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More companies are increasingly impatient with the closure of South Africa, as the country still has another week to go with people locked up in their homes and possibly more months before sectors such as sit-down restaurants can re-operate.
During a round table organized by financial analysis provider RisCura, the country’s asset managers joined the growing number of voices calling for an end to the blockade. On Thursday morning, the PSG Group wrote a long letter to the government warning that remaining blocked will be catastrophic for an already fragile local economy that faced the recession pandemic and was later hit by a downgrade of Moody’s credit rating to the junk state.
Recent calls for SA to end the blockade have been a departure from overwhelming support from the business community to the president when he announced the first phase, which was supposed to last only 21 days. But President Cyril Ramaphosa extended the blockade for another two weeks and on Tuesday told the nation that there will be a “risk-adjusted” reopening of the economy when the additional two weeks come to an end.
In the RisCura discussion, asset managers said that the coronavirus (Covid-19) is not something that will happen soon, going the route of suppression, which is what SA has chosen to institute an early blockade, has more disadvantages than the alternative route that only restricts social interactions with the aim of building herd immunity.
Karl Leinberger, chief investment officer for one of the country’s top managers, Coronation, said the financial services group has spoken to 20 epidemiologists around the world and since January. Everyone says there are too many unknowns that Covid-19 had put life on hold for being dangerous, as it is here to stay “all this year and maybe most of 2021.”
“We wonder if the blockade has not been too strict. If it has not been too forceful, too applied at the national level instead of trying to identify regional critical points and manage them,” said Leinberger.
He added that focusing on restricting the movement of older people and immunocompromised people while giving younger people a chance to stay financially active would have had better economic consequences.
Sweden is a country that has opted for the collective immunity route. But Professor Salim Abdool Karim, who chairs the SA government’s advisory committee on Covid-19, warned that measures such as collective immunity and blocking only the elderly have not been shown to be effective against this virus.
Malungelo Zilimbola, CEO and Chief Investment Officer of Mazi Asset Management, said SA is commendable and exemplary around the world for acting quickly and decisively because if countries do nothing, they risk the epidemic exceeding and exceeding capacity. of the health system. , as seen in Italy.
“But the big problem about repression [lockdown] is that it has a massive impact on the economy. With the Covid-19 crisis, we have to make sure that the depth of the recession is somewhat mitigated, “he said.
He said the government’s R500 billion stimulus package announced Tuesday night will help the recession not be as deep as it would have been without such intervention, but the recovery will be longer and not as clearly defined.
Glenn Silverman, director and CEO of GS Investments, said that Covid-19 is a sovereign crisis that goes beyond individual companies and banks, which is understandable why governments have taken drastic measures to block their economies.
However, since the first projections show that SA’s unemployment rate could rise to more than 50%, as some small businesses may not survive, it is unlikely that all the lost jobs will be created.
