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If SA goes into lockdown, saving the economy will be a focal point

by Roi Simpson

As heard on “The Lunchtime News Wrap” on 23 March 2020

 

It seems the only question on most people’s minds is whether we’ll go into lockdown in South Africa.

The short answer is we don’t know – and the President will only address the nation this evening.

 

Let’s just look at what the state of play is.

274 confirmed cases nationwide. (ed: by the time of the address the number was confirmed at 402, with 100 in the Western Cape)

On a side note: the 88 cases in the Western Cape are a serious red light: Gauteng does have 132 – but it’s population is more than double ours. So on a per capita basis, the Western Cape is the worst performer.

 

SA’s first case was confirmed on March 5th, that person landing on the first – so for practical purposes, we can benchmark Mondays, and say this is the start of week 4.

A week ago, we had 62 cases – and the week before that just seven.

 

There are far too many unknown parameters to predict the curve from here.

What do know is that in the worst example – Italy – it took just 5 days from being at the point we are, to crossing the 1,000 mark, and two weeks to cross 10,000.

And there’s been a lot of criticism of the Italian government’s slow response.

 

So, especially with no deaths so far, we are in a window period where we still have the opportunity to significantly impact the graph here in South Africa.

That suggests that even more restrictions on what kind of places can stay open, and where people can travel would make sense.

 

But the difficulty for the President, and the balance that needs to be sought is that this isn’t only a health issue.

This is – in a very real way – an economic issue.

If people’s income dries up – and that’s already happening in wide range of service and tourism industries – those people enter several danger zones: they can’t access private health, their ability to pay for utilities – like water for hygiene – becomes threatened, and food security will increasingly become an issue.

And the last one is a serious danger.

 

Macroeconomically, there are external pressures as well.

The Rand’s trading on the dark side of USD 17,70 – and I only had time to check the past 10 years – but this is the worst exchange rate we’ve had in that decade.

What’s happening is investors are moving to safety – and we’re seen as a speculative investment market.

So, we’re on our own – and speeding downhill if we need to import anything in large numbers.

 

So, while the nation is feverishly debating lockdown – my prediction is that the President’s speech tonight will actually focus more on financial measures to ameliorate the economic impact.

 

That could see temporary tax breaks for business – especially around keeping people on the payroll when they’re not working,

Australia actually went further and gave cash payouts to businesses who were hiring people.

 

Expect confirmation of significant leniency from the banking sector on credit payments – and Standard Bank’s relief to small businesses came just hours after a meeting between business and the Executive, so that speculation has a solid basis,

 

We could see some kind of social grant – and there are calls for that to be tailored to bring in the many people who don’t qualify for the existing grants, but whose income from informal trade might be about to disappear – the difficulty is how you’d implement that – especially while trying to avoid person-to-person contact.

Existing recipients already have SASSA cards – new ones wouldn’t.

 

And then, big increases in free access to utilities like water and electricity – and possibly relief for people renting from government.

We can’t be sure what: but I think we can be sure there’ll be some.

 

What we can expect is an honest assessment from the President.

In an open letter to the nation, Ramaphosa quoted Abraham Lincoln – saying “if they’re given the truth, the people can be depended on to meet any national crisis”

we’ll see how good these predictions are later tonight.

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