The severe contraction in South Africa’s gross domestic product (GDP) in the second quarter of the year was expected, but still "paints a horrific picture" of the damage done to the economy by the lockdown restrictions, says industry organisation Business Leadership South Africa (BLSA).
BLSA believes the country cannot afford any further restrictions to economic activity and calls on government to urgently lift existing restrictions.
“Our call is given further credence by the declining trend of the infection rates throughout the country. Furthermore, the healthcare system is no longer overwhelmed and can comfortably cope with the current levels of the pandemic. We believe this is possible.
"The health protocols, including physical distancing and wearing of masks, are well entrenched and should be the only requirements for the resumption of activities that still operate under restrictions,” the organisation says.
The guidelines for lockdown Level 1 state that all Covid-19 health and safety protocols must be followed at all times, including observance of guidelines for physical distancing, sanitation and hygiene, and the use of appropriate personal protective equipment, like cloth face masks, as determined by the National Department of Health.
BLSA believes the time is now right for this to be implemented.
“We believe that applying just that one condition to all economic activity will be sufficient and no other restrictions are necessary, apart from some that will still be required for international travel. Under Level 2, the main remaining restrictions affect restaurants, public gatherings, trading hours for bottle stores and international travel,” BLSA says.
Restaurants have a curfew and the number of guests is limited. BLSA believes the curfew should be lifted entirely, saying that the physical distancing requirements in themselves will naturally restrict the number of guests.
Similarly, for hotels and other accommodation businesses, the physical distancing restrictions will enforce a limited number of guests, it says.
“Specific restrictions by government are not necessary; naturally the role of government inspectors in overseeing compliance with health protocols will be an important one," BLSA notes.
The organisation says public gatherings remain problematic in terms of physical distancing; however, it posits that the sensible arrangement would be to place the responsibility for physical distancing on event organisers.
For sporting events, for example, organisers could close off certain seats so that spectator seats are at least 2 m apart. Any other public gatherings should be allowed only if the organisers can enforce physical distancing, BLSA suggests.
The organisation says that the blanket ban on international travel should be replaced with a more targeted approach, that is, by allowing all visitors in from certain countries where infection rates are under control.
For other countries, BLSA suggests enforcing a 14-day quarantine period, with testing.
Moreover, it calls on government to lift all restrictions on outbound travel and apply the same protocols to returning travellers, that is, quarantine and testing if they visited a high-risk area.
"The restrictions on business activity that the physical distancing protocol itself imposes mean South Africa still cannot get back to full operational capacity. But we need to get to a level where we are as efficient as possible without risking lives. We believe this is achievable within the framework of simply observing the health protocols,” BLSA says.
GDP fell by over 16% between the first and second quarters of 2020, giving an annualised negative growth rate of 51%. An annualised growth rate shows what growth would be over a full year if the quarter-on-quarter growth rate were to occur four times in succession.
BLSA highlights that the worrying factor is that three of the country’s most labour-intensive industries were hardest hit. On an annualised basis, construction contracted by 76.6%, manufacturing output fell by 74.6% and mining output by 73.1%.
“Overall, BLSA commends the way government has handled this pandemic, particularly at the beginning of the Covid-19 outbreak. The hard measures it instituted in March resulted in us passing the peak infection rate period earlier than forecast, but the strange “product by product” approach to releasing the lockdown in May/June certainly contributed to a greater decline in quarterly GDP than needed to be the case.
"However, now it is time for government to shift gears and focus more on livelihoods and protecting jobs. Impose only the overarching principle of observing the health protocols and allow businesses and other organisations to operate as optimally as possible within that restriction. The government needs to trust its citizens to observe the health protocols and for businesses to behave responsibly. We simply cannot afford any other way,” BLSA says.