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Government ineffective in protecting the economy during the Covid-19 lockdown – BLSA


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Government ineffective in protecting the economy during the Covid-19 lockdown – BLSA

20th April 2020

By: Rebecca Campbell
Creamer Media Senior Deputy Editor


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The South African government had dithered in its economic response to the crisis created by the Covid-19 pandemic. So charged Business Leadership South Africa CEO Busi Mavuso in her April 20 newsletter.

“I hope this week will change that, but we have already lost much time,” she wrote. “When we come to the end of the Covid-19 crisis we will have a substantially diminished economy. We will need decisive economic leadership to rebuild it. It will be in the worst state we have seen since democracy [in 1994]. This will force us to think radically and we are going to have to start afresh.”


She highlighted that both formal and informal enterprises, numbering in the tens of thousands, had had their revenues completely cut off by the national lockdown (to counter the spread of Covid-19). As a consequence, they had had no choice but to lay off their workers.

“The one salary support scheme the government has offered so far, the UIF’s TERS [Unemployment Insurance Fund’s Temporary Employer-Employee Relief] scheme, is so bureaucratic that companies that have tried to access it have given up, and it doesn’t touch the informal sector,” she warned. “The queues for food parcels in the townships are a devastating indicator of the real on-the-ground impact.”


She called on the Cabinet to focus on the country’s growing and urgent economic crisis, which threatened “humanitarian catastrophe”. South African data was not yet available, but overseas data did give a clear indication of the likely scale of the economic damage the country would suffer. Thus, the UK’s gross domestic product in the second quarter was expected to drop by 35%, while the US employment rate had jumped from effectively zero a month ago to 17% now. “We should expect our economic decline to be at least on this scale, exacerbated by the already-weak position we were in before the crisis,” she cautioned. 

“We know the many things that must be fixed to sustainably boost the economy: energy security; granting more spectrum for broadband; sorting out policy confusion on mining; reaffirming property rights; and so on,” affirmed Mavuso. “This list is among the ‘structural reforms’ that are needed to increase the capacity of the economy while transforming it from its carbon intense economic model to a more sustainable future.”    


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