Lockdown easing: Picking the winners and losers

17 Apr 2020

You can’t impose a nationwide lockdown at the flick of a switch, and you can’t lift one at the flick of a switch either. There are going to be winners and losers as the restrictions are gradually lifted.

Just before the stroke of midnight on 30 April, the lockdown may be relaxed, but as Minister of Cooperative Governance Nkosazana Dlamini-Zuma said on Thursday, 16 April, the “floodgates cannot just open”.

Yet a trickle has already started, and many economic players would like to see it pick up into a faster flow in coming weeks. Some of the players are still treading water in the dam, waiting for the floodgates to open as lost income and revenue gush from their pockets and balance sheets.

Government is clearly not taking chances, and it remains to be seen how the Cabinet will plot the way forward. There must be divisions, and like South Africa’s graphic disparities, they may be thrown into sharp relief by the pandemic. Still, a measured relaxation is no doubt informed by the best scientific and medical advice government has at its disposal. Mortality levels so far seem to indicate the pandemic is relatively contained in South Africa, but it is early days.

This is an ultra-marathon, not a 10-km race, and the finish line is elusive. It is a delicate balancing act and it is not only the Loony Right in the US which is calling for an economic reboot, given the lasting social and also public health damage that will be inflicted by lockdown responses to the pandemic.

There are clearly winners and losers here, and that is where contestation will rear its head in the days ahead. Picking these seems to be based on their relative importance to essential needs and the broader economy, as well as the risk posed. It may also turn out that the “winners” are losers if the pandemic erupts in a certain industry.

For what it’s worth, the relative winners include the mining sector, which was already partly running anyway, and has employee control mechanisms conducive to intensive screening and isolation or hospitalisation if required. It has now been agreed that during the official lockdown – the “hard lockdown” before the “incremental” move to what one supposes will be the “lighter lockdown” versions – the sector can run at 50% capacity.

Mines and Energy Minister Gwede Mantashe said at Thursday’s briefing that “a portion of rehabilitation reserves” could “be used to address the risks of Covid-19”.

Some mines in the platinum and iron ore sectors already are, and coal mines that provide Eskom have been running mostly at full tilt. Yet, the industry has taken a massive hit, with many companies paying wages to workers even when there has been no production, and commodity prices have generally been in free fall because global demand has been killed.

And there are already mining casualties. Business Maverick has obtained a letter sent to unions from Kangra Coal informing them that it has launched a Section 189 process to lay off more than 400 staff and mothball its operations while keeping a handful of managers in place for care and maintenance. It cited among other things the effect that Covid-19 has had on its operations and the markets. It mostly exports its products through Richards Bay.

Mines and Energy Minister Gwede Mantashe said at Thursday’s briefing that “a portion of rehabilitation reserves” could “be used to address the risks of Covid-19”. This is essentially cash put aside by a mining company strictly for environmental and social rehabilitation after a mine is closed. So, rehabilitation funds look set to be among the many piggy banks raided to deal with the economic fallout from the pandemic.

Meanwhile, the Association of Mineworkers and Construction Union (Amcu) made it clear in a statement that it did not feel the health and safety measures being implemented – they include a “rigorous screening and testing programme” – were adequate. It wants a national task team to determine minimum standards for the sector as a whole. Expect legal action to follow.

Other “winners” include the oil refineries, which have the go-ahead to go full steam ahead as the gradual relaxation of the lockdown presumably boosts road travel and hence demand for diesel and petrol at the pumps.

Retailers already permitted to sell “essential goods” have also been given the okay to sell blankets and clothing and some other things, while some call centres can send their staff back to the phones to suffer verbal abuse from irate customers going stir crazy in lockdown.

The ports will also be cleared so there is no backlog when things really get chugging again: goods that have been at sea for weeks and untouched by human hands will not be contaminated by the virus.

Also in the winner category are some skilled tradespeople such as plumbers, who can now buy essential supplies from hardware stores, which can now sell some items to qualified artisans. So if your pipes are blocked and you can afford a plumber, you are lucky.

That leaves a lot of sectors, notably manufacturing, largely in the lurch. As it does the labour-intensive tourism industry, not to mention the producers and retailers of alcohol and tobacco products. An experiment in prohibition ahead of the planned relaxation on cannabis restrictions does not make a lot of sense.

Adults can consume alcohol, tobacco – and even dagga for that matter, depending on your reading of the 2018 Zondo ruling on the matter – at home. And SARS is losing out on sin taxes, but then it is losing out on a lot of taxes these days. Winners here will include bootleggers.

New amendments will likely be made in a week’s time, if not before, depending on how things unfold. The economy may be bottled down, but things are starting to seep through the strainer. The trick is to catch the virus in the straining mechanism as well. BM

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Business Maverick

Mines and Energy Minister Gwede Mantashe said at Thursday’s briefing that “a portion of rehabilitation reserves” could “be used to address the risks of Covid-19”.