When it comes to dishing out the dos and don’ts of the lockdown alert levels, South Africa’s National Command Council has taken the reigns from president Cyril Ramaphosa – and is micromanaging the economy into unworkable confusion.
This is according to Intellidex analyst Peter Attard Montalto, who laid out a number of issues with the country’s “risk-based approach” to managing the coronavirus outbreak in a recent webinar.
Key among the issues is the ‘fallacious’ position taken by the Department of Trade and Industry and minister Ebrahim Patel that it can micromanage the country back to health – which the analyst described as unworkable.
“For instance, you can get clothing retailer to sell winter clothes but not kettles or underwear. That you can get companies working with 50% of employees. This is unworkable – just as you can’t control social distancing in townships by force but only by educating and bringing the populous with you,” Attard Montalto said.
This micromanaging of all things related to the outbreak increases the risk of social unrest and civil disobedience (people disregarding the restrictions), which in turn increases the risk of retaliation or overzealous enforcement by authorities.
Attard Montalto noted that people have already started crowding malls since the start of level 4 on Friday (1 May), and have crowded the streets to take advantage of the tiny window to exercise. It remains to be seen if companies will be able to implement the strict requirements needed to get their employers back in action in the coming weeks.
“Our fear then is that we see a forceful crackdown by the police and army in the coming week combined with a return to stage-5 of lockdown given the (veneer) of calmness that was in existence then. This is the key risk point which will compound the humanitarian issues on the ground,” the analyst said.
“The UN has raised a warning flag about SA standing out for the level of police brutality during the first month of lockdown and in this regard is performing poorly vs most other countries. We have raised serious worries about the curfew during this next stage of lockdown and the likely risks that come with that with the deployment of 73,000 army personnel.”
Ramaphosa ‘strapped to the mast’
Politically, the risks are high for the president, Attard Montalto said.
Up until now, Ramaphosa has been lauded for his response to the coroavirus pandemic – but if the lockdown levels lead to social unrest or collapse completely, its the president who will take the blame.
“The political risk here is that those so keen to shower praise on Ramaphosa’s leadership have now strapped him to the mast if or when this goes badly wrong,” Attard Montalto said.
“This works well for the political forces against him and why we continue to reinforce the fact that factional and intra-party politics is not dead but just hibernating – which doesn’t stop them being en manoeuvres below the surface in the interim.”
This is not helped by comments from the National Command Council – such as Patel pointing to a swift move towards level 3, while other messages from government point to a peak in cases yet to come, which means the lockdown level will have to increase.
Patel has also rubbished poor GDP forecasts and talked up the economy at a time where all external sources are in agreement – including the South African Reserve Bank – that the economy is in real trouble.
“Raising expectations like this is dangerous politically, too,” Attard Montalto said. “All these factors create a dangerous risk point ahead not just on the economic front but politically and in terms of the humanitarian situation on the ground.”
Not finding the right balance
Lockdowns are required to flatten the curve of the virus spread, and to provide time for the health sector to prepare. But this has an unprecedented negative impact on economic activity, the Bureau of Economic Research (BER) says.
In a research note published on Monday (4 May), the group said that countries with more resources (mainly advanced), the impact is to an extent mitigated by unheard-of monetary and fiscal policy support measures.
“Emerging market and developing countries do not have this type of firepower. Therefore, prolonged lockdowns in poorer countries cannot be sustained as the economic cost is just too high.
“But opening up economies too soon and/or at too fast a pace will also have economic costs,” it said.
While this is a ‘very difficult balancing act’, the BER said that South Africa has failed in some aspects.
“We are increasingly concerned that the South Africa government has not found the right balance between opening up the economy and at the same time doing everything possible to contain the virus spread.
“The focus very much remains on the latter. In the meantime, the economic costs are mounting.”
The group cited the news that Edcon has filed for voluntary business rescue after losing R2 billion in sales since early March.
It noted that Associated Publishing, publisher of the Cosmopolitan and House & Leisure magazines, closed its doors.
“There are numerous other businesses at risk of closing down permanently.
“Then there were the heart-wrenching images of people queuing for what looked like kilometres to receive food parcels in parts of the country.
“This is not a sustainable situation. In light of these events, it was quite bizarre to read weekend reports that Minister Ebrahim Patel dismissed some of the more downbeat forecasts for the decline in GDP during 2020,” it said.