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Business leaders have asked the government for clarity on reported plans to push South Africa into a tougher lockdown in the event of a second wave of Covid-19 infection.
Monday, Bloomberg reported that the government is considering reimposing various measures aimed at containing the coronavirus pandemic as fears about a second wave mount, citing three officials familiar with the situation.
The option to reintroduce the restrictions is likely to be on the table when the National Coronavirus Command Council meets this week, said the officials, who spoke on condition of anonymity because the information has not been made public.
However, South African companies expressed concern about the report, saying that a higher level of lockdown would have an “extremely negative impact on the economy and employment.”
Business for South Africa (B4SA) said that certainty around government policies is required to restore and boost investor and consumer confidence in South Africa.
“The certainty that South Africa will not return to a hard lockdown, regardless of infection rates, would stimulate economic activity by unlocking business investment projects and consumer spending plans, which are currently on hold due to concerns about the response of the government to a possible second wave of infections in South Africa, ”the group said.
The first hard lockdown, from April to July 2020, caused the loss of more than two million jobs. Statistics South Africa is expected to release improved employment figures for the third quarter of 2020 this week, but new lockdown restrictions could slow growth, the group said.
Gross domestic product (GDP) fell significantly quarter-on-quarter due to the collapse of consumer spending due to lockdown measures. SME bankruptcies increased to 6.5% from 4% a year earlier and are expected to exceed 10% as credit extensions and tax breaks expire.
The B4SA model suggests that a one percentage point change in real GDP growth leads to a 0.91 percentage point change in employment figures.
A modeled downside scenario, which sees South Africa reverting to lockdown level 3 from mid-November and December, could result in another 200,000 job losses and a 10.6% decline in GDP by 2020, said the group.
“We estimate that the loss of formal jobs has already reached between 1.4 million and 1.6 million, with one million more lost in the informal sector,
“It will take until 2024 for formal employment levels to return to the pre-Covid employment level, assuming we pivot the economy onto a path of sustainable inclusive growth,” said Martin Kingston, chairman of the B4SA steering committee.
South Africa cannot afford the loss of additional jobs and aggravated economic hardship, he said.
Kingston said that the impact of a return to alert level 3 or higher would be compounded by the fact that most of the measures available to counter the negative economic effect on individuals and businesses may no longer be available:
- Covid-TERS is ending;
- Complementary social grants are unlikely to continue after the three-month extension;
- The deduction of the FIU and VAT cannot continue indefinitely; Y
- Banks that granted credit to businesses and individuals now require payment.
“To improve investor and consumer confidence, the government must provide the highest possible certainty that there will be no other strict lockdown, regardless of infection rates,” he said.
I can’t afford to go back
It is vitally important that South Africa deals with Covid-19 hotspots as they appear, because the country cannot afford to re-enter the lockdown, Western Cape Prime Minister Alan Winde said.
In a digital briefing on November 5, Winde said he was concerned that several European territories had re-entered the lockdown, especially countries like Germany, which had previously been seen as a prominent example in its response to Covid-19.
“We have to avoid this, we have to make sure we don’t go into an additional lockdown (as) South Africa cannot afford it. Our economy cannot afford it, we are getting poorer, we are losing jobs and we need to recover now ”.
Winde said that the country’s economy can only recover and begin to regain jobs if it continually makes managing Covid-19 a “habit” and understands the risk areas.
“If we do things right, we can avoid that second wave and we can focus our energy on recovery instead of spending too much time managing and preparing a second wave (of Covid-19 cases).”
President Cyril Ramaphosa will brief the nation this week on South Africa’s lockdown strategy around the coronavirus pandemic.
South Africa reported having 1,247 new cases on Monday (Nov 9), bringing the total reported to 738,525.
Deaths have reached 19,845 (a daily increase of 36), while recoveries have risen to 680,726, leaving the country with a balance of 37,954 active cases.
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