Unaltered lockdown doing more harm than good as economic collapse looms


Unaltered lockdown doing more harm than good as economic collapse looms

* 66% of Sakeliga respondents now expect 2020 turnover drop greater than 25% *

It must be said: The lockdown in its current form is doing more harm than good. The amendments to the lockdown regulations announced on 16 April 2020 are insufficient for the resumption of safe business operations and public well-being.

Sakeliga accepts that it is the intention of government to safeguard public health. However, we must now respectfully submit that the current approach is risking precisely that, through its acute effect on material well-being and social stability. Few additional provisions for further safe business conduct were made, while some provisions were even tightened. Even patently harmful prohibitions such as on community neighbourhood watches, regular informal food trading, and e-trade apparently remain in place. It does not have to be so.

Further economic harm with all its deleterious consequences is preventable, while maintaining the same level of public health and even improving it. This would require that we change our regulatory approach away from defining what is allowed, and rather focus on defining what is not allowed.

Sakeliga poll after regulation announcement
In a poll conducted between one and four hours after the announcement today of the lockdown extension regulations, 66% of businesses indicated that they now expect their 2020 turnover to drop by more than 25%. Moreover, 40% indicated that they do not see a way of recuperating their losses. 400 businesses participated in the poll.

Of business that qualified as “essential”, 83% indicated that they experience increased difficulty in obtaining inputs from upstream providers, with 55% indicating severe difficulty. This is an indication of the truly integrated nature of the economy, where all businesses are part of a great value chain that puts food on people’s tables. Difficulties in “non-essential businesses” deeply impact “essential businesses” as well.

Problems with the essential / non-essential distinction
The current distinction between essential and non-essential businesses is only one of many ways in which to deal with public health risk. While intuitive from a policy perspective, its practical effects are now clear: to try and define what is essential and not is to create a maze of uncertainty and delays, which brings its own public health consequences.

Currently, virtually every business activity that is not specifically allowed is prohibited. This is not the hallmark of a society that trusts its businesses and other organisations to find innovative ways of contributing to the public good. It limits our social potential to that of centralised decision-making in command-economy style at a time when we need all hands on-deck.

There is today no lack of goodwill from businesses to voluntarily comply with requests and guidelines, but instead they are faced in practice with an ever-changing, unclear and apparently semi-permanent novel regulatory framework for the economy, however well-meant. It is a mountain that especially small and medium-sized business will not be able to climb. It will obstruct thousands of businesses whose operations pose no additional health risk with prohibitions, paperwork requirements, and policy-lags.

Several organisations and leading thinkers have been proposing alternative approaches and regulations in recent days. Many have great merit.

One particularly attractive alternative is drawing a distinction between high-risk and low-risk business operations. Under such an approach, all businesses could continue as long as they make sure that their operations are adjusted for health risks. Regulators then focus on identifying and defining risky operations which need to be changed, instead of identifying businesses that should be open or closed.

The attractiveness of this approach is that it could boost both public health and social and economic stability. It would also be much easier to understand and support, because the regulatory focus falls on defining what is not allowed, instead of defining what is allowed – as the case should be in a free society.

About Sakeliga
Sakeliga is one of the largest business organisations in South Africa, now representing more than 16 000 businesses, businesspersons and several chambers of commerce. Visit www.sakeliga.co.za/en/covid19 for more information.

Statement issued by Piet le Roux, CEO, Sakeliga.