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The long road ahead

By Verashni Pillay and Aarti Bhana

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EMOJI NEWS INDICATOR

  1. Covid-19 update: we could unlock Level 3 sooner – DTI
  2. Lockdown fatigue: debates for and against
  3. The scenarios for SA’s economy
  4. The pandemic hastens the demise of already troubled companies

And, your weekly dose of inspiration. ?

So, let’s dive in:

Format

For the audio version of this update, go here:

Note that the podcast with Nickolaus Bauer is taking a slightly different format, and will not reflect the contents below exactly.

For text, keep scrolling

News

▁ ▂ ▄ ▅ ▆ ▇ █ 1. COVID-19 UPDATE: WE COULD UNLOCK LEVEL 3 SOONER – DTI

Latest numbers: 3 May 2020*

230 686 tests conducted
6 336 confirmed positive
2 549 recoveries
123 deaths

Remember when we told you how we were waiting… and waiting for SA’s increase in Covid-19 cases? Well, we are now in the amplification phase, as you can tell from the numbers above. You should brace yourself to see South Africa’s Covid-19 numbers rise until, wait for it, SEPTEMBER. That’s when experts are expecting us to peak. ?

Wednesday and Thursday this week saw around 300 new cases each day. This is a far cry from the days before 16 April (just over two weeks ago!) when our daily growth was only in the double digits – or less. The Health Minister, however, mentioned on Saturday that testing numbers have also reached their highest level in a 24-hour cycle. So, as testing increases, we are bound to see an increase in the average number of cases. ?

The good news though, is that the Department of Trade and Industry (DTI) says if South Africa avoids a ‘sharp increase’ in Covid-19 infections, we could ‘very soon’ shift to Level 3 restrictions. Minister Ebrahim Patel said there is no set duration for the current Level 4, but it all depends on whether South Africa CAN avoid a sharp increase. BUT at this same time, millions of people are returning to work. And as South Africa entered Level 4 on Friday, images circulated of scores of people walking on the promenade in Cape Town, and people flocking to malls. This could spell disaster for our confirmed cases and the healthcare system in the coming weeks, so be careful out there! Let’s be on our best behaviour SA, so we can unlock Level 3! ?

▁ ▂ ▄ ▅ ▆ ▇ █ 2. LOCKDOWN FATIGUE: DEBATES FOR AND AGAINST

Some people are unhappy with certain decisions the government has recently made, as SA moved from full-blown lockdown to a staged easing of restrictions.

Another problem is that Minister Nkosazana Dlamini-Zuma (NDZ), who is at the forefront of explaining the new regulations, has drawn a lot of criticism – fair and unfair. Most South Africans prefer hearing from the president than most of his ministers.

The most unpopular decisions made around the current Level 4 include:

? Reversing the decision to allow cigarette sales after President Cyril Ramaphosa said it would be allowed: NDZ said this was based on public submissions, but those against it are crying foul over the process, and British American Tobacco is threatening court action. Finance Minister Tito Mboweni revealed he argued that sales of alcohol and cigarettes should go ahead – especially given the billions it contributes monthly to our country’s coffers – but lost the argument against his fellow ministers. Those standing for the ban cite health concerns, and further spreading of the virus by those buying singles and rolling their cigarettes.

– Allowing exercise from 6am to 9am only, within a 5km radius of one’s house.

– A curfew that says we must stay at home from 8pm to 5am every day.

– Schools reopening. The Department of Basic Education’s initial announcement called for schools to reopen during Level 4, but this was amended to have a phased reopening which will see Grade 7s and Grade 12s go back on June 1. The rest will have to wait.

For a fuller summary of what you and can’t do under Level 4, check our chart here.

▁ ▂ ▄ ▅ ▆ ▇ █ 3. ECONOMY: SA’s SCENARIOS

First, a correction from last week. We referenced an Economist report in our 26 April 2020 edition, which looked at how countries across the world will have to deal with the issue of debt after the pandemic. We noted they said gross government debt across the developing world will rise from 105% of GDP to 122%, according to the IMF. This should have read the developed world. Our apologies. As you can imagine, those are two very different kinds of economies. The Economist this week revealed a report into the financial strength of emerging economies in the developing world. In good news for Africa, Botswana ranked number 1! They beat out nations like South Korea and Taiwan. The bad news is… SA ranked 47. Ouch. You can read it here.

However, the wheels of South Africa’s economy are slowly beginning to turn again. ?

On Thursday, the National Treasury presented a few scenarios on what might happen to the economy in the coming months. Its findings were based on a research collaboration between the government as well as local and international bodies, including the UN.

This is what they see happening:

– The economy could contract by 5%, even under ‘quick’ recovery
– The economy could shrink by 16%, under a ‘slow’ scenario of prolonged disruption to the economy
– Total salaries and wages could shrink by more than 30% amid the lockdown.

In another scenario, SARS Commissioner Edward Kieswetter announced that South Africa had already experienced a R13 billion revenue shortfall for the first month of the fiscal year, adding that under a ‘lockdown plus’ scenario, tax revenue could fall by almost 15%.

Finance Minister Tito Mboweni is yet to table further fiscal measures to help save the economy.

It doesn’t look good, but considering the circumstances, our situation is not unique. Nouriel Roubini, a US economics professor who has worked for the IMF, the US Federal Reserve, and the World Bank, wrote in The Guardian this week that the entire world is facing a “greater depression” – thanks to 10 pre-existing risks that the pandemic has brought to a head. This ranges from high levels of public debt, to digital disruption.

▁ ▂ ▄ ▅ ▆ ▇ █ 4. COMPANIES GOING UNDER

Roubini’s argument can be extended to companies: the pandemic has only hastened the demise of those already facing major risks. We’ve seen this locally.

▪️ Edcon
The owner of Edgars filed for business rescue after months of struggling to keep the company afloat. The retailer was in a fix pre-corona, but the lockdown and forced closure of many non-essential businesses, like its own – Jet and Edgars, exacerbated its woes. A few weeks ago, the CEO Grant Pattinson admitted that the company did not have enough liquidity to pay its suppliers and that it anticipates further major losses.

P.S. In case you forgot: business rescue is the step before liquidation, and aims to restructure or rehabilitate a business so that staff and those who are owed money can get a better deal than if the whole thing was just shut down.

▪️ SA Express
Another state-owned airline was placed under provisional liquidation this week – this is the step after business rescue efforts fail. The airline was placed under business rescue in February, and had to stop operations amid Covid-19 restrictions. Business rescue practitioners filed for liquidation this week, saying the airline has no prospects of survival after government denied its requests for further bail-out funding. The Johannesburg High Court has given all concerned parties till June to explain why the airline shouldn’t be placed into full liquidation – this would mean a full halt to its operations, and over 600 job losses.

▪️ Associated Media Publishing
The owner of Cosmopolitan, House and Leisure and other magazines also had to permanently close its doors last week, as publishers across the world take a beating with vanishing advertising revenue. The company, which was in existence for nearly four decades, was forced to make this decision as Covid-19 disrupted its production chains and advertising. The closure affects nearly 70 people.

INSPIRATION

Mainstream and social media has raised serious alarm over South Africans’ views on lockdown. But when headlines scream that South Africans have had it and are at breaking point, it’s often based on anecdotal evidence, and the situation is not nearly as binary as that. The majority of South Africans probably support part of government’s efforts, are unhappy with others, and largely indifferent to a lot of the chatter as they just try to get through this difficult time. The data we have reflects this, with three prominent recent surveys, all conducted in April:

▪️ HSRC survey of 19 330 participants show the “majority of people adhered to the regulations” and “empirical data that shows goodwill, solidarity and Ubuntu” are present in dealing with the crisis
▪️ Ipsos survey of 1 000 participants: 84% “agree that a total lockdown was correct” and 78% expected it to be extended
▪️ Rapport/City Press survey of 600 participants: 80% supported the original lockdown extension, and 42% supported it beyond April

Heated debates about how, and if, to end a lockdown are happening around the world, with the New York Times reporting this week that “nations confront the possibility that reopening may be harder than locking down,” and adding that “protests have broken out and frustration has mounted over the way governments have handled, or mishandled, the easing of lockdowns”. Thankfully, our fights over the issue have been confined to social media! ??‍?

Week ahead

– Expect continued news that South Africans are depressed or at breaking point, but remember what the empirical data we have shows us so far. Also expect to see more and more criticism aimed at government, as Ramaphoria 2.0 wears off and critics take aim at missteps from our leaders. It’s a fast-moving situation, so we can have some sympathy as they feel their way in the dark, but it’s important to continue holding power to account.

– British American Tobacco company has given SA’s government till 10 am Monday to reverse its decision to ban the sale of tobacco products, or it will take legal action.

– Some parliamentary committees will be meeting this week to discuss the impact of the Covid-19 on the tourism industry, and what measures the Department is putting in place to mitigate the impact of the crisis.

– The National Treasury and the South African Revenue Services will hold a briefing on the Strategic Plan and Budget.

That’s it from us at The Wrap, a product of https://www.explain.co.za/ – simple news summaries for busy people.

Don’t forget to check out our satirical news too, as you head into your week.
https://www.explain.co.za/not-the-news/

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Till next time, goodbye from Verashni, Nickolaus and Aarti ✌