special Risk Insurance Association (Sasria) works through claims in the wake of violent unrest and looting in July, any allocations beyond the R3.9 billion it got in July will be outlined in Finance Minister Enoch Godongwana’s medium-term budget policy statement.

This according to National Treasury’s deputy director-general for public finance, Mampho Modise, who was briefing Parliament’s Standing Committee on Appropriations on Tuesday.

The public unrest and looting in July had its beginnings in the outcry following the incarceration of former president Jacob Zuma for disregarding the Constitutional Court and refusing to subject himself to the Judicial Commission of Inquiry into State Capture. However, this quickly morphed into waves of violence that saw the looting and destruction of businesses, mostly in KwaZulu-Natal and Gauteng, with the cost of unrest exceeding R20 billion in KwaZulu-Natal alone and the impact on national GDP estimated to be R50 billion.

Sasria is a National Treasury entity that provides cover for loss or damage to insured property due to terrorism, political violence, strikes and riots. It has cover of up to R500 million and additional coverage of R1 billion. The association cannot cancel nor refuse cover. It said earlier in August that claims related to the violence had already surpassed R10 billion.

Modise also told the Standing Committee on Tuesday morning that a special appropriation bill to the tune of R32 billion would be funded through last year’s “higher-than-expected” revenue and would also go towards providing support towards people and businesses affected by July’s unrest, including those not covered by Sasria.

Modise said the allocations would be made in terms of the Public Finance Management Act (PFMA) and guidelines of each department. She said on top of higher-than-expected revenues, National Treasury requested that government departments re-allocate funds internally, rather than asking for more money.

“Funding for five votes was allocated, splitting the allocations in terms of section 16 of the PFMA for emergency funding and provisions for the Department of Trade Industry and Competition to assist companies affected [by the unrest], but not covered by Sasria,” said Modise.

Modise said the allocations of the special appropriation included R10 billion for the Department of Social Development, R1.3 billion for small businesses support to the Department of Trade, Industry and Competition and R3.9 billion for Sasria.

She said R16.7 billion for social development as well as R700 million to the Department of Defence and Military Veterans for the deployment of South African National Defence Force personnel and R250 million to the Police Ministry for appointment of more personnel to respond to unrest.

Regarding Sasria, Modise said National Treasury has been engaging regularly with the state-owned insurer and said the R3.9 billion injection gave Sasria room to balance its books as it works through claims.

“Because they don’t know how much they will need, since they have not assessed all of the claims, there is R3.9 billion and if there is more it can be dealt with in the medium-term budget policy statement, but this R3.9 billion is there to assist them,” Modise said.

Modise said 13.2 million people were likely eligible for a South African Social Security Agency’s Social Relief of Distress grant, which includes 7.3 million caregivers. A total of R26.7 billion will be transferred those in need.

Modise said the Department of Small Business Development and the Department of Trade, Industry and Competition made proposals for adjustments, with the Department of Small Business Development committing to reallocate R300 million internally.

The Department of Trade, Industry and Competition told National Treasury it will need R3 billion, but Treasury identified funds that could be reallocated. Following this, the department said it would reallocate R700 million from existing funds.

“When the riots started, the two departments approached Treasury. The Department of Small Business Development did a survey on the impact of the unrest and spoke to businesses. They are trying to do this on a continuous basis to update their numbers,” Modise said.

She said the Department of Public Works and Infrastructure would get R600 million for the refurbishment of critical infrastructure. A loan facility will assist manufacturers affected by unrest through restocking, fitting and other functions, she added.

She said the retail recovery support fund will provide interest-free loans to companies that are not covered by Sasria. Modise said the R12 billion contingency reserve has not be used for any new items outside of the health interventions.

The Standing Committee on Appropriations chair Sifiso Buthelezi said Sasria was due to appear before the committee on 8 September.


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