Frontline Wrap | As Covid-19 batters economy, business leaders call for structural reform

Kingston says there is hope to be had from the fact that South Africans are working shoulder to shoulder to confront both the virus and historical problems that have bedevilled South African society over the past 10 years. 

With that the discussion ends. 

Zungu says SA should not allow the Covid-19 crisis to go to waste. 

Structural reform need to be implemented, he says, across all sectors. 

"We need to get on with it, the heaviest work has only just begun," he adds. 

Viljoen, says Covid-19 may even be a "dress rehearsal" for an even worse virus, with a higher transmission and death rate. 

It is accelerating the move into the new economy, he adds. 

"If we can with this mindset of sacrifice stricture this economy properly' with market-based principles - it will be "tremendously positive" for SA," says Viljoen. 

Kingston says the virus may teach SA compassion, notes that business has launched the Solidarity Fund to help. 

He says South Africans may not like the lockdown rules, but must follow them. 

"We need to become a much more caring and giving society". 

Kingston notes that SA was recently downgraded to junk by Moody's, the last rating agency to still have SA assessed at investment grade. 

In addition, SA was already in a recession before coronavirus struck. 

"The cost of borrowing is going to go up considerably," he said.  

"South Africa is going to be left to its own devices," to some extent, he says, adding SA is going to have to take difficult decisions that it had put off in the past. 

He says SA needs to introduced words such as competitiveness into the country's vocabulary, cannot afford to keep funding struggling state-owned enterprises.  

Continuing on the informal sector, Zungu gives the example of Shisa nyama and car washes in the informal sector. 

These may not be registered, he notes, for various reasons, and would face difficulties in accessing loans, especially from the R200 bn govt-guaranteed bank loans that give announced o Wednesday. 

SMME's, he said, need an injection of between R50 billion and R100 billion in the short term.  

Kingston says that structural reform is more important than ever. 

He says SA needs to explore how the country can start to implement those reforms immediately, not "next year". 

He notes while SA may be affected by the virus for between 12 to 18 months, meaning SA may need to implement structural reforms while the lockdown is still ongoing. 

Viljoen, meanwhile, says that while he welcomes the R500 billion injection announced by Ramaphosa on Wednesday, he fears that parts of the economy may be permanently destroyed if a stringent lockdown continues. 

Zungu says govt should consider shifting some of the compliance in enforcing the lockdown to the private sector. 

The stimulus package, he says, is unprecedented. "I never realised so much money could be found'. 

He says the needs of the SME sector - from restaurants to bed and breakfasts - are huge. Some cannot survive for a month without customers. 

Kingston notes SA has limited supplies of PPE, saying SA needs more facemasks and handsanitizers. 

He says the best-case scenario is a million people will permanently be added to the lists of the unemployed, and the vulnerable need to be protected. 

Speaking of Ramaphosa's R500 billion injection announced on Thursday, he says it is a 'critical injection", but may not be enough. 

"We welcome the R500 billion that has been announced". 

Kingston says Business for South Africa is focussing on addressing the pandemic three phases. The first is the lockdown phase, the second is the progressive easing of restrictions on business, and the the third phase is the progressive recovery post lockdown. 

He notes that while it is easy to voice opinions from the outside, first and foremost sectors of the economy with the lowest possible risk of transmission need to return to work. 

Zungu says the Black Business Council estimates that 500 000 jobs will be lost in informal and small business sectors alone. 

Add to that what is already happening among large banks and large employers, we will be faced with a bloodbath. 

Zungu said is different to fault what Mouton said in his letter. 

He said Mouton raised issues that others would be scared to raise. 

Zungu said the letter found resonance among both black and white businesspeople he spoke to. 

He notes that the president faces only difficult choices. 

"We are at the center of the pandemic," he says, saying SA has likely not reached the peak, adding that the message to flatten the curve must continue. 

Viljoen says he fully supports the letter from PSG's Piet Mouton calling for the lockdown to be eased more quickly. 

"He made the point that you need the economy to be functioning properly to save lives," notes Mouton. 

"I think it is important for the economy to get up and running again." 

Kingston notes that healthcare, economic and social challenges have to be dealt with simultaneously, and argues for pragmatism and realism in addressing the impact of the virus. 

'The fabric of society is under enormous stress," he says, adding SA is on a journey to see how the economy can be returned to full activity. 

Under level 4, he notes, SA will only see a limited number of sectors restarted.  

Seasoned market watcher Piet Viljoen, the founder and chief executive of RECM, says "all sorts of funny things" are happening around the world, such as negative interest rates and negative oil prices. 

"It is not easy to make sense of what's going on he says," adding that it is generally difficult to understand markets. He suggests investors should be less active than normal.

Sandile Zungu, leader of Black Business Council, says the coronavirus will sharpen SA's inequality. 

"Our inequality has a racial character," says Zungu, but says South Africans will be able to equal to the task. 

Martin Kingston, Executive Chairman of Rothschild & Co, and leader of Business for South Africa, starts Friday's Frontline by saying the global lockdown is unprecedented. 

Speaking on Thursday evening in his second address to the nation in two days, Ramaphosa said SA must "avoid a rushed re-opening that could risk a spread, which would need to be followed by another hard lockdown, as has happened in other countries".

"We have to balance the need to resume economic activity with the imperative to contain the virus and save lives."

Some business leaders have started to call for a faster reopening of the economy, which has largely been shut done since the lockdown was implemented in late March. 

"I just think we've got to go back to a normal cause of action as quickly as possible. We have written a letter to government stating that we don't have the luxury to remain in lockdown," said PSG CEO Piet Mouton told Fin24's Londiwe Buthelezi on Thursday after the release of the group's financial results on Thursday.

On Thursday President Cyril Ramaphosa announced R500 billion social and economic package to provide support for the economy and South Africans battered by the nationwide coronavirus lockdown. On Friday, Ramaphosa provided further details about how South Africa would gradually ease the lockdown. 

Ramaphosa announced that, from May 1, SA would have five levels of lockdown. 

Level 5 means that drastic measures are required to contain the spread of the virus to save lives.

Level 4 means that some activity can be allowed to resume subject to extreme precautions required to limit community transmission and outbreaks. 

Level 3 involves the easing of some restrictions, including on work and social activities, to address a high risk of transmission.

Level 2 involves the further easing of restrictions, but the maintenance of physical distancing and restrictions on some leisure and social activities to prevent a resurgence of the virus.

Level 1 means that most normal activity can resume, with precautions and health guidelines followed at all times.