The national lockdown will cause serious economic hardships to the majority in society and will push us into a deep recession, given our economy has already been performing poorly over the last five years.
However, the lockdown is a necessary evil to prevent even greater harm to society for decades to come.
If we are able to contain the virus over the next four months as the government hopes, the economy will bounce back to a growth phase in a short time.
In Wuhan, the epicentre of the virus, they contained it in less than three months and things are now returning to normal.
Mr Ramaphosa announced on Monday that all businesses will be closed except for essential services such as the food industry, inclusive of supermarkets, financial and banking sectors and medical services.
The government have announced a range of measures to assist businesses and low income workers employed by them.
These include a tax reprieve for formal businesses that are urged to continue to pay their workers who earn less than R6 500. In return they receive a tax subsidy of up to R500 per month.
Larger tax compliant firms will be given incentives in delayed payment of taxes without penalties for assisting workers; the Small Business Development Department has allocated R500-million to provide assistance to struggling small and medium businesses (SMEs); the Industrial Development Corporation and Department of Trade, Industry and Competition has earmarked more than R3-billion to assist troubled industries; and a further R200- million was set aside by the Tourism Department to assist small to medium enterprises in the sector.
Another significant development involved the establishment of the Solidarity Fund to assist small businesses, to which government contributed R150-million, while the Oppenheimer and Rupert families generously contributed R1-billion each and the public are urged to make further contributions.
However, all these incentives, although most welcomed, are targeted toward formally registered businesses and workers exclusively.
An ominous omission among the identified vulnerable workers are the 2.5 million workers operating within the informal sector.
Nothing has been mentioned about them.
To avert a serious socio-economic crisis, the state and business sector need to develop speedy solutions to ensure informal businesses and workers are also supported over the next four months.
Moreover, it is incumbent upon government and the private sector to ensure the funds are directed toward whom it is intended.
The President’s announcement was silent on the methods that will be used to access the incentives, especially for SMEs, given the restrictions on movement.
To keep the economy alive and to assist the most vulnerable, it is imperative that as much resources as possible are diverted to the most vulnerable sectors of society. Unfortunately, owing to poor governance over the last decade, the government finds itself with limited resources.
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