It’s not only the economy at stake. South African society is also at risk if the government extends a five-week lockdown without allowing more industries to get back to work.
That’s the view of Investec Group CEO Fani Titi and the head of the company’s South African banking unit, Richard Wainwright, who is also the chairman of local industry body, the Banking Association South Africa.
“We don’t have the capacity to absorb the kind of job losses that could result,” Titi said via a video conference call. “We would see significant damage to the economy, but also to the social fabric.”
President Cyril Ramaphosa’s administration has to balance restarting an already moribund economy with avoiding a surge in Covid-19 infections that the nation’s crippled public health-care system can ill afford.
“They’re going to have to select types of businesses and industries where it is practical to start lifting the lockdown restrictions,” said Wainwright. “But at the same time protecting people whether it is through social distancing or screening technology.”
Banks are in talks with the government and regulators over a loan-guarantee programme largely aimed at keeping small business running, Wainwright said. Banks would have to share some of the risk because the government doesn’t have the fiscal room, he said. Lenders can use their infrastructure to feed that stimulus into the economy.
Relief efforts
“We are far advanced in our discussions so we are hoping for a good outcome in the not-too-distant future,” Wainwright said. Investec is also in talks with the JSE to find ways of easing access to the equity market for capital raisings that often get bogged down in complex regulation.
The government will have to harness the private sector to ensure there are broader support measures, Titi said.
“Relief efforts that are private-sector and public-sector based, given the state of our fiscus is constrained, is what we have to work on now as we move into the next phase of the crisis.” — Reported by Roxanne Henderson, (c) 2020 Bloomberg LP
