Ramaphosa Underwhelms With Vague Plans to Reopen South Africa

(Bloomberg) --

An eagerly anticipated speech by South African President Cyril Ramaphosa about plans to reopen the economy turned out to be a damp squib, with an expected easing of lockdown rules delayed.

More consultations will be held about relaxing the restrictions aimed at curbing the spread of the coronavirus and allowing more businesses to reopen by month-end, Ramaphosa said in an address to the nation on Wednesday night. He warned the process will be gradual and stringent rules will remain in place in areas with high infection rates.

Ramaphosa gave “a brilliant speech, but unfortunately it said next to nothing,” Rob Jeffrey, an economist at Johannesburg-based advisory service Econometrix, said by phone. “The president did not come out with the things he should have said about reviving the economy and appeared to be treading overly cautiously. The country is now in a situation where the cure is worse than the disease and millions of jobs are being lost.”

The rand dropped as much as 1.4% against the dollar on Thursday, extending Wednesday’s 0.9% decline. It was 0.6% weaker at 18.6032 per dollar at 5:14 p.m. in Johannesburg. The FTSE/JSE All Share Index declined 2.1%, its biggest daily drop since May 4.

South Africa, with 12,074 confirmed coronavirus cases and 219 fatalities, has been in lockdown since March 27. While the rules were eased on May 1, large parts of the economy remain shuttered, unemployment-benefit claims have soared and poor citizens are increasingly running out of money and in need of food aid.

Business for South Africa, a group of associations, has warned 4 million jobs will be at risk and the economy could shrink as much as 16% this year unless commerce speedily resumes. That process could be stymied should the stringent lockdown rules be retained in cities such as Cape Town, Durban and Johannesburg, which account for the bulk of economic activity and have among the highest confirmed infection rates.

The National Coronavirus Command Council, which is overseeing the government’s response to the disease, will review its progression in every district every two weeks and decide on an appropriate level of restrictions, Health Minister Zweli Mkhize said in a statement. Community and religious organizations will be given the power to monitor compliance and enforce the rules, he said.

Alan Winde, the premier of the Western Cape region that includes Cape Town and is the only one of the nine provinces controlled by the main opposition Democratic Alliance, called for the entire region to move down to Level 3 restrictions as soon as possible. The national alert level is currently Level 4.

‘Humanitarian Disaster’

“With our health-care system prepared, it is simply no longer possible to maintain Level 4 restrictions anywhere in the Western Cape or South Africa,” Winde said in a statement. “The economic crisis caused by these restrictions has resulted in a life-threatening humanitarian disaster that will only worsen in the months ahead.”

While the government has drawn praise from the World Health Organization for its decisive response to the pandemic, public anger has been mounting about the economic meltdown and a raft of seemingly ill-considered lockdown rules. They include a night-time curfew, bans on the sale of tobacco products, alcohol and summer clothing, limits on e-commerce and restricting exercise to a three-hour window, part of which falls before sunrise.

The DA will file a lawsuit Thursday challenging the rationality of the curfew and restrictions on exercise and e-commerce, according to John Steenhuisen, the party’s acting leader. Another case will be filed on Friday contesting the constitutionality of the nation’s Disaster Management Act, which gives the council excessive and unchecked powers, he said.

“The executive is effectively doing the job of writing our laws and regulations as they please,” Steenhuisen said. “We have to fight this, because from here our democracy finds itself on a very slippery slope.”

Revised Rules

Ramaphosa conceded that the government had made mistakes and pledged to rectify them. Retail and exercise regulations will be revised within days, he said. The first change was announced Thursday, with e-commerce sites allowed to resume sales of all goods except alcohol and tobacco.

The president’s address was aimed at restoring public trust in the government’s handling of the crisis, but the hard work still lies ahead, according to Goolam Ballim, the chief economist at Standard Bank Group Ltd.

“He calculatedly and rationally pointed out that the country was ready to go a lower lockdown level,” Ballim said by phone. “A lot now will depend on how his ministers execute the move and ensure that regulations, no matter how well-intentioned, do not appear nonsensical.”

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