Social and economic risk if no smooth transition out of lockdown
The fabric of the country will be seriously damaged if we can’t at least get some economic activity going soon.
South African society is at great risk if the lockdown is extended further and the economy cannot begin to function again, albeit in a limited way. This is the warning from senior executives at Investec, who say the country does not have the capacity to absorb the kind of job losses that could result.
In an interview with Bloomberg, Group CEO Fani Titi and the head of the SA banking unit, Richard Wainwright, said the damage would not only be economic, but to the social fabric as well.
Select types of businesses where lifting lockdown is possible
“They’re going to have to select types of businesses and industries where it is practical to start lifting the lockdown restrictions,” said Wainwright. “But at the same time protecting people, whether it is through social distancing or screening technology.”
Government would have to harness the private sector to ensure there are broader support measures, Titi said. “Relief efforts that are private-sector and public-sector based, given [that] the state of our fiscus is constrained, is what we have to work on now as we move into the next phase of the crisis.”
Government must adopt a risk-adjusted approach
Meanwhile, Peter Attard Montalto, head of capital market research at financial services research company Intellidex, urged the government to aid a smooth and sustainable exit from lockdown by adopting a risk-adjusted approach that would allow any business to resume operations if it can show appropriate health protocols.
“The government’s command-and-control mindset is still hampering the transition to this mode,” he said. “We do expect government to eventually switch to this risk-adjusted mindset and after that we [will] enter a new phase, which may well have to last until the start of September at least, [given that the] Department of Health currently see the number of cases peaking at the end of winter.”
He added that an alternative scenario was to have the lockdown end to some degree in May, but then be put back in place during June and July as case and death numbers increase more rapidly in mid-winter. “Both scenarios are broadly the same in terms of economic impact,” he said.