Stop the strict lockdown and open the economy now

South Africa cannot afford to close the economy in the draconian way the government has done so as part of its national lockdown measures.

This is the view of economist Mike Schussler, who was presenting on the impact of COVID-19 on pensions and the South African economy.

Schussler said the local economy was already in a dismal state prior to the coronavirus outbreak and subsequent lockdown.

The lockdown, especially with the government’s very strict measures, will push South Africa further into an economic crisis.

Consumer spending, measured through cash and card payments, has declined by 45% since the lockdown started.

Electricity use in South Africa has also seen a rapid decline to levels last seen during the 2008/9 financial crisis.

Certain sectors, like tourism, transport, retail, entertainment, and restaurants, are particularly hard hit.

Schussler said car sales were already down 29% in March and will probably drop to nearly 0 in April.

Restaurants and hotels which were already struggling before the lockdown have now been barred from doing business.

The same holds for other businesses like clothing stores, hairdressers, and dry-cleaning services.

This translates into an economic crisis which will lead to businesses closing down and many people losing their jobs.

South Africa’s very strict lockdown

Schussler said South Africa’s lockdown is far stricter than most other countries, with some of the current rules downright petty.

He said very few countries closed all non-essential production during lockdown, which raises questions about the government’s decision to do it here.

“Most countries have allowed outside walks, jogging, or walking the dog close to home,” he added.

He said that while most countries put restrictions on shopping, very few banned fast food outlets or alcohol sales.

“South Africa, along with a few other countries, are running the risk of going overboard,” said Schussler.

What should be done now

Schussler suggested measures which could be implemented immediately to help to start economic activity.

Open shops with social distancing guidelines.
Open factories with social distancing guidelines.
Open schools, especially as the disease does not impact children much.
Keep cafes and restaurant closed for another week or two but allow takeaways.
Ask people to wear masks in public.
Public transport should be opened with social distancing rules. Subsidize trips to ensure operators can still make money carrying fewer people.
Encourage companies to stagger their operating hours to help to alleviate congestion on public transport.

Poverty kills

Schussler said it is “unsustainable madness” to keep the weak South African economy closed for much longer.

“The prolonged lockdown means the lives lost will exceed those lost due to COVID-19 is my belief,” he said.

South Africa already has 18% of its population in poverty, and this is set to increase with the extended lockdown.

“TB, malaria and malnutrition are diseases of the poor. 27% of children are stunted and around 7 million people in South Africa went hungry some of the time,” he said.

He added that depression, suicide, and general wellbeing in the form income loss also impacts lives.

“It is not lives versus the economy. It is lives versus lives,” said Schussler.