SA needs lockdown-lite to survive after pandemic
While Covid-19 causes illness and death, a fettered economy will also cause death
As it stands, we officially have 2,173 infections, 24 deaths and we have conducted 80,085 tests. Covid-19 is a global health crisis and is forcing the world to reevaluate the way we conduct our lives as well as our business.
SA has been praised for its reaction to the pandemic, taking decisive action before the virus spreads beyond control. I applaud the SA government for taking charge to protect its people. The same cannot be said for supporting entrepreneurs and small businesses.
Just days after applications for support funding opened, they are already oversubscribed, proving the devastating impact of Covid-19 on the economy. The Sukuma Relief Programme — an initiative aimed at supporting small and medium enterprises (SMEs) that are financially affected by Covid-19 — has been nearly three times oversubscribed, with applications for financial assistance far exceeding the current available capital of R1bn.
The impact of the lockdown on business owners is devastating. And, as the sector responsible for 60% of job opportunities in the country, the wider impact is unthinkable. Most small businesses lack the capital or the resources to survive for extended periods without conducting business and generating income. While Covid-19 causes illness and, in some cases, death — poverty, unemployment and a non-existent economy will also cause death.
Global leaders are likening the impact of Covid-19 on the global economy to the 2008 financial crisis and the Great Depression. The nail in the coffin for SA came at the same time the lockdown came into effect. Ratings agency Moody’s cut the country’s sovereign credit rating to subinvestment grade, meaning the country now has a junk rating from all three major international ratings agencies.
We need to have a serious conversation about the way forward. We need to come up with an economically feasible “Lockdown Lite” to save the economy.
Let’s consider what the immediate future after the lockdown looks like.
The most important thing we need to do is to stimulate the economy as much as we can. After all, innovation and business growth come from entrepreneurs. If they cannot operate more freely, who will think of innovative ideas and make it happen?
Businesses that cannot operate from home, should be given permits to operate from their offices. While restrictions will still be necessary, and businesses will by no means flourish, this would at least provide an opportunity for them to survive.
While I am not suggesting we go back to a world before Covid-19, certain measures can be relaxed to save the economy. We still need to protect the elderly and the vulnerable, continue practising social distancing and ramp up education about Covid-19 and the importance of good personal health to prevent the spread of the virus.
We can make allowances for businesses and entrepreneurs to operate. Restaurants, for example, can be restricted to no more than 100 people at any given time. Travel can still be restricted (such as within cities or provinces) and curfews can still be imposed after office hours.
Businesses that can operate in isolation, or from the homes of business owners and employees, should continue to do so.
Support funds should be channelled specifically to industries completely shut down by Covid-19, such as tourism.
If this can be implemented, until late this year, we have a chance to save the economy, jobs and thousands of small businesses. Extending the current lockdown by another 21 days (or more) is not feasible. We cannot flatten the curve and flatten our economy with it.
To survive the Covid-19 crisis, we need money and resources. An active economy, with operating businesses, will provide the finances we need to access resources and to effectively fight this pandemic.
This is a discussion I hope President Cyril Ramaphosa and his team consider having announced an extension to the lockdown. There are tough decisions to be made by SA’s leadership and I hope there is a drive to solve the crisis facing the economy.
• Ferreira is the CEO of Osidon.