Level 3 is actually Level 2 in disguise, because sanity has finally prevailed

Ebrahim Patel, Minister of Economic Development, in his office on February 12, 2012 in Cape Town, South Africa. (Photo by Gallo Images / City Press / Leon Sadiki)

Was Patel’s laughing stock of a clothing list the proverbial last straw?

Based on Level 3 regulations leaked over the weekend ahead of President Cyril Ramaphosa’s announcement on Sunday evening that the whole of South Africa will move from Level 4 to Level 3 lockdown on June 1, government has done a complete about-turn on how it will ease lockdown restrictions.

Supposed ideological battles over the sale of tobacco aside, the “phased reopening” of the economy is starting to look decidedly unphased at all.

Instead of specifying exactly which sectors of the economy will be allowed to resume operations (and how), the favoured approach seems to be to explicitly prohibit certain types of businesses from trading. This is consistent with the approach promoted by many smart economists, business leaders and columnists in recent weeks, and reinforced by comments made by Ramaphosa at Nedlac consultations this week.

The details were the devil

Original draft regulations for public comment were absurdly detailed, likely as a result of tons of “consultation” with the likes of Minister of Trade, Industry and Competition Ebrahim Patel. Businesses in the manufacturing sector would, in theory, scale up production (depending on the type of manufacturer) through Levels 4 and 3.

But in many cases this theory ignored whether inputs were available and if suppliers to those businesses would be operating. They also ignored the fact that many manufacturing concerns simply cannot operate at 25% capacity.

The draft framework contained a host of other illogical and arbitrary distinctions. Building a bridge? You’re fine. An office building? Not allowed.

The deeds office has finally reopened (it only took nearly a month), but real estate agents are not yet allowed to operate. See the problem?

These completely arbitrary distinctions in the lockdown regulations reached their nadir in the spat over the sale of “hot, cooked food” (implemented after the fact with a one-line amendment) and Patel’s now-infamous Kafkaesque numbered list of what items of clothing are allowed to be sold under Level 4. That the clothing retail industry clamoured to “sincerely thank him” for the “clarity” is bewildering.

Linked to the clothing retail regulations was the stipulation that only winter clothes could be manufactured. But as the whole world except Patel knows, tons of seasonal clothing items (especially basics) are manufactured in advance. Quite how shops were expected to have T-shirts available in spring given this farcical approach to regulation remained to be seen.

The endless lists and micromanaging meant that certain things fell outside of regulation completely.

A month ago, spice stocks at supermarkets were running low because spice was seemingly not categorised as an essential good and therefore could not be manufactured.

The gaping loophole that effectively permits the sale of takeaway coffee is another likely unintended effect of the Department of Trade, Industry and Competition (dtic) ‘approach’ to regulation.

That Woolworths, which rolled over on the rotisserie chicken and pie front, has reopened coffee counters at all its stores tells you all you need to know.

Certain other chains have been trading from petrol station forecourts right throughout lockdown!

(And most other supermarkets continue to sell pies – they’re baked, not cooked, see…)

It is probable that the list of types of winter clothing permitted to be sold was the final straw that broke the proverbial camel’s back. Was the dtic really going to try to regulate in painstaking detail what could and could not operate?

Was there perhaps the realisation in all the president’s consultations that the economy needed to be reopened as quickly as possible to avoid a far bigger catastrophe as millions starve and more than a million lose their jobs?

So, then, to the list…

The only “specific economic exclusions” in the draft regulations for Level 3 are restaurants, pubs and shebeens, travel for recreational purposes and possibly certain personal care services (in what is a confusingly constructed regulation).

Construction, manufacturing, retail? Everything is fair game now, with the burden and responsibility on the business to ensure safe operating (and adherence to Department of Labour requirements). Even business travel is allowed – yes, flights.

Compare these draft regulations to the original “framework for sectors” published for comment and it is clear that these are Level 3 in name only; we’ve all but skipped right to Level 2.

A gaping hole in this year’s budget, pictures of food parcel queues stretching for kilometres, dire economic and unemployment forecasts, and models that confirm there is nothing further to gain from a lockdown have forced this outcome.

You could feel the pressure and despair ahead of the president’s address on May 13 in which he actually said very little. He needed to speak to the nation – even when there was not yet anything to share – to avoid the country turning into outright revolt.

Sooner or later, we all need to get back to work. For many small businesses, the lockdown ended a month ago. The remaining constraints should arguably have been removed a few weeks ago, but at least we’re finally there.

Now, on to the far more important conundrum: how do we actually kickstart this economy after a damaging shutdown and how does government fund its nascent ambitious public works programme (which will certainly help)?

Brought to you by Moneyweb

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