Thought Leadership

Let’s have a clear road map of how businesses will operate on level 4

28/04/2020 | By Busiswe Mavuso

For more than a month, the economy has been put into a medically induced coma to stave off what would have been a much larger health catastrophe that would have collapsed already strained systems. The big bang has been avoided or delayed.

Whatever our position, what is clear is that in opening up our economy later this week, the state of readiness of our health systems will now face the test of about 1.5-million people returning to work.

In a world whose success metrics are based on the search for growth, anxieties over the fate of the economy during this lockdown have grown with each passing day. Some have questioned whether the government’s response was too severe given that the death rate from Covid-19 is still less than 100, but we’ll never really know the answer.

It’s a wasteful exercise, in truth, because what’s clear is that the scale of our tragedy has not been as large as what was first envisaged for a society struggling with deep structural inequalities.

The big test comes on Friday when the patient, the SA economy, gets its first adrenaline shot, with restrictions lifted on agriculture, manufacturing and mining, among others. Our manufacturing sector, which has long been heralded as the biggest jobs multiplier, will be allowed to scale up activity to accommodate 20% of employment.

As business, we’ve been at the coalface of the damage caused by the lockdown. It has strained all sectors as, virtually overnight, there was a mass withdrawal of consumption spending as the vast majority of people were confined to their homes. Companies considered to be essential-service providers, such as our large grocery chains, haven’t escaped the pain even though they’ve remained open. The numbers of shoppers since the end of March have fallen off a cliff, while the running costs of their stores have remained the same.

I’ve attended many symposia focused on our joblessness problem, and, in many of them, tourism is seen as a sector that can absorb much of our labour. We’ve managed to drop a few balls in realising its full potential, such as the bungling of the tourism visa matter, but that pales in comparison with what Covid-19 has done. The hotel industry has been nearly decimated by the pandemic. Before the virus, the sector employed about 1.2-million people.

Business and the economy have certainly got the bloodiest nose from this unprecedented period in world history, even though the Spanish flu in the early part of the previous century cost more in the number of lives lost. This crisis
comes after 100 years of increased globalisation, meaning our financial bonds are deeper and much stronger.

The world is in recession, and according to the SA Reserve Bank, our economy will shrink by 6.1% in 2020 and there’ll be a loss of 370,000 jobs. That’s a conservative figure when compared with Business for SA’s forecast of as many as a million jobs. Moody’s Investors Service sees the economy shrinking 6.5% and the budget deficit widening to 13.5% in 2020.

These figures make for sobering reading and, as a business community, we are most anxious to get back to work and get the economy chugging along. In this pursuit, much clarity is still needed from the government on just how we’ll operate in what is a new normal. There’ll be additional costs to adhere to restrictions faced by business to ensure their staff work safely and that clientfacing industries operate safely.

As seen by recent reports of a bakery closure by Tiger Brands in Durban or the closure of one of Mediclinic’s hospitals because of the spread of Covid-19, it has proven a difficult undertaking to keep workers safe for companies with large balance sheets. How much more will it be for smaller businesses that have now just gone over a month without any receipts?

Over the weekend, trade & industry minister Ebrahim Patel put out a proposal on just how level 4 will work, and, as business, we’ll provide our inputs. We hope that on the last day of the month, when legislation is put forward by the department, we will all have a clear road map of just how businesses will operate.

We are mindful that these are uncharted waters for the state in managing a very delicate release of the levers of the economy knowing that science warns of a potential steep rise in infections for a virus that has no cure. The increased activity will see a rise in cases and, sadly, the loss of lives.

In raising this iron curtain, the state now places responsibility on citizens and other spheres of society, including business, to ensure there’s no explosion in cases. To do so, we need clearly set out regulations and for the broader public to understand their obligations.
If we fail here, it’s a possible return to another hard lockdown — something that will send our economy into a coma that will require a stimulus shock much larger than the R500bn raised, something the fiscus can’t afford. As imperfect and unclear as our lockdown has been and as frustrated as we’ve become, we commend the state’s role in getting us to this point where commerce can slowly begin again.