CEO’s newsletter – 20 September 2021

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I was disappointed by the announcement by UK authorities on Friday that South Africa would remain on its “red list” of countries. This decision is bad for development in South Africa and bad for the two countries’ economic ties.

Travellers from red-listed countries are required to quarantine on arrival for 11 nights in government-controlled facilities at considerable expense. This is a dramatic disincentive to tourists and an effective barrier to businesspeople as they can seldom afford 10 days of forced isolation. The consequences for both South African and Britain are significant.

It is difficult to understand the decision. It was announced at the same time that Turkey would be removed from the red list, yet that country is experiencing over 23,000 new cases per day with a population of 82-million, while South Africa is at 4,000 and declining, with a population of 58-million. Infection rates are far higher in other countries that have already been off the red list. Of course, both Turkey and South Africa are below the infection rate in the UK itself, which is running at 29,000 with a population of 37-million.

The Beta variant is no longer prevalent in South Africa, making up just 1% of infections. Just like in the UK, the majority of infections are caused by the Delta variant. The UK’s decision appears to be motivated by the presence of the Beta variant, yet its science on this is outdated. Contrary to initial indications, vaccines have proven effective against the Beta variant including Astra Zeneca, which has been widely used in the UK. The Beta variant is less than 1% of new infections in South Africa. New variants discovered in South Africa have proved to be less infectious and are reducing. South Africa has among the best genomic sequencing capabilities in the world and therefore there should be a high confidence that it would identify any dangerous new variant quickly.

The UK is now an outlier in its treatment of South Africa-sourced travellers. The European Union, Canada and United States now allow vaccinated travellers from South Africa without further restriction. This flies in the face of the UK’s post-Brexit strategy of becoming “Global Britain” – indeed the European Union is proving far more global than the UK.

The relationship between Britain and South Africa is an important economic corridor with Britain exporting R62bn to South Africa in the year to end-March while it imported R90bn. The UK is South Africa’s second-largest trading partner (behind the EU). For the UK, South Africa is the largest trading partner in Africa.

In advance of the decision, BLSA wrote to UK prime minister Boris Johnson urging him to reassess restrictions on Southern Africa which frustrate trade and have a severe impact on the lives of millions who depend on travel for business, education, sport and cultural exchange. The letter was co-signed by BLSA members including large multinationals with operations in both countries.

Before the pandemic, 440,000 UK travellers visited South Africa in 2019, making it the most important overseas market for tourists to South Africa. They spend R10bn during their visits. This activity is a key part of our tourism industry which directly employs 657,000 people, 87% of whom come from disadvantaged backgrounds. The UK’s decision therefore has significantly negative effects on development in South Africa.

The lack of a clear rationale for the UK’s decision risks creating resentment towards the country at a crucial time in its engagement with the rest of the world. This is particularly sensitive for South Africans who have close cultural and familial ties to the UK. Apart from business links, many families split between the two countries have been unable to see each other for over 18 months because of the travel restrictions. This has been exacerbated by constant stories of the poor treatment of travellers in the UK’s government-controlled quarantine centres, despite the R46,000 cost of the 11-night quarantine.

Reviews of the red list take place every three weeks. The UK must take a balanced approach in future considerations of South Africa. There needs to be clarity on the scientific basis for the risk categorisation of South Africa, and due regard for the business, cultural and developmental relationship between the two countries.

 

The first bits of economic data reflecting the effects of the July unrest are coming through, with business confidence falling by seven points to 43 in Q3. It is now back in negative territory, well below the neutral 50-point mark, I wrote in Business Day. The unrest came after encouraging developments on our reform front and have set back our recovery efforts.

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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