Post-lockdown SA: 5 lessons from our future

In June, beer has returned to our fridges and soon sport will return to our TVs. This is all some will need to feel momentum in the recovery from the Covid-19 pandemic and to trigger a more optimistic outlook.

Overseas, people may be crossing borders for a long-weekend excursion, or heading out to their favourite restaurant to see old friends. But in SA, the situation is far different to those places where the “new normal” is starting to look more familiar.

The pandemic here hit later than in East Asia and Europe, and due to the structural divisions in our society and the stringent early lockdown, community transmission has taken longer to fully establish — giving the government precious time to put in place additional capacity in the public health-care system.

The peak was delayed, but it is now on the immediate horizon.

When such a unique challenge presents itself, it can be of great benefit to learn from early trial and error elsewhere: when to lock down, how to exit, and — most importantly now — how society finds a way to “manage” the rising health-care crisis with economic recovery until the arrival of a vaccine.

By watching the global situation closely, and monitoring countries as they seek to strike the best possible balance between competing socioeconomic imperatives, here are five possible lessons we can learn about SA’s future “normal”.

1. There will be no absolute victory in the short term

Only a very small number of countries have had any success in eliminating the virus completely, most notably New Zealand and, rather miraculously, large parts of China.

For the rest, the challenge is that just a handful of cases can be enough to start a new epidemic, potentially to the level of a more deadly second wave.

This danger is even more pronounced in SA and several other emerging-market countries, where economic and social pressure which have forced governments to open up into the peak of the virus — and there is little comparative evidence for exactly how this will turn out.

Ordinarily, it is advised that lockdown easing is dependent on a controllable case load and a transmission rate of less than one, which essentially means the number of new daily cases is not increasing exponentially.

SA couldn’t afford to wait. New clusters of cases have emerged since the easing of the lockdown in the hard-hit areas of Western Europe, South Korea, Japan and Iran, among others.

This is inevitable. The question is whether opening the economy will lead to a growth in cases so great that it will force countries back into lockdown.

So far, though several countries have experienced a fresh spike in infections, no country yet provides a model for a more deadly second wave. But it’s early days yet.

What does seem unavoidable is new clusters popping up, with recurring “mini epidemiological waves,” as the World Health Organisation puts it.

The bottom line is that the risk remains of many more deaths and further localised lockdowns, as envisaged by the government’s risk-adjusted strategy, and as seen in many other countries.

2. The economic recovery will be slow and messy

While some attribute the economic downturn to the hard lockdown policy, Covid-19 (rather than the decision to implement a lockdown) is the reason for reduced economic activity.

It is a mistake to think that countries that opted for no lockdown, or a soft lockdown, are radically better off than those that took a harder approach.

For example, economic analysts for the Financial Times reported some weeks ago that the economic impact on Sweden which opted for loose social distancing measures enforced primarily by voluntary public compliance, was little to no less extreme than in neighbouring states that went for a harder model.

And now the Swedish central bank has published GDP projections that predict a similar economic decline to other countries in Western Europe.

The reason for this is the simple economics of supply and demand. When a lockdown is eased and supply chains are reopened, this doesn’t mean demand necessarily floods back.

Consumers may not only have less money to spend; they may also still be generally scared of exposing themselves to the virus when going to out to buy nonessential goods and services.

The investor climate has arguably never been more fraught with uncertainty, or business confidence so low. So regardless of the government’s original approach to the lockdown, certain sectors of the economy are going to keep struggling, especially “fun spending” spots — restaurants, bars, tourism, musical and sporting events and the like.

As a result, the V-shaped recovery for the economy now seems implausible, not because of the lockdown, but because of the virus. The economy will largely recover, but it will take years, and be a U-shaped recovery at best

3. Resource inequalities will bite, encouraging a post-Covid shakeup

As in most disasters, the poor will be hit much harder than the rich.

Testing and health-care capability is the most glaring example. The US, for example, has conducted roughly 21-million Covid-19 tests — which dwarfs the number of tests done in the whole of Africa.

It’s not just the number of tests but their quality, and the capacity to process them. In wealthier parts of the world, test results can be returned in minutes. In SA, a testing backlog of up to two weeks renders testing almost ineffective.

After SA conducted more than three times the total tests of the next best country on the continent, its testing capacity seems to be wearing increasingly thin, forcing some areas to firm up the conditions for someone to qualify for a test.

The same is true at a micro level. Early evidence from the effects of Covid-19 on employment shows that lower-earning workers are far more likely to face retrenchments — and the adverse health effects of the virus — than higher earners. “Tech displacement” of labour-intensive jobs is becoming more attractive.

It is unclear which direction the political impact will go. But there will be political impact.

And the overlap with other epic generational campaigns, such as the Black Lives Matter and Climate Emergency movements, presents a “perfect storm” that will confront structural inequalities and demand a different economic paradigm.

4. The new normal will be contested

The long-lingering health risks, the economic depression and the inequality of the impact of the health and economic crises mean that the social and political dynamic that emerges will be volatile.

Traditional political and economic systems will be contested. Liberal and conservative factions will fight to maintain the system that was built before, while leftist and progressive forces will argue for something different.

In some countries the former will win through; in others the latter; and in others still a new centre will emerge. This is a battle that is already raging in SA — not only between the various political parties, but also factions within them that will firmly contest what sort of “structural reforms” are really needed.

Some elections — most obviously the US presidential poll in November — will matter greatly to the form the future takes. But in most places, extra-parliamentary pressure and activism will have the greater impact, as new coalitions form and fresh social forces press hard for change.

5. Good and compassionate leaders succeed

One of the most striking aspects of Covid-19 has been the remarkable overlap between populist strongman leaders and a higher death toll.

The causality may be a little too uncertain to draw any firm conclusions, but as the UK this week overtakes Spain and joins Russia, Brazil and the US in the top four positions for Covid-19 infections globally, it is hard to view it as just a coincidence.

All four countries are led by populist-nationalist leaders (Boris Johnson in the UK, Vladimir Putin in Russia, Jair Bolsonaro in Brazil, and Donald Trump in the US), all of whom were either very late to act or have continued to pursue callous, reckless denialist policies in response to the pandemic.

What is clear is that arguably the most valuable governance tool has been trust between government and citizens. If citizens trust their government and buy into its Covid-19 response measures, so can the government trust its citizens to comply voluntarily rather than through force.

The most successful leaders in this pandemic have taken a firm approach to public health, but a soft touch with enforcement, coupled with quality and compassionate communications.

Initially, SA seemed to be going down this route. It appeared to be the pivotal moment in SA’s social compact — an infrequent “second chance” for the government and ANC to restore credibility.

But the failure to rein in police heavy-handedness and brutality, and the imposition of some arbitrary measures, alongside a glaring weakness in communications, have meant that the rationale for many of the lockdown regulations was at best unclear and at worst perceived to be bonkers.

It has cost the government credibility.

The government is facing a barrage of litigation from a wide range of actors, some driven by the public interest and others by narrow self-interest.

They all, however, challenge the legal basis of lockdown regulations, and SA awaits clear and reasoned court decisions as the rationality of the government is put on trial.

Is this moment lost? Not quite yet. At the end of it all, the government won’t be judged on the beach bans and the short-term absence of rotisserie chickens and slip-slops. It will be judged on the death toll, the strength of the economic recovery and, most fundamentally, the social compact or absence thereof that emerges.

In that sense, there is still everything to play for.

*The Paternoster Group provides political risk and political economy analysis, as well as strategic advisory services. The group’s Covid-19 political risk analysis is produced in association with Discovery. For more information, visit www.thepaternostergroup.com