JOHANNESBURG – South Africa’s economy would take a long time to recover from the effect of the 23 weeks of lockdown, but the move to ease restrictions was “good news”, according to economists at the weekend.
President Cyril Ramaphosa over the weekend announced the easing of lockdown restrictions, including the sale of alcohol and tobacco, which would open much of the economy.
“Economic activity will be allowed with the necessary and appropriate stringent health protocols and safety precautions in place,” Ramaphosa said.
He said the government was working together with social partners on an urgent economic recovery programme that places the protection and creation of employment at its centre.
Alert level 2 lockdown means that all restrictions on inter-provincial travel have been lifted, while accommodation, hospitality venues and tours are now permitted to operate.
Restaurants, bars and taverns will also be permitted to operate, and the restrictions on the sale of tobacco was lifted after months of lobbying from the industry.
The suspension of the sale of alcohol was also lifted, while liquor outlets will sell alcohol for off-site consumption from Monday to Thursday, from 9am to 5pm only.
The restrictions on international travel, however, will remain in place.
Anchor Capital’s Nolan Wapenaar said moving to level 2 lockdown was like suddenly taking off the handbrake on a car.
“This means that the damage will be less, but doesn’t mean the economy will recover overnight. We have just only reduced the amount of damage. We are doing damage at a slower pace,” Wapenaar said. “Based on expected gross domestic product (GDP) growth, it’s a good outcome. We’ve got a long road to recovery.”
Wapenaar said the move was most important for restaurants and the hospitality sector, as it was dependent on customers for survival, as well as beer and tobacco manufacturers that contributed significantly to the country’s GDP.
The economy is expected to see its worst contraction in 90 years as a result of the Covid-19 lockdown, with the unemployment rate rising to unprecedented levels.
North West Business School economist Professor Raymond Parsons said the move to level 2 was good news for the country, but economic recovery would nonetheless be slow.
“We should not underestimate the enormous damage done to the economy over the past few months by the lockdown. Despite the gradual relaxation of the lockdown rules, many businesses have closed, never to reopen,” Parsons said.
“South Africa must not expect an immediate resumption of pre-lockdown levels of business activity as the country starts to recover economically.”
The alcohol and the hospitality industries have welcomed the lifting of restrictions, saying it was committed to partner with the government to save businesses and jobs.
South African Liquor Brand Owners Association chief executive Kurt Moore said the industry was looking forward to working across the value chain to ensure the sector was able to make its contribution to the revival of the economy.
“The liquor industry confirmed it is willing to ensure enhanced resources, including funds, people and time, are available to assist the government in dealing with the burden on the public healthcare system,” Moore said.
Restaurants SA chief executive Wendy Alberts said the lockdown had shrunk the size of the restaurant industry.
“We have gone from a R7 billion to a R1bn industry. The future of the industry now rests on the relationship we are going to have with the Department of Tourism to reform the industry,” she said. “We are certainly relieved for the lifting of the ban. It should have happened a long time, as a lot of restaurants have fallen.”
BUSINESS REPORT