From 1 May, smokers will be happy to know that they can
light up once again, and some businesses will be allowed to operate, under
specific conditions, as government gradually begins to lift the coronavirus
lockdown. 

In an address to the nation on Thursday, the president
said that while there has been progress in limiting the spread of the Covid-19,
the lockdown cannot continue indefinitely.

It was instituted on 26 March. Several businesses, not
deemed essential services, have had to close temporarily, leading to a loss of
income for many South Africans.

The Reserve Bank has projected that the impact of the
Covid-19 crisis would see SA’s economy contract by 6.1%. Ratings agency Moody’s
projects a 2.5% contraction and the International monetary fund (IMF) a 5.8%
contraction.

A leaked draft document from the presidency’s office on the
risk-adjusted approach to lifting restrictions, warned that the longer the
lockdown was extended, the harsher the economic impact would be. It showed that
an  extended lockdown would lead to high
levels of retrenchments
in the tourism, creative (arts, music and film), as
well as the construction and aviation industries.

On Tuesday, Ramaphosa announced a historic R500 billion
coronavirus support package in an effort to provide relief to vulnerable South
Africans.

But while some hailed the stimulus plan, there were concerns
over how it would be funded and the resultant strain on the economy and tax revenue,
said Rand Merchant Bank analyst Matete Thulare. 

“The truth is we have had one of the strongest and most
stringent lockdowns that we have seen worldwide. Obviously, that has come at
the expense of economic activity,” he said.

“I think we need to make sure that as much as we open
up the economy in gradual phases, we must make sure we do not have long-term
stress on the economy,” said Thulare. 

In his address on Thursday, Ramaphosa acknowledged the need
to resume economic activity for the benefit of South Africans. “Our people
need to eat. They need to earn a living. Companies need to be able to produce
and to trade. They need to generate revenue and keep their employees in
employment,” he said.

Ramaphosa said an uncontrolled lifting of restrictions would
result in a massive resurgence of infections – which have to date risen to 3
953 confirmed cases with 75 deaths – and potentially require a second hard
lockdown.

For this reason, a risk-adjusted strategy would be adopted
to lift restrictions. Ramaphosa described it as a “deliberate and cautious
approach” – in which there would be five coronavirus levels. These levels would
be applied nationally, at provincial level as well as districts and metros, and
are based on the level of transmission.

According to the president the system will work as follows:

  • At
    level 5, drastic measures are to be taken to contain the spread of the virus.
    Only essential services are allowed to operate.
  • At
    level 4, some activity can be allowed to resume, subject to extreme
    precautions. 
  • At
    level 3, there will be an easing of some restrictions including work and
    social activities. 
  • At
    level 2, there will be further easing of restrictions. Physical
    distancing and restrictions on some leisure and social activities will
    still be required.
  • At
    level 1, most normal activity can resume, with precautions and health
    guidelines followed at all times.
  • South Africa is currently at level 5, and from 1 May we will
    move to level 4.

    Buying time?

    Chief economist at econometrix Dr Azar Jammine was not
    convinced by the new measures announced by the president, describing them as
    “vague”.

    “I almost get the impression they are still not quite
    sure what to allow and what not to allow,” said Jammine.

    Jammine said there was not enough detail given by the
    president, and that it seemed as though he was buying time. 

    According to a draft document detailing the different
    levels, at level 4 food retail stores are allowed to sell a full line of
    their products. Open cast mines may operate at full capacity and other mines
    only at 50% capacity. Formal waste recycling and fibre optic and IT services
    are also among those which can operate.

    The president said at this stage borders will remain closed
    and no international travel will be allowed, except for the repatriation
    of South African nationals and foreign citizens. No travel will be allowed
    between provinces, except for the transportation of goods and exceptional circumstances
    such as funerals, Ramaphosa said.  

    The sale of cigarettes will be allowed. Additional
    categories of goods that may be sold will be clarified by relevant ministers.

    Going forward, the National Coronavirus Command Council will
    determine the alert level based on evidence of the infection rate and the
    capacity of the health system to provide care. 

    Breakdown by sector

    Different sectors have been examined in terms of the risk of
    transmission, the impact of the lockdown on the sector and livelihoods and the
    economic contribution of the sector. The relevant ministers will hold a
    briefing on the classification of different industries and industry bodies may
    also be allowed to make submissions before new regulations are gazetted,
    Ramaphosa said.

    Ramaphosa has said that sectors or businesses which require
    large numbers of people gathered together in small spaces for long periods of
    time are not allowed to operate. These include hotels and sit-in restaurants,
    bars and shebeens, conference and convention centres, sporting events, cinemas,
    theatres and concerts, as well as religious and social gatherings.

    The president has also advised industries to encourage
    employees to work from home. Several measures will be instituted to ensure
    workplaces have the health protocols in place to screen employees for symptoms
    and to ensure hygiene is maintained.

    On Friday, Finance Minister Tito Mboweni will be among the
    economic cluster ministers who will brief the nation. Mboweni is expected to unpack
    the funding of the R500 billion support package announced by Ramaphosa on
    Tuesday. 

    Ramaphosa previously announced that an amount of R130
    billion will be reprioritised within the national budget. R200 billion is to be
    provided from a loan guarantee scheme and the remaining R170 billion would be
    sourced from Covid-19 support loans from international financial institutions,
    global partners and local sources such as the Unemployment Insurance Fund.

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