Economic cluster lead within the Business for South Africa (B4SA) Covid-19 alliance, Martin Kingston, has urged government to fast-track the reopening of the economy or face a more devastating economic fallout – possibly even a depression.
Speaking during a B4SA webcast briefing on Wednesday, Kingston said that for South Africa to get back to full economic activity, it needs to “be enabled to move down the various lockdown levels as quickly and responsibly as possible”.
Kingston, who is also vice-president of Business Unity South Africa (Busa), warned that at least a million jobs are set to be lost in the country. However, if the phased “risk-adjusted” approach to restart the economy is not accelerated, up to four million jobs in the formal and informal sectors will be at risk.
B4SA – an alliance of organised business bodies formed in mid-March that includes Busa, the Black Business Council and other corporate sector volunteers – has presented an even more dire forecast for the local economy.
It now says that GDP is likely to shrink by between 10% and 17% as result of the impact of Covid-19 and related lockdown measures.
“In collaboration with government at all levels, as well as with our social partners at Nedlac, we need to accelerate the restart of the economy to minimise hardship, hunger and desperation. These factors could threaten the rule of law and weaken South Africa’s capacity to respond to the impact of the Covid-19 pandemic,” said Kingston.
“We have every reason to believe that a safe return to work will be successfully achieved. This is provided that people and businesses abide by the hygiene, mask usage and social distancing protocols, adhere to regulations inside the workplace and in public places and, importantly, cooperate with the authorities with due regard for healthcare protocols to reduce the risk of transmission,” he added.
Kingston said the B4SA Covid-19 alliance contributed to the conceptualisation of the government’s risk-adjusted approach towards responding to the pandemic and provided input to the initial thinking on Level 4 lockdown regulations.
He however added that B4SA had “no visibility” around the time frames for the various lockdown levels. It is interacting with government regarding “Level 4 challenges” that include high levels of “regulatory complexity, unworkability and difficulty” from an implementation perspective.
“We think it is possible that there can be adjustments within the levels,” he said.
“That is the discussion we are having with the government now so that we can migrate to Level 1 as quickly as possible.”
Meanwhile, Kingston noted that South Africa’s economy was already in a slump even before Covid-19. “The recession is going to be much deeper than we initially thought and it’s going to endure for much longer [due to the pandemic],” he said.
Kingston intimated the country could face an economic depression, however, he stopped short of directly saying this. He said that it could take three to five years for the country’s economic growth to return to its pre-recession and credit rating downgrade levels.