When fighting Covid-19, level 4 restrictions prove flexibility is not weakness

29 April 2020

In wartime, there are inevitable mistakes – over reactions by officials, excessive use of police force, the proliferation of regulations, and a burgeoning army of officials who draw up new laws to be obeyed for the greater good -- all intended to help win the war, and all regarded as therefore unchallengeable.

Individual liberty is often the first casualty after Truth. Citizens are placed under curfew, confined to their homes between certain hours. They must go to shelters when ordered. They need permits to travel, some jobs are reserved occupations – like the police. In short, everything is subsumed to the interests of winning the war.

Of course, we are not at war, but we are under attack by an enemy we cannot see. That is why we should rein in our worst fears, control our imaginations, and assume the best in others, not the worst.

Never before have we all needed to keep cool heads, and to use every rational faculty our brains possess, so as not to take decisions we may later regret.

That is why we wholeheartedly welcome the request by the government for us to comment and make suggestions on the full range of the economic impacts posed by the Level 4 Lockdown rules, before they are implemented from May 1, 2020.

This risk-adjusted strategy is impressive. Informed minds have obviously been applied. There are few discernable signs of an ideological approach. Commendable above all is the recognition that the private, wealth-and- job-creating sector of the economy must not be strangled to the point beyond which it cannot breathe or pay taxes to the Treasury.

The Ship of State, barely afloat before Covid-19 struck, is still sailing. But it is moving through a storm that will eventually pass. While the stages by which we can reach calmer waters are mapped out, we should realize that they cannot be to everyone’s satisfaction.

The best advice the Chamber can give is for the authorities to listen to those who represent -- and know best -- their own economic sector.  Wise examples are the lifting of some restrictions on mining and the sale of tobacco. In both cases the draconian bans initially imposed have been relaxed if not lifted completely in response to sensible lobbying.

Another positive note is the recognition that flexibility is not weakness – a good thing since it is the opposite of the tendency among some in government to exert control over every aspect of our lives. Where this dark instinct has triumphed, is to be found in our negative responses to aspects of the Level-4 rules. Foremost is the decision to re-impose the ban on the export of wine from the vineyards of the Western Cape.

These exports provide foreign exchange. Banning them hurts the Treasury. The world wine market is fiercely competitive. Withdrawing from it will evoke a cheer from our competitors in Argentina, Chile, Australia and New Zealand. Rather than shooting ourselves in the foot, it makes more sense to allow wine containers to leave Cape Town for customers who will pay in hard currency. It is perfectly possible to impose sensible health and safety rules to do so.

The risk that gangsters may attempt to hijack wine tankers is something to guard against, if necessary, through private security measures.

Overall, it seems that the authorities believe that the lockdown will only be lifted when a vaccine is available—at the earliest a year in the future.  A lot will happen between now and then – treatment options could improve, the epidemic we all fear may not happen. Regulations must be constantly adjusted to evolving circumstances.

There remains over everything the issue of how swiftly available funds reach their targets. So far, the process has been neither swift nor smooth. Ironing out these wrinkles must get top priority.

From a macroeconomic perspective, the biggest threat to the economy is not the Covid-19 storm (which will pass), but the fact that the country is bankrupt. The IMF bailout is still the elephant in the room.  The minds that drew up the risk-adjusted strategy behind Level-4 options have done a good job. Confronting the elephant in the room should be their next task.

Issued by Dean Le Grange, Media and Digital Co-ordinator, Cape Chamber of Commerce and Industry, 29 April 2020