President Cyril Ramaphosa has announced that “most” of South Africa will be downgraded to a level 3 lockdown by the end of May – but details around the move remain scarce, and questions around logistics and enforcement have not been answered.
According to Intellidex analyst Peter Attard Montalto, Ramaphosa’s address to the nation on Wednesday evening drew a polarised reaction from investors, with the president seemingly assuaging business leaders calling for the economy to be opened up, while not providing a clear way forward.
In his address, the president said that the country is ready to move to a new phase in its coronavirus response, announcing that most of South Africa will move to level 3 lockdown restrictions by the end of May.
However, he warned that areas hardest hit by the virus may have to remain at level 4 for longer.
To soften the blow on these areas, the president said that new regulations would be issued that relax the current level 4 restrictions, particularly around businesses, exercise and e-commerce.
Some of these regulations have since been published, namely the ability to go online to shop again.
However, Ramaphosa’s comments also came with an apology, with the president admitting that some of the more recent regulations have been unclear and slow in response, and enforcement inconsistent and harsh.
According to Attard Montalto, this is the clearest signal that the president is not actually in charge.
“The issue is that the apology reinforces for us the fact that Ramaphosa is not truly in charge of the crisis response, but is instead the leader of a collective where decisions and micro-detail are worked out by individual ministers with NDZ (Nkosazana Clarice Dlamini-Zuma).”
He said that there appears to be an active discussion within the National Command Council about a more rapid and thorough reduction in lockdown level – which Ramaphosa may well agree with – but “despite being president, (Ramaphosa) seems to have been outvoted or outmanoeuvred into a messy compromise,” he said.
“This shows, again, his collectivist leadership style with manifests itself practically as cabinet majoritarianism,” the analyst said.
What happens next?
What follows is uncertain. According to Attard Montalto, some areas will move to level 3, as the president said, with hotspots remaining at level 4. In the interim, level 4 restrictions will be eased.
“This was the compromise – delay level 3, keep metros unchanged, and loosen level 4,” he said.
However, having different parts of the country on different levels for several months, will lead to operational and logistics issues.
“Given the transport and logistics differences between 4 and 3 (and 5), supply chains will be properly gummed up without very substantive changes to the rules for both levels 4 and 3 right now,” he said.
“We see no philosophical change (in micromanaging the economy) and the mass of additional level 3 regulations that will be produced is going to cause more confusion – there has been no shift we believe in micro-economic-fiddling philosophy,” he said.
Another major issue is that the ‘hotspots’ which are likely to remain at higher lockdown levels, are also the most economically active, with the likes of Cape Town, Nelson Mandela Bay, Buffalo City, eThekwini, Ekurhuleni and Johannesburg all identified as high risk areas.
“The story is clear here: that if you keep high risk areas on a higher level, then roughly half the economy remains at the higher level, with a wider impact from gummed up supply chains,” the analyst said.
Attard Montalto previously warned that level downgrades would only be prevalent in the short-term, projecting a rise in levels as the coronavirus peak hits (around September), and may well hit level once again during a second peak in 2021.