Busisiwe Mavuso, the CEO of Business Leadership SA, says the government is in “disarray” and does not seem to grasp the magnitude of the economic crisis facing the country. It is clearly not tackling this crisis with the urgency it applied to the health crisis, she says. “We’re not seeing it yet.
I don’t think that from where they’re sitting they see what we’re seeing. “She says it is “absolutely frightening” that trade & industry minister Ebrahim Patel, who is in charge of easing lockdown restrictions on business and industry, seems to be “in denial” about the true impact of the lockdown on the economy. Patel said last week that estimates by economists of how much the lockdown has cost the economy were a “thumb suck”.
“It gives the impression that those who are in charge are not on top of the situation and that is deeply concerning,” says Mavuso. “They have to come up with a strategy to turn this economy around. If there is this denialism it is going to fundamentally impact what we end up with. “In recent addresses to the nation, President Cyril Ramaphosa has been “very clear that our economic strategy is going to have to accelerate structural reforms, that we’re going to have to overhaul our state-owned enterprises [SOEs] and promote localisation and industrialisation”.
She says Patel’s statement does not reflect the same sense of urgency at all. “The underlying tone of the president’s message is that something radical is going to have to be done. By suggesting the situation is actually not all that bad, the minister is undermining that which the president seeks to do,” says Mavuso.
Other examples of ministers undermining the president’s message include public enterprises minister Pravin Gordhan’s refusal to let go of SAA. “The president talks about overhauling SOEs. What Gordhan is doing with SAA is definitely not overhauling. “Minister of co-operative governance & traditional affairs Nkosazana Dlamini Zuma’s “contradiction” of Ramaphosa’s statement that the ban on cigarettes would be lifted in level 4 of the lockdown is another.
“This is actually a government in disarray,” says Mavuso. “They are clearly not looking at the same compass. In a time of crisis the last thing we need is a government pulling in different directions. We are looking to this government for leadership and direction but they can’t even agree about how urgent our situation is.
“I don’t see us employing the same radicalness [as the health measures] when it comes to the economy. “You see this in how rigid the level 4 approach is. Everything they’re putting in place is still hamstringing the economy. We have a lot of businesses in the small, medium and micro enterprises sector telling us they don’t know if they’ll be able to press the restart button after all this is said and done.
“The level 4 regulations reflect a trivialising of the situation by the government and a failure to realise what is at stake, she says. “It means we’re not doing the minimum that we should be doing. “We could have looked at opening up the economy in terms of level 4 in its entirety, putting in place interventions employers would have to observe to ensure the safety of their people is put first, rather than doing this 30% of people going back to work and not allowing people to access all goods in shops that are now open. “She says there are too many illogical regulations, too much red tape and rigidity. “It’s going to take much longer to restore consumer confidence at this rate, and it is consumer confidence that will turn this economy. They have to be able to buy the goods and services they want if we want to see GDP growth.
“They’re not going to be flocking to the shops while the situation is as it is, and while there is this lack of clarity and disarray that you see with one minister talking left and the other one walking right, or with the president talking left and his ministers walking right. That doesn’t help the situation at all and it’s a conversation the president is going to have to have with his ministers.
“She says the priority of level 4 regulations should be to ensure that as many businesses and industries get back to full production as quickly as possible while observing necessary health protocols. This is far from evident in regulations limiting e-commerce – “which doesn’t make sense at all” – and continuing the ban on cigarettes and alcohol.
“Why the government would insist on keeping these industries in lockdown doesn’t make any sense when lifting the ban would be good for the economy and wouldn’t change anything on the health front. “She says SA needs to be “a bit bolder” than other countries in opening up the economy. It doesn’t have the same fiscal “cushion” as these countries because its economy was already in a state of disaster before the lockdown began.
She is confident that the close partnership between the government and business in fighting the pandemic will be maintained in dealing with the economic crisis. She admits that when companies challenge the government in court, as British American Tobacco did before withdrawing its case, it “strains the relationship”, “but this doesn’t mean we are not going to call government out if we think they’re wrong”.
“Business is going to challenge government on some of the rigidities we are seeing in the level 4 lockdown . we’re going to ensure that government rethinks some of the things it is putting in place if we think they’re not in the best interests of the economy. “All of us have a vested interest in ensuring that the economy turns the corner. If the economy collapses then businesses collapse. And then the government collapses, because the government gets its money from businesses.”
This article was first published in the Sunday Times.