South Africa’s 51% economic collapse – the third worst in the world for the second quarter of 2020 – is due to President Ramaphosa’s lockdown, not to the virus as he would have you believe. His lockdown was one of the world’s longest, hardest, most irrational, most costly, and most unsuccessful. It cost not only 3 million jobs, thousands of businesses, and billions in foregone tax revenue, but lives too. It certainly did not on balance save lives as he would also have you believe.
Ramaphosa’s lockdown has been deeply harmful to South Africa, destroying not only present income but the means to generate future income. South Africa’s economy is its lifeline. Yet he chose to restrict over half of all economic activity for no real benefit. All lockdown really achieved was to give legitimacy to the Disaster Management Act, under cover of which ANC cronies were able to inflate tenders and loot the state.
While staggering, a 51% drop in GDP will come as no surprise to the millions of South Africans whose jobs, livelihoods and businesses have been destroyed, along with their prospects for the future. It should also come as no surprise that the Presidency moved quickly to reassure South Africans that this decrease “reflects the severe impact of the global coronavirus pandemic on the economy”. Ramaphosa wants people to believe that it was the virus, not his lockdown, that collapsed our economy. This is a false narrative and it must be debunked at every opportunity.
Responses to the singular threat of the Covid-19 virus differed markedly across countries. The general pattern shows that the stronger lockdown, the greater the economic fallout. This alone shows that it is not the virus, but the lockdown that damaged economies. And South Africa’s was next-level damaging, with nationwide irrational bans on online commerce, cooked food, alcohol, tobacco, open-toed shoes and the like, most of which restrictions had no bearing on the virus’ rate of transmission.
In response to the self-evident fact that lockdown, not the virus, damaged the economy stands Ramaphosa’s claim that the lockdown was necessary to save lives. Once again, this is false. In fact, the lockdown did little to curb the pandemic, with the virus spreading out of control during level 4 and South Africa posting the fifth highest number of cases in the world during level 3. Globally, there is no clear inverse relationship between lives lost to Covid-19 and the severity of lockdown. On the contrary, in the fullness of time lockdown will cost multiples more lives than it saved, not only due to missed vaccines and postponed treatment for other diseases, but due to the undeniable fact that poverty kills.
Nor did government use the lockdown to prepare hospitals, other than in DA-run Western Cape. Elsewhere, not a single functional field hospital bed had been delivered months into lockdown.
Unforgivably, Ramaphosa ignored the advice of his own scientific advisory council, as well as calls by many groups in society including the Democratic Alliance, to end the hard lockdown and instead opted to prolong it for purely political reasons.
Ramaphosa could have implemented a “smart lockdown” restricting activity only when and where necessary, as the Democratic Alliance suggested. But he opted for the blunt instrument of hard lockdown. He could have trusted and empowered people to weigh up their own risks and act accordingly within a reasonable set of safety rules, as the DA suggested. Instead, he opted for highly centralized, top-down state control. This is the same approach he is taking to our “economic recovery”, which is why there is reason to doubt that the economy will recover to anything better than it was prior to lockdown, when it had already contracted for three consecutive quarters.
In the fullness of time, Ramaphosa’s presidency may prove to have been every bit as damaging as was Zuma’s. His lockdown has set South Africa’s progress back by at least a decade. History will not absolve him, as he claims.
He can issue all the platitudes and plans he likes now, but if he is serious about economic recovery, he needs to end the lockdown now and implement wide-ranging pro-growth reforms so that new jobs and livelihoods can be created. And reform must happen swiftly if he is to alleviate mass suffering and avoid a sovereign debt crisis.
He promised energy reform in his state of the nation address yet bid window 5 is still not open to allow new producers, even as our kneecapped economy is subjected to stage 4 loadshedding. And when eventually it does open, few investors will be interested, given the stringent BEE conditions attached. We should be on bid window 8 by now.
There is similar lack of urgency regarding the auction of spectrum to bring down data costs. Investment-killing NHI is back on the table, even though the pandemic laid bare the dire weaknesses in our state’s ability to deliver healthcare. There is absolutely no talk of relaxing labour legislation for small businesses, even though this is crucial for large-scale job creation. This all needs to change fast.
There will never be a bigger wake-up call than this 51% fall in GDP. It’s now or never for Ramaphosa.