Business lobby wants assurances over Covid-19 hard lockdown

Business for South Africa (B4SA) has called for certainty that another hard economic lockdown would not be implemented in the country, in the event of a second wave of Covid-19 infections.

This certainty, B4SA said, was necessary to restore and boost investor and consumer confidence in the country and stimulate economic activity by unlocking business investment projects and consumer spending plans, which it said were currently on hold due to concerns about government’s response to a potential second wave of infections.

“The higher levels of economic lockdown had an extremely negative impact on the economy and jobs. The first hard lockdown, from April to July 2020, which B4SA supported, caused more than two million job losses.

“If all nine provinces remain on alert level 1 – the lowest alert level – B4SA estimates a 9.3% decline in GDP [gross domestic product] for 2020, a figure which already considers the positive offset of fiscal and monetary policy interventions and the Temporary Employee Relief Scheme (TERS) benefit.”

The chairperson of B4SA’s steering committee, Martin Kingston, said the organisation estimated that formal job losses were now between 1.4 to 1.6 million, with the informal sector shedding one million jobs.

Kingston said it would take until 2024 for formal employment to return to the levels it was before the pandemic, “assuming that we pivot the economy onto a sustainable inclusive growth path”.

“South Africa can ill-afford additional job losses and compounded economic difficulty,” Kingston said.

B4SA said the impact of a return to alert level 3 or higher would be worsened by the fact that the majority of measures available to counter the negative economic effect on individuals and businesses may no longer be available, because:

• Covid-TERS is ending;
• Top-up social grants are unlikely to continue after the three-month extension;
• UIF and VAT relief cannot continue indefinitely; and
• Banks that extended credit to businesses and individuals now require payment.

Instead of a hard lockdown in the event of a second wave, B4SA proposes interventions that focus on behavioural change but enable maximum economic activity.

“The key to maintaining economic momentum is to put in place targeted interventions by sector rather than a hard lockdown.  All industries should remain operational, unless specifically identified as being uniquely high risk.

“Universities, schools and other educational institutions should not be closed as participant risk is generally low.

“Restaurants, hotels and other accommodation and the broader leisure industry should be allowed to operate subject to adhering to health and safety protocols.”

B4SA  suggested the following directives as a way of minimising the spread of Covid-19:

• limiting the numbers of people at social and religious gatherings and,
• if necessary, reintroducing an extended curfew

“Reintroducing cigarette or alcohol bans should be avoided due to their significant adverse economic effects.”

The organisation said a ban on domestic travel should not be implemented “but existing safety measures should apply for all mass and public transport”.

“Inbound and outbound cross-border travel should be allowed, subject to negative test results provided at departure and arrival.”

Compiled by Makhosandile Zulu

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