BLSA CEO’s weekly letter 28 June 2021

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The battle against the Covid-19 pandemic will only be won through the rapid distribution of vaccines. Last week the Department of Health and its partners succeeded in a substantial increase in the momentum of the roll out and I applaud their efforts. President Cyril Ramaphosa last night increased the ante by calling for a trebling of the vaccination rate to 300,000 per day. That would be an impressive achievement.

The extension of vaccines to the over 50s is a big step in widening access and the focused programme to vaccinate teachers that launched last Wednesday is an important measure to ensure education is not further disrupted. The pace of the rollout to teachers was particularly impressive with 48,000 jabs administered on the first day and a target of vaccinating all 582,000 teachers and school personnel within 10 days.

But the third wave that is upon us is devastating despite the vaccine successes. As the president said last night, this wave looks set to peak at a level higher than the previous two. The move he announced to Level 4 lockdown, with additional restrictions for two weeks, reflects a very complex balance of considerations. I applaud the president for putting a clear timeframe to the additional measures. This allows businesses and others to plan around a finite disruption.

The third wave was widely predicted – we cannot say it has come as a surprise, though the pace of the spread of the disease is still shocking. Hospitals are at their limits and the toll in illness and loss of life is severe. My heart goes out to all those who are fighting the disease and have lost loved ones. Few have not been directly affected. I applaud the frontline medical staff who are working in extremely challenging conditions – the nation is grateful to you all.

The president moved us to level 4 with bans on alcohol, a tighter curfew and a restriction on movements into and from Gauteng for leisure, the epicentre of the third wave. But he was clear that the movement of goods should be permitted, ensuring that there is not unnecessary damage to the nascent economic recovery and restaurants can continue to sell takeaways. I agree with the president that the measures taken reflect strong efforts to minimise the impact on the economy, with most businesses able to continue at full capacity.

I applaud the efforts to find the right balance and ensure that there is not unnecessary economic damage.

As I have written before, we have learned much in the previous waves of this disease. Interventions like lockdowns come at a steep cost. As the president said last night, we have been able to learn from the experiences of many countries around the world. The ministerial advisory committee, made up of world class scientists, are in place to advise government. Now that we have a global body of evidence on what works, we can be far more targeted about interventions.

As Gauteng premier David Makhura said last week, we can’t afford to shut down the economy; there are no resources to support people if they are forced to stay at home. There must be a careful balance in doing what we can to reduce the spread of the disease without a catastrophic impact on people’s ability to earn a living. There is no tension in being concerned with lives and livelihoods. Being able to earn a living is critical to healthy outcomes for individuals and their families. Far too many in our population depend on being able to work to put food on their tables and access medical care. Forbidding work without a massive social programme would be a recipe for disaster.

We cannot afford a major new social programme, though we must do what we can to avoid the humanitarian consequences of the restrictions on economic activity that have to happen. The financial pressures government faces inevitably restricts what is possible. The economic recovery we have experienced over the last few months has enabled a minor recovery in governments’ finances, but we need to remain focussed on driving the reforms necessary to continue that improvement, especially in the face of the third wave. The recovery has also seen employment starting to increase, reabsorbing thousands who lost their jobs. Bold moves like the increase of the licensing threshold for own electricity generation to 100MW, and the disposal of a majority interest in SAA, have given the economy a big shot of confidence. But the third wave can undo that confidence if government does not show it is serious about further structural reforms. Just as we need harsh interventions to slow the progress of the disease, we need harsh interventions to accelerate the recovery of the economy.

That is the only way we can find the balance needed to be able to direct more resources to support our most vulnerable, while ensuring the economic recovery doesn’t dramatically veer off course. BLSA stands ready to support government in managing this difficult balancing act.

Our troubled state-owned enterprises is another area for reform we cannot lose focus on. I wrote in Business Day last week that the financial state of our SOEs remains a major vulnerability for our whole economy. The SAA deal and the calls by Transnet for more private sector participation in the ports are important, but Eskom and many other SOEs remain big challenges.

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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