Government cannot micromanage its way out of coronavirus crisis
Rapid lifting to lockdown now the only way to salvage SA's economy
President Cyril Ramaphosa’s address to the nation last week was welcome but sadly vague and lacked a clear sense of how SA plans to protect its fragile economy.
Reading between the lines, one thing was clear in Ramaphosa's speech: the pace at which government believes we should proceed. The astounding lack of urgency about salvaging our economy is cause for considerable alarm, if not flat-out panic.
One of the most critical factors for the success of a country’s response to this pandemic is trust. The extent to which citizens trust the government to protect their welfare, and lead the nation through this crisis, will be a key determinant in maintaining social order and civil obedience. Trust is generated through regular and consistent releases of transparent and accurate information, as well as through clear evidence of efficient implementation of support measures.
The government seems oblivious to the carnage playing out in business
SA's government, through the obscure national command council, has been making some incredibly irrational decisions. The uncertainty and lack of transparency about how certain decisions have been made, along with the failure to provide even the basic rationale behind many regulations, is eroding trust in our political leaders at an alarming rate.
The economic cost of the ongoing lockdown is being severely underestimated, and the government seems oblivious to the carnage playing out in business. Most South African businesses, across all sectors, have been under enormous pressure during the past decade as we tried to navigate a particularly difficult operating environment hampered by policy uncertainty and rampant corruption.
This extended and overly severe lockdown will be the death blow for many companies. Those that survive will do so only through considerable cost-cutting, including mass retrenchments, salary reductions and a halt of all non-essential expenditure such as planned investments and growth initiatives.
The government simply cannot micromanage the entire country and its economy. The attempts to dictate which items can and cannot be sold are simply ludicrous. It is a frightening thought that the national minister charged with safeguarding our economy is spending his time determining which specific items (out of millions of products) might be allowed for sale. Would it not be better spent on strategies to rebuild the economy, on implementing initiatives to rescue small business, and on regaining the trust and support of big business so that mass retrenchments can be avoided?
We do not need to be mollycoddled by the government. It would make far more sense for the government to open up the economy entirely, and work closely with business to restrict items and practices that pose the highest risk. It makes absolutely no sense to try to define which items may be bought while others may not.
If trust is to be restored between business and the government, the restrictions imposed on the private sector should also hold true for the public sector. There is no logical reason public sector construction projects are allowed while private sector construction is prohibited. This only leads to further speculation and distrust about suspect government procurement and tenderpreneurship.
All South African airlines are also in a severe state of distress. An extension of the lockdown until September will decimate the air transportation system. The air transportation value chain presents a lower risk — with more intense risk mitigation protocols and higher compliance than other modes of transport such as taxis, buses and trains — and therefore should not be precluded from activity where other modes are not. Air access is a key economic enabler as people need to commute to and from work, businesses need to deploy personnel between their offices and remote sites, and all forms of tourism (including business and leisure) depend almost entirely on accessibility by air. This industry will be fundamental to rebuilding our economy after this crisis, but the uncertainty about when air travel will resume presents a high risk of a total collapse of air transportation in SA.
While these onerous and illogical regulations are apparently intended to save lives, economic destruction and poverty will cost lives, not only during this crisis but also for many years after. The most effective way to lift people out of poverty and improve their quality of life is through education and economic growth but both of those are being destroyed by the severity of the lockdown.
The government’s approach to the lockdown, and the subsequent economic hardships, will cost more lives than it saves. The government urgently needs to consider the economic costs of their decisions as the vast majority of the job losses and suffering we will need to endure is the consequence of a tragically flawed lockdown strategy.
• Ravens is the Accelerate Cape Town CEO.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.