The PSG Group, which owns companies like Capitec, Curro and private higher education group, Stadio, says South Africa does not have “the luxury to remain in lockdown”.
“I just think we’ve got to go back to a normal cause of action as quickly as possible. We have written a letter to government stating that we don’t have the luxury to remain in lockdown,” said PSG CEO, Piet Mouton, speaking to Fin24 after the release of the group’s financial results on Thursday.
In the letter, the PSG Group Board said it “lies awake at night” thinking about the impact of the current lockdown, because the company has to protect the livelihood of its over 20 000 employees, and it has other financial obligations to honour.
Silence ‘no longer an option’
“To remain quiet during this crisis is unfortunately no longer an option for us and silence will certainly not be of benefit to anyone,” read the letter.
The group said from the various medical opinions it has seen in the media, South Africa has potentially bought enough time to be as ready to end the lockdown. It said the extension of the lockdown, which President Ramaphosa announced on 9 April, effectively keeping most businesses shut for two more weeks than initially anticipated, is causing severe damage to what is left of SA’s fragile economy.
“The longer it takes to come out of the lockdown, the worse it will be going forward for every citizen of South Africa.”
Lives linked to economy
The group noted a system whereby the country moves in and out of lockdown could be an alternative, depending on the number of infections, but argued that this too would have a disastrous effect.
“Please understand us correctly – we are NOT arguing economy over lives. BUT the truth is that lives are inextricably linked to the economy. Our survival and wellbeing depend on whether and how quickly our economy recovers. Our economy is struggling,” said the company in the letter.
PSG said while the president is looking at phased relaxation of the lockdown restrictions, given the realities it faces, SA cannot afford to gradually or slowly revert normal activities. “We therefore publicly request government to carefully consider the extent of further restrictions and the urgency to return to economic activity. We believe South Africa should act much faster in lifting restrictions to rejuvenate the economy.”
Meanwhile, Mouton has said given the possible dire impact of the lockdown and of coronavirus (Covid-19) in general, PSG may be forced to step in to help some of its subsidiaries stay afloat.
The investment holding company is however comfortable with the different scenarios built by its investee on how they might be affected, he said. In most scenarios, PSG companies should be able to respond with their existing budgets.
“You might have low impact, medium impact and high impact. Without naming any of the companies within the group, some of them in certain scenarios may require capital going forward,” said Muton.
PSG’s businesses like Capitec and Curro are at the coalface of the Covid-19, with the former serving many low-income earners who are at higher risk of the projected mass layoffs and retrenchments. Curro was already struggling with elevated bad debts in its high-fee schools in 2019 and stretched household finances as some parents’ income has been affected by lockdown could exacerbate an already challenging situation.