BLSA CEO’s letter 30 November
POSTED ON: November 30, 2020 IN BLSA CEO's Weekly, Economic policy, Employment, Political economy, small business by BLSA
By Busi Mavuso
The surge of Covid-19 cases, particularly in the Eastern Cape, is a stark reminder that the pandemic remains extremely dangerous.
The pandemic remains extremely dangerous. Infection rates, while still some way off the peak levels of earlier in the year, are creeping up. The Eastern Cape is a particular concern, but it is not the only one.
At the same time, the economic scars of the crisis are deep. We have 1.8-million fewer jobs than we had before it, while many more are working less or at lower salaries. While some try to draw an either/or distinction between the health and economic decisions we must make, it is clearly a false dichotomy.
Those lost jobs have a health impact – it means households cannot afford to access healthcare when they need it or maintain preventative measures like good nutrition or keeping up to date with vaccinations. Social grants can relieve the pressure only to an extent. The best way to have a healthy population is an economy that is working at capacity and growing.
But we must face the realities of the pandemic. We cannot try and pretend it is business as usual, or we risk facing a much worse spike in infections that ultimately will do more damage to the economy and public health.
There are relatively straightforward measures to take, and some not so easy ones. Compliance with the regulations for level 1 should be non-negotiable. We should all be wearing facemasks in public. To not do so is to recklessly endanger others, as well as yourself. Businesses must insist that staff and clients comply, no matter where they are. Social distancing rules must be enforced.
It is critical that staff work from home if they can, while those who can’t must have access to PPE and respect social distancing and hygiene guidelines. For those serving customers face to face, it is particularly important to ensure customers can stay safe. The festive season means shops and social venues will be busy, but we cannot let our guard down on social distancing. Full compliance with regulations will lower the probability of infection rates reaching levels where further actions must be taken.
But we are likely to have some areas with infection rates that we cannot contain on level 1 regulations alone. From a business perspective, it is critical that we leave us much of the economy to operate as possible. That means that when we must shut down economic activity, we must do it in a way that focuses on the areas where infection rates are most in need of control, with minimal collateral damage to the wider economy.
That means keeping lockdowns localised, allowing the rest of the country to function as close to normal as possible.
I can understand the temptation for political decision makers to make sweeping national decrees. They are simpler to enforce and non-compliance is easier to identify. But the cost of simplicity is unnecessary economic damage.
From a public policy perspective, we need to put the effort into a regional approach to lockdowns in order to deliver the best outcomes. We need a policy approach that sets out what levels of infection rate will trigger additional measures and what rules will apply. If we get set that down, we can then look at the complexity involved in enforcing them. I expect businesses would widely support such an approach and add resources necessary to manage compliance.
Last week I also wrote about the damning decision of ratings agencies to downgrade the country further. The best we could have hoped for was a reprieve in their judgment of the country’s sovereign ratings as they considered the impact of Covid-19 pandemic on the economy. But there was no such comfort when Moody’s and Fitch pushed SA’s credit ratings even deeper in “junk” status, indicating their concerns about the country’s recovery efforts post the pandemic.
I wrote in Business Report that while the strategy on fiscal consolidation and structural reforms to promote medium-term growth remains in place, implementation risks have risen materially.
If we are to rebuild the South African economy, we are going to have to stop the financial bleeding. Public corporations such as the SABC must be allowed the space and time to restructure into financial sustainability. This must not be delayed by political objectives to keep people employed no matter the cost, I wrote in Business Day.
Big businesses have a huge role to play in helping the state to build capacity. At a workshop that BLSA held with the World Economic Forum last week priority areas were identified. One area in which they could make an immediate impact – at no cost – is by guiding small businesses to help them to expand. Big companies can use experience and expertise to play a mentoring role, advising small businesses on how to gain new customers, improve processes and systems and expand in other markets. Read the full briefing note on the BLSA Hub.
This is a weekly newsletter from BLSA CEO Busi Mavuso.
BLSA is a business organisation that believes in South Africa’s future and shares the values set out in the Constitution. In 2017, BLSA signed a contract with South Africa, committing business to playing its part in creating a South Africa of increasing prosperity for all by harnessing the resources and capabilities of business in partnership with government and civil society to deliver economic growth, transformation and inclusion.
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