The government is putting together an emergency plan to kick-start SA’s economy after the lockdown, in a bid to stave off a jobs bloodbath that economists fear could take unemployment to more than 50%. This implies that in a country with a population of nearly 60 million people, about 30 million people are to become jobless and poor.
The national command council, chaired by President Cyril Ramaphosa, is tomorrow expected to discuss proposals from some industries to ease certain restrictions during the lockdown, too. Among them are lobbies from the tobacco and alcohol sectors, as well as a call to allow fast-food outlets to reopen.
The results of these discussions are expected to be taken to the cabinet later in the week, where a raft of proposals that include a comprehensive financial package geared at scaling up the production of essential goods will be tabled.
Also on the agenda will be a radical proposal to cut “non-core” sections from the school curriculum in a bid to relieve pressure on pupils, who will miss at least two months of school this year.
The Sunday Times has learnt from well placed sources that the government is likely to focus on the production of items for which high demand is expected — specifically in the medical and pharmaceutical industries and those that produce protective gear and ventilators.
The plan is being driven by the department of trade & industry.
Minister in the presidency Jackson Mthembu said Ramaphosa has ordered all cabinet cluster committees to come with their recovery plans.
“The work of the national command council is the containment of the virus. We will also start discussion that will feed into cabinet about what do we do so that there is economic recovery? The president has said all of us as clusters, how do we rebuild and come up with a recovery plan … how do we ensure that our people remain employed after the lockdown, and how do we bring hope to our people that we’re on our way to recovery? We have all been instructed to come up with that plan.”
Ramaphosa announced on Thursday night that the lockdown will be extended to the end of April, but life after lockdown is likely to see strict regulations remain in place for the better part of at least a year.
A massive haemorrhaging of jobs cannot be avoided, but there is a hope that repurposing certain industries will create new jobs and retain some old ones. Engineering intensive firms such as motor vehicle manufacturers will start to produce ventilators if the state can pull off a proposed complete redesign of the economy, with a renewed focus on industrialisation.
Other proposals up for discussion include ways in which to support and restructure the informal sector and the self-employed.
A government insider said one of the challenges will be to identify those who were active traders in the informal sector before the Covid-19 crisis, given the almost nonexistent paper trail in most cases.
Already the Unemployment Insurance Fund (UIF) has seen a massive take-up from companies to assist with paying salaries in workplaces that have been closed. About 50,000 applications have been processed with 20,000 having been paid out and the remaining payments to be made this week.
The first major hurdle likely to be discussed by the cabinet this week is the reallocation of the budget presented by finance minister Tito Mboweni just two months ago, in order to accommodate the economic package that will soon be adopted.
It’s understood that current projections have Covid-19 peaking in mid-May, meaning that strict regulations prohibiting movement will have to remain in place at least until then.
This could mean that social distancing and the wearing of masks would have to continue. Limits on the number of passengers in public transport vehicles would also continue. Other short-term interventions by the government are yielding results.
The Solidarity Fund has raised more than R2bn, including donations from 3,000 ordinary South Africans. Fund CEO Nomkhita Nqweni said they were “humbly overwhelmed”.
She said the Solidarity Fund was a catalyst in ensuring a rapid response to the pandemic, beginning with bolstering public health care but also focusing on humanitarian efforts.
Ramaphosa said on Thursday night that he and all members of the executive will donate a third of their salary for three months to the Solidarity Fund.
The EFF followed suit saying all of its public representatives will donate a third of their salaries to the fund.
This led to a series of other pledges from politicians both in office and in the opposition to donate their salaries.
Nqweni said they were collaborating with various foundations such as the Motsepe Foundation, the Naspers fund and other organisations.
She said from April 4-14, 6.7-million surgical masks, a million test kits, 1.2-million N95 masks, 20,000 face shields and a million gloves had arrived in the country. About 200 ventilators have also been procured.
Spokesperson for the department of small business development Priscilla Monama told the Sunday Times that pleas for support have been “overwhelming”.
“By Tuesday [April 7] over 100,000 SMMEs had registered online to express their need for assistance,” she said.
Economic efforts have extended to the government’s alliance partners.
Cosatu spokesperson Matthew Parks, who is also the labour co-ordinator at the National Economic Development and Labour Council, said: “We have been having almost daily Zoom meetings at Nedlac to look at economic measures to cushion businesses and workers… Cosatu is engaging with its affiliates on what are the sectors or workplaces that could be allowed to start functioning again under stringent health and safety conditions.”
However, Cosatu’s biggest concern is the UIF. Though R40bn has been set aside for Covid-19 relief to be disbursed via the UIF, it fears the shutdown will end without the funds reaching workers.
“The UIF was not built to manage an economic meltdown and there is a serious capacity logjam,” said Parks.
Labour wants the South African Revenue Service and banks to be considered as alternatives to the UIF to get the money disbursed.
Despite media reports this week that 60% to 70% of the mine labour force will go back to work next week, Alan Fine, for the Minerals Council SA, yesterday denied this, saying a date when miners would return to work would be informed by the state “after the lockdown”.
“Our approach to dealing with Covid-19 before the lockdown was risk-based, and it will continue to be so,” Fine said. He said the council has developed a standard operating procedure for those mines returning to production.
Alan Mukoki, chair of the South African Chamber of Commerce & Industry, called on the government to ease restrictions on the fast-food industry.
He told the Sunday Times yesterday would be “an informative test case”.
“We can’t go headlong into opening businesses, and the fast-food sector is the easiest to reopen quickly,” he said.
“They are related to the food industry as essential services, the value chains are very similar in that producers who support Pick n Pay are the same ones who service fast-food restaurants.”
The government will also have to come up with a way to keep the poor fed.
Professor Shanaaz Mathews, director of the Children’s Institute at the University of Cape Town, said the extended lockdown is it likely to cause starvation in large numbers of households already living in poverty, and will increase vulnerability in child-headed households.
“Since the lockdown, child hunger rates have spiked. With the extension, 55,000 living in child-headed households are at risk of starvation, especially as school feeding programmes are not operating,” she said.
“To avert disaster, government must urgently resolve food distribution network problems, with a lack of co-ordination at provincial levels causing delays in getting food to communities.”
Christo van der Rheede, AgriSA’s deputy president, said “a nationwide food hamper strategy must be rolled out which sees retailers, NGOs, and the religious and farming community using their networks to distribute food to those urgently in need”.
He warned that if this doesn’t happen, the lives of many of the country’s vulnerable will be endangered.
Economic expert Mike Schussler said the extended lockdown will kill the economy, pushing unemployment levels past 50%.
“We cannot continue at less than 50% of normal activity … government does not have enough money to help. SA could become the first country in the world with more unemployed than employed people in the labour force. The tax base will be wiped out. Government will have to cut salaries and grants and will not be able to build schools.”
Economist Dr Thabi Leoka said the extended lockdown will push SA into a deep recession, with the country potentially having lost up to R200bn in the past two weeks.
“Tourism, mining and manufacturing may not recover quickly. The retail and vehicle sector will struggle due to demand reduction. Small and informal businesses are the most impacted and many may never recover.”
Wits University health economist Alex van den Heever said SA doesn’t have the economic resistance for an extended lockdown.
“Based on economic formulas, the GDP for the full lockdown which we are currently in will lose nearly R370bn. For the country to survive, the lockdown must be downgraded.
“This must, however, be done with strict health regulations in place which allow major industries to operate while protecting workers’ lives, with mass testing and hotspot areas quarantined.
“Mass screenings and testing must be scaled up even more, with the infected and their contacts immediately traced, isolated and quarantined.”
Professor Shabir Madhi, an infectious diseases expert at Wits University, said what happens after the lockdown will be determined by what happens over the next three weeks in terms of testing, tracing and isolation. “As soon as you lift the lockdown, you get a rebound,” he said, adding that SA did not do enough testing in the early part of the lockdown.
“In terms of reducing transmission, you have to identify cases in households and then put them into isolation and quarantine their contacts. Otherwise, those in the house spread the virus to one another at a rapid rate, and then go out and spread the virus back into the community,” he said.
“With us not having done early identification during the course of the first lockdown, we risk this rebound.”
Citi economist Gina Schoeman said that adding another two weeks of lockdown means a contraction in the economy of 7.5%8%. “Unfortunately the impact is not linear and the longer it persists the more intense the impact,” she said.
– Sunday Times