South Africa loosens lockdown to revive battered economy

President Cyril Ramaphosa. FILE PHOTO | REUTERS 

JOHANNESBURG (Reuters) -

By REUTERS
More by this Author

Summary

• South Africa sought to revive its stuttering economy on Monday with a partial lifting of its coronavirus lockdown, letting people out for work, worship or shopping, and allowing mines and factories to run at full capacity.
• President Cyril Ramaphosa was praised when he ordered a strict lockdown at the end of March, but the measures have battered Africa’s most industrialised economy, which was already in recession before the outbreak.
• South Africa’s central bank expects the economy, which has also been hard hit by the impact of power cuts at crisis-hit state energy firm Eskom, to contract 7 percent this year.

South Africa sought to revive its stuttering economy on Monday with a partial lifting of its coronavirus lockdown, letting people out for work, worship or shopping, and allowing mines and factories to run at full capacity.

President Cyril Ramaphosa was praised when he ordered a strict lockdown at the end of March, but the measures have battered Africa’s most industrialised economy, which was already in recession before the outbreak.

South Africa’s central bank expects the economy, which has also been hard hit by the impact of power cuts at crisis-hit state energy firm Eskom, to contract 7 percent this year.

But moving to “level 3” lockdown so soon has been questioned by some who say it will increase the number of coronavirus cases, which jumped above 30,000 over the weekend.

“We are taking a gradual approach, guided by the advice of our scientists and led by the realities on the ground,” Ramaphosa said in a statement.

The rand rose against the dollar but after midday it had fallen back slightly and was trading just 0.14 percent up.

South Africa has so far had fewer than 700 coronavirus deaths. Many more South Africans, half of whom live below the official poverty line, are at risk from hunger because of the shutdown and industry officials said the outlook remained bleak.

Although schools were ordered to open on Monday for some pupils, unions urged staff to stay away, saying schools were not properly equipped.

The education ministry backed down on Sunday and pupils will now return the week after next. Teachers will come in this week for training and protective gear.

Education Minister Angie Motshekga apologised for the last- minute U-turn at a press conference on Monday.

“The reopening was a real uphill ... We have lost a whole term and we are likely to lose more time because of the virus,” she said.

Hot spot

However, Western Cape province, run by the opposition Democratic Alliance, said its schools would re-open on Monday, because they were appropriately equipped. The province is the main coronavirus hot spot, with two thirds of confirmed cases.

Masked teachers held up placards outside schools in Cape Town’s Bishop Lavis township to protest that decision.

The Marxist opposition Economic Freedom Fighters (EFF) have accused authorities of sacrificing poor workers to the interests of the elite. They and others have also criticised the reopening of churches and other places of worship if they limit to 50 people.

In a hopeful sign, the Absa Purchasing Managers’ Index (PMI), a closely watched indicator of manufacturing activity, showed a slight recovery in May, rising to 50.2 points, from 46.1 points in April.

But Philippa Rodseth, executive director of the Manufacturing Circle, said she expected high demand “first and foremost in medical textiles ... and PPE (personal protective equipment)”, not for other goods.

Restaurants were relieved at being allowed to offer collections and takeaways, instead of just delivery. Eating in remains banned.

“Adding drive-through and collections/takeaway will have a massively positive affect on our business ... and the industry as a whole,” a spokesman for McDonald’s South Africa said, adding that 80 percent of their restaurants will open and about two thirds of staff will return.

For alcoholic drinks shops, which are now allowed to open in limited hours after a total ban, Kurt Moore, head of the South Africa Liquor Brand Owners’ Association, predicted: “There will be an initial spike but it will go back ... to normal”. He said 117,000 jobs had been lost.

Standard Bank, Africa’s largest by assets, said it expected half-year earnings to fall 20 percent on the same period a year ago.