This week, we’ll be watching the cabinet for further supportive economic measures, but it has little fiscal space to manoeuvre because of 10 years of corruption and maladministration. There’s no doubting that we’ve walked into this lockdown period hobbled by a host of own-goals, but government, business and labour have to now set a path to economic recovery that is years away.
And we have to start protecting the economy by turning on the dials on parts of it over these next two weeks without affecting our own war on the pandemic. There’s no argument to the fact that a healthy economy is possible only with a healthy population. A person who loses a job can always get another, but a life lost is forever. When President Cyril Ramaphosa addressed us last week on the extension, he said there would be a “risk-adjusted response to ensure the economy recovers”.
This provides an opportunity to soften the edges around a lockdown period that has been heralded as being among the most effective in the world, never mind SA’s structural shortcomings. Companies and industries that can show that health protocols, including testing, are in place should be allowed to restart their operations. Mining, manufacturing and agricultural firms can increase our export earnings at a time when the rand needs much support after the body blows of two ratings downgrades in as many weeks.
The idea of opening some of these sectors will come with some delicate conversations with labour, business and government, with the health of workers being of prime importance. We can’t expect to see industries powering away in the first week of the extension as these talks hopefully take place. Thereafter, one hopes that we can see output increasing ever so slightly.
These talks need to happen urgently if there is indeed a need for a further extension of the lockdown. At that point, the grease should have been applied to what will be an increasingly rusty economy. Some of our major corporations have announced plans to reduce executive pay and reassured staff that their jobs are safe in this most insecure time in this country and the world’s history.
They are the healthier ones that have managed to navigate through the economic underperformance for more than five years where growth hasn’t breached the 2% mark. For other industries such as steel makers that have made towns like Vanderbijlpark shells of their former selves, we have to consider just how limited their reserves of strength are.
While the everyday frustrations of South Africans are evident and worrying when there are incidents of looting of bottle stores, the easing of business restrictions for bars and restaurants at this point did not make sense. But should the lockdown move beyond the next two weeks, a plan needs to be made about resuscitating those industries that feed into domestic consumption, the biggest component of the SA economy.
This column was first published in Business Day.