'Our people need to eat. They need to earn a living' - Ramaphosa

President Cyril Ramaphosa (GCIS)
President Cyril Ramaphosa (GCIS)

From 1 May, smokers will be happy to know that they can light up once again, and some businesses will be allowed to operate, under specific conditions, as government gradually begins to lift the coronavirus lockdown. 

In an address to the nation on Thursday, the president said that while there has been progress in limiting the spread of the Covid-19, the lockdown cannot continue indefinitely.

It was instituted on 26 March. Several businesses, not deemed essential services, have had to close temporarily, leading to a loss of income for many South Africans.

The Reserve Bank has projected that the impact of the Covid-19 crisis would see SA's economy contract by 6.1%. Ratings agency Moody's projects a 2.5% contraction and the International monetary fund (IMF) a 5.8% contraction.

A leaked draft document from the presidency's office on the risk-adjusted approach to lifting restrictions, warned that the longer the lockdown was extended, the harsher the economic impact would be. It showed that an  extended lockdown would lead to high levels of retrenchments in the tourism, creative (arts, music and film), as well as the construction and aviation industries.

On Tuesday, Ramaphosa announced a historic R500 billion coronavirus support package in an effort to provide relief to vulnerable South Africans.

But while some hailed the stimulus plan, there were concerns over how it would be funded and the resultant strain on the economy and tax revenue, said Rand Merchant Bank analyst Matete Thulare. 

"The truth is we have had one of the strongest and most stringent lockdowns that we have seen worldwide. Obviously, that has come at the expense of economic activity," he said.

"I think we need to make sure that as much as we open up the economy in gradual phases, we must make sure we do not have long-term stress on the economy," said Thulare. 

In his address on Thursday, Ramaphosa acknowledged the need to resume economic activity for the benefit of South Africans. "Our people need to eat. They need to earn a living. Companies need to be able to produce and to trade. They need to generate revenue and keep their employees in employment," he said.

Ramaphosa said an uncontrolled lifting of restrictions would result in a massive resurgence of infections - which have to date risen to 3 953 confirmed cases with 75 deaths - and potentially require a second hard lockdown.

For this reason, a risk-adjusted strategy would be adopted to lift restrictions. Ramaphosa described it as a "deliberate and cautious approach" - in which there would be five coronavirus levels. These levels would be applied nationally, at provincial level as well as districts and metros, and are based on the level of transmission.

According to the president the system will work as follows:

  • At level 5, drastic measures are to be taken to contain the spread of the virus. Only essential services are allowed to operate.
  • At level 4, some activity can be allowed to resume, subject to extreme precautions. 
  • At level 3, there will be an easing of some restrictions including work and social activities. 
  • At level 2, there will be further easing of restrictions. Physical distancing and restrictions on some leisure and social activities will still be required.
  • At level 1, most normal activity can resume, with precautions and health guidelines followed at all times.
  • South Africa is currently at level 5, and from 1 May we will move to level 4.

    Buying time?

    Chief economist at econometrix Dr Azar Jammine was not convinced by the new measures announced by the president, describing them as "vague".

    "I almost get the impression they are still not quite sure what to allow and what not to allow," said Jammine.

    Jammine said there was not enough detail given by the president, and that it seemed as though he was buying time. 

    According to a draft document detailing the different levels, at level 4 food retail stores are allowed to sell a full line of their products. Open cast mines may operate at full capacity and other mines only at 50% capacity. Formal waste recycling and fibre optic and IT services are also among those which can operate.

    The president said at this stage borders will remain closed and no international travel will be allowed, except for the repatriation of South African nationals and foreign citizens. No travel will be allowed between provinces, except for the transportation of goods and exceptional circumstances such as funerals, Ramaphosa said.  

    The sale of cigarettes will be allowed. Additional categories of goods that may be sold will be clarified by relevant ministers.

    Going forward, the National Coronavirus Command Council will determine the alert level based on evidence of the infection rate and the capacity of the health system to provide care. 

    Breakdown by sector

    Different sectors have been examined in terms of the risk of transmission, the impact of the lockdown on the sector and livelihoods and the economic contribution of the sector. The relevant ministers will hold a briefing on the classification of different industries and industry bodies may also be allowed to make submissions before new regulations are gazetted, Ramaphosa said.

    Ramaphosa has said that sectors or businesses which require large numbers of people gathered together in small spaces for long periods of time are not allowed to operate. These include hotels and sit-in restaurants, bars and shebeens, conference and convention centres, sporting events, cinemas, theatres and concerts, as well as religious and social gatherings.

    The president has also advised industries to encourage employees to work from home. Several measures will be instituted to ensure workplaces have the health protocols in place to screen employees for symptoms and to ensure hygiene is maintained.

    On Friday, Finance Minister Tito Mboweni will be among the economic cluster ministers who will brief the nation. Mboweni is expected to unpack the funding of the R500 billion support package announced by Ramaphosa on Tuesday. 

    Ramaphosa previously announced that an amount of R130 billion will be reprioritised within the national budget. R200 billion is to be provided from a loan guarantee scheme and the remaining R170 billion would be sourced from Covid-19 support loans from international financial institutions, global partners and local sources such as the Unemployment Insurance Fund.

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