SA loosens lockdown to revive economy

Mines and factories can run at full capacity

03 June 2020 | International

Kurt Moore, head of the South Africa Liquor Brand Owners’ Association: "There will be an initial spike but it will go back ... to normal."

South Africa sought to revive its stuttering economy on Monday with a partial lifting of its coronavirus lockdown, letting people out for work, worship or shopping, and allowing mines and factories to run at full capacity.

President Cyril Ramaphosa was praised when he ordered a strict lockdown at the end of March, but the measures have battered Africa's most industrialised economy, which was already in recession before the outbreak.

South Africa's central bank expects the economy, which has also been hard hit by the impact of power cuts at crisis-hit state energy firm Eskom, to contract 7% this year.

But moving to "level 3" lockdown so soon has been questioned by some who say it will increase the number of coronavirus cases, which jumped above 30 000 over the weekend.

"We are taking a gradual approach, guided by the advice of our scientists and led by the realities on the ground," Ramaphosa said in a statement.

The rand rose against the dollar but after midday it had fallen back slightly and was trading just 0.14% up.

South Africa has so far had fewer than 700 coronavirus deaths. Many more South Africans, half of whom live below the official poverty line, are at risk from hunger because of the shutdown and industry officials said the outlook remained bleak.

Although schools were ordered to open on Monday for some pupils, unions urged staff to stay away, saying schools were not properly equipped. The education ministry backed down on Sunday and pupils will now return the week after next. Teachers will come in this week for training and protective gear. Education Minister Angie Motshekga apologised for the last-minute U-turn at a press conference on Monday.

"The reopening was a real uphill ... We have lost a whole term and we are likely to lose more time because of the virus," she said.

In a hopeful sign, the Absa Purchasing Managers' Index (PMI), a closely watched indicator of manufacturing activity, showed a slight recovery in May, rising to 50.2 points, from 46.1 points in April.

But Philippa Rodseth, executive director of the Manufacturing Circle, said she expected high demand "first and foremost in medical textiles ... and PPE (personal protective equipment)", not for other goods.

Restaurants were relieved at being allowed to offer collections and takeaways, instead of just delivery. Eating in remains banned.

"Adding drive-through and collections/takeaway will have a massively positive affect on our business ... and the industry as a whole," a spokesman for McDonald's South Africa said, adding that 80% of their restaurants will open and about two thirds of staff will return.

For alcoholic drinks shops, which are now allowed to open in limited hours after a total ban, Kurt Moore, head of the South Africa Liquor Brand Owners’ Association, predicted: "There will be an initial spike but it will go back ... to normal". He said 117 000 jobs had been lost.

Standard Bank, Africa's largest by assets, said it expected half-year earnings to fall 20% on the same period a year ago.


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