South African business is calling for an accelerated transition from lockdown Level 4 to lower levels so that full economic activity is able to resume as quickly as possible, albeit with a full acknowledgement that the country’s Covid-19 infection peak is now anticipated only in either August or September.

To navigate the period, Business for South Africa (B4SA) has endorsed a risk-adjusted approach that incorporates the implementation and enforcement of clear workplace and travel protocols to limit the rate of Covid-19 transmission, while allowing for far higher levels of business activity.

“We have every reason to believe that a safe return to work will be successfully achieved. This is provided that people and businesses abide by the hygiene, mask usage and social distancing protocols, adhere to regulations inside the workplace and in public places and, importantly, cooperate with the authorities with due regard for healthcare protocols to reduce the risk of transmission,” B4SA’s Martin Kingston said during a webcast on May 6.

Kingston also confirmed that business was now expecting the South African economy to contract by between 10% and 17% in 2020, despite the R500-billion in fiscal support announced by government.

It also assumed that the support package would have to be enlarged at a time when tax revenues were falling sharply, which would result in a far higher fiscal deficit than initially expected.

South African Revenue Service commissioner Edward Kieswetter indicated on May 5 that it was projecting an under-recovery of R285-billion this year, but that Finance Minister Tito Mboweni would announce any new revenue estimate in his adjustments Budget.

The National Treasury published preliminary details of the Covid-19 economic support measures in preparation for the revised Budget on April 30, but Mboweni is only expected to release the new Budget in June.

Mboweni has also come out in support of an accelerated resumption of economic activity, telling lawmakers on May 5: “The quicker we are able to reach Level 2, the better”.

B4SA concurs with the Finance Minister’s stance, arguing that Level 4 would have limited beneficial economic impact based on the current regulations, with any significant increase in economic activity only occurring at Level 2, particularly given interdependencies between sectors of the economy.

ECONOMIC DEPRESSION

Convened at the start of the Covid-19 crisis and including various business bodies, B4SA was now also anticipating that between 1-million and 4-million formal and informal jobs would be shed as a result of the country’s response to the pandemic, which included a hard Level 5 lockdown from March 26 to April 30.

“The economic slump into which we had already entered [ahead of Covid-19], in other words a recession, is going to be much deeper than we thought and it’s going to endure for much longer,” Kingston said, indicating that B4SA was anticipating that South Africa would enter an economic depression.

“We think we going to be, unfortunately, confronted by significant negative growth, or a contraction of the economy, for an extended period of time and that it will take us between three and five years to return to the levels of economic activity that we had seen prior to the [Moody’s] downgrade, prior to moving into a recession and indeed prior to Covid-19.”

B4SA’s Phumzile Langeni stressed that government’s approach had been strategically sound and had, seemingly, served to “flatten the curve”.

“[But] unless we restart the economy, hardship, hunger and desperation threaten the rule of law, weakening the State and businesses’ capacity to respond to the crisis, and worsening the impact on society,” Langeni added.

LEVEL 4 DIFFICULTIES

South Africa transitioned to a Level 4 lockdown on May 1, which was theoretically expected to facilitate the return to work of some 1.5-million people. Some of the restrictions had made it impossible for many enterprises to resume operations profitably, however.

Kingston confirmed that business had provided input on the Level 4 regulations ahead of their enforcement, but that it was currently in discussions with government to address “high levels of complexity and unworkability and difficulty in implementation”.

“These new regulations make new laws that are of critical national importance. They should, therefore, be as concise and clear as possible, complied with and enforced.”

B4SA also wanted the regulations to be used “solely for the purpose for which they were designed, which is to respond to the national disaster”.

It held back, though, from directly criticising government’s decision to sustain a prohibition on the sale of cigarettes during Level 4, which had triggered much public opposition and an initial threat of a legal challenge.