More businesses are growing impatient bout South Africa’s lockdown as the country still has another week to go with people cooped in their homes and possibly more months before sectors like sit-down restaurants can operate again.
During a panel discussion hosted by financial analytics provider, RisCura, the country’s asset managers added to the growing number of voices calling for an end to the lockdown. On Thursday morning, the PSG Group penned a long letter to government warning that remaining on lockdown will be catastrophic for an already fragile local economy which confronted the pandemic in recession was later hit by a credit rating downgrade to junk status by Moody’s.
The recent calls for SA to end the lockdown have been quite a departure from the business community’s overwhelming support to the president when he announced the first phase which was supposed to only last for 21 days. But President Cyril Ramaphosa extended the lockdown by another two weeks and on Tuesday told the nation that there will be a “risk-adjusted” reopening of the economy when the additional two weeks come to an end.
In the RisCura discussion, the asset managers said because the coronavirus (Covid-19) is not something that is going to pass anytime soon, going the suppression route – which is what SA has chosen by instituting a lockdown early on – has more disadvantages than the alternative route which only restricts social interactions with the aim of building herd immunity.
Karl Leinberger, chief investment officer of one of the country’s biggest asst managers, Coronation, said the financial services group has spoken to 20 epidemiologists around the world and since January. All of them say there are too many unknows about Covid-19 making putting life on hold because of it dangerous as it is here to stay for “all of this year and perhaps most of 2021”.
“We question whether the lockdown has not been too stringent. Whether it has not been too blunt, too nationally applied as opposed to trying and identify regional hotspots and managing those,” said Leinberger.
He added that focusing on restricting movement of the old and the immune-compromised individuals while giving younger people an opportunity to remain economically active, would have had better economic consequences.
Sweden is one country that has chosen to go the herd immunity route. But Professor Salim Abdool Karim, who chairs SA’s government’s advisory committee on Covid-19, has warned that measures like herd immunity and lockdown of only the elderly have not proven effective against this virus.
Malungelo Zilimbola, CEO and chief investment officer of Mazi Asset Management, said SA is commendable and exemplary around the world for acting swiftly and decisively because if countries do nothing, they run the risk that the epidemic will overwhelm and outstrip the capacity of the healthcare system, as seen in Italy.
“But the big issue about the suppression [lockdown] is that it has a massive impact on the economy. With the Covid-19 crisis, we have to make sure that the depth of the recession is somehow mitigated,” he said.
He said government’s R500 billion stimulus package announced on Tuesday night will help make the recession not as deep as it would have been without that intervention, but recovery will be longer and not so clearly defined.
Glenn Silverman, director & CEO of GS Investments, said Covid-19 is a sovereign crisis going beyond individual companies and banks, which is understandably why governments have taken drastic measures to lock down their economies.
However, as early projections show that SA’s unemployment rate could rise to beyond 50% as some small businesses may not survive, the chances that all the jobs lost will be created is unlikely.