By Philippa Larkin
JOHANNESBURG – BUSINESS for South Africa (B4SA) on Tuesday yesterday has called for the government to provide certainty that there would not be another hard economic lockdown in the event of a second wave of Covid-19 infections.
President Cyril Ramaphosa is expected to address the nation this week following a meeting of the National Coronavirus Command Council, which will present its recommendations to the Cabinet on November 13, according to Minister in the Presidency Jackson Mthembu last week.
Ramaphosa in his weekly newsletter this week warned that a resurgence of Covid-19 cases “at any scale will not just dramatically reverse our health gains. It will choke the green shoots of economic recovery that have emerged, and take us back from spring to winter”.
On Monday, it was reported that South Africa’s Covid-19 cases had increased to 738 525, with nearly 1 300 new cases since the last report, according to the Department of Health.
B4SA said policy certainty would stimulate economic activity by unlocking business investment projects and consumer spending plans, which were on hold due to concerns about the government’s response to a potential second wave of infections.
It said the higher levels of lockdown had an extremely negative impact on the economy and jobs.
“The first hard lockdown, from April to July 2020, which B4SA supported, caused more than 2 million job losses. Gross domestic product (GDP) fell by 51 percent quarter-on-quarter as consumer spending collapsed due to lockdown measures. SME (small medium enterprises) bankruptcies increased to 6.5 percent from 4 percent in the previous year and are expected to reach more than 10 percent as credit extensions and tax relief expire,” it said.
If all nine provinces remain on level 1 – the lowest alert level – B4SA said it estimated a 9.3 percent decline in GDP for this year, a figure which already considers the positive offset of fiscal and monetary policy interventions and the Temporary Employee Relief Scheme benefit.
However, it said one downside scenario modelled, which looked at South Africa moving back to level 3 from the middle of this month and December, could result in a further 200 000 job losses and a 10.6 percent decline in GDP for 2020this year.
Martin Kingston, B4SA’s steering committee chairperson, said: “We estimate that formal job losses have already reached 1.4 million to 1.6 million, with a further one million lost in the informal sector, and that it will take until 2024 for formal employment levels to return to the pre-Covid level of employment, assuming that we pivot the economy on to a sustainable inclusive growth path. South Africa can ill afford additional job losses and compounded economic difficulty.”
The impact of a return to level 3 or above would be worsened by the fact that the majority of measures available to counter the negative economic effect on individuals and businesses might no longer be available, the organisation warned.