Business leaders are ratcheting up pressure on President Cyril Ramaphosa to re-open the economy more swiftly, warning that the devastation wreaked by a lockdown aimed at curbing the spread of the coronavirus could exceed damage caused by the pandemic itself.
The economy was brought to a near halt on 27 March as the government sought to prevent a surge of infections swamping an already overburdened health system. Some curbs were eased on 1 May and limited commerce has resumed, but the authorities have indicated that the re-opening process could span six to eight months.
“I am concerned that our government’s lockdown approach and the subsequent economic hardship inflicted on our people will cost more lives than it can save,” Andrew Lapping, the Cape Town-based chief investment officer at Allan Gray, said in a column on the money manager’s website. “Economic and human costs are two sides of the same coin. Studies indicate that mortality rates double with job losses.”
Business for South Africa, a group of business organisations, has also urged the government to restart the economy faster, saying a protracted lockdown could result in the economy shrinking as much as 16% this year and as many as four million people joining the ranks of the unemployed in a country where just 16.4 million have jobs. The nation’s unemployment fund has already seen benefit applications surge, while the number of people lining up for food parcels has been growing daily.
“The lasting damage is when companies go out of business and they have no means to go back into business,” said Stanlib Asset Management chief economist Kevin Lings, who expects the economy to shrink 6% and shed 1.7 million jobs this year. “In South Africa that represents a very significant area of risk. Even if you remove the lockdown fully now you will not go back to where you were.”
Some of the rules implemented by the government, including a ban on tobacco sales, restrictions on online sales and limits on the ranges of goods stores may sell have been panned because they appear unrelated to efforts to tackle the pandemic.
“We must ensure that the economic rules are rational,” former finance minister Trevor Manuel, now the chairman of insurer Old Mutual, said in a radio interview with SAfm. “I think that a lot of the decisions that have been taken don’t pass the test of rationality.”
Just over 10 000 coronavirus cases have been detected in South Africa since 5 March, while 194 people diagnosed with the disease have died. The government expects infections to peak in August or September and Ramaphosa has warned the disease will pose a risk for at least a year, with the number of cases set to rise as more people return to work.
“We must accept the reality, prepare for it and adapt to it,” the president said in his weekly newsletter. “Easing the lockdown restrictions must not result in careless behaviour by individuals or reckless practices by businesses keen to resume activity at the cost of human health.” — Reported Mike Cohen and Loni Prinsloo, (c) 2020 Bloomberg LP