South Africa Prepares to Gradually Reopen Hobbled Economy

(Bloomberg) -- South Africa’s government announced plans to further ease a nationwide lockdown as the fallout from shuttering much of the economy threatens to outweigh the damage wrought by the coronavirus.

Consultations will begin in the coming days about moving most of country to disease alert level 3 by the end of the month, from level 4, and allow a number of additional industries to resume operations, President Cyril Ramaphosa said Wednesday in a televised address to the nation. Level 4 restrictions will remain in force in areas where infection rates are highest, including some of the main cities.

“We’re now preparing for a further easing of the lockdown and a gradual opening of our economy,” Ramaphosa said. “If we lift the lockdown too abruptly and too quickly, we risk a rapid and unmanageable surge in infections. We will therefore continue to proceed cautiously, informed by the best available evidence.”

The authorities have faced mounting criticism that some lockdown rules are nonsensical, have no bearing on the fight against the virus and have caused undue harm to the country. The government will announce changes to level 4 regulations to expand permitted business activities and e-commerce, and reduce restrictions on exercise, Ramaphosa said.

Jobs Risk

Business for South Africa, a group of business organizations, has warned that 4 million jobs will be placed at risk and the economy could contract 16% this year if the easing of lockdown rules isn’t accelerated.

The government initially imposed a 21-day lockdown on March 27 to curb the spread of the virus, later extending it by two weeks. Enforced by the police and military, it only allowed people to leave their homes to buy food, collect welfare grants and seek medical care -- unless they provided essential services.

While the severity of the lockdown was adjusted from the maximum level 5 to level 4 on May 1, allowing commerce to resume, many businesses remain partially or completely shut.

“Despite its duration and its severity, the lockdown that we’ve imposed was absolutely necessary,” Ramaphosa said. “Without the lockdown, the number of coronavirus infections would have soared uncontrollably. Our health facilities would have been overwhelmed and many thousands of South African would have died.”

While South Africa’s 12,074 confirmed coronavirus infections and 219 fatalities are low compared with nations such as the U.S., Spain and Italy, the number of cases has risen over recent weeks as testing and screening increased. The government has used the lockdown weeks to help prepare the health system for a surge, and has added almost 25,000 beds for quarantine, personal-protective equipment and other supplies, Ramaphosa said.

‘Little Substance’

The administration has been weighing concerns about a surge in cases against worries about a spiraling unemployment rate, which stood at 29% before the virus hit, and a spike in the number of people seeking food aid.

The president last month announced a 500 billion-rand ($27 billion) support package aimed at reigniting growth and supporting those worst affected by the lockdown. The government is working on the next phase of its economic response to the crisis and the Cabinet will announce the outcome of its discussions once they’ve been completed, he said on Wednesday.

Ramaphosa’s speech contained little of substance, said John Steenhuisen, acting leader of the main opposition Democratic Alliance.

“Essentially, he doubled down on what has been a tragically flawed approach that has wreaked catastrophic, unnecessary and possibly irreparable damage to our country,” Steenhuisen said in a statement. “South Africa’s economy and society must be opened up now, to save lives and livelihoods from all types of risks, not just Covid.”

Key Ramaphosa quotes:

• “The best current estimate is that without the lockdown and the other measures we have taken, at least 80,000 South Africans could have been infected by now and the death toll could have been at least eight times higher than it is.”
• “Our field workers have now screened over 9 million people, and we have conducted nearly 370,000 coronavirus tests.”
• “We have been able to strengthen the capacity of our health system and to put in place wide-ranging public health programs to better manage the inevitable increase in infections.”
• “I wish to express our appreciation to the government and the people of the United States for the donation of 1,000 ventilators.”

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