The Covid-19 Lockdown Is Dead – The Policy Lockdown Remains

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When he moved South Africa to Alert Level 2, and lifted the psychologically important bans on social visits, interprovincial travel and tobacco and liquor sales, President Cyril Ramaphosa more or less lifted the lockdown.

For those feeling the strain of months of restrictions and enforced idleness – or worse, unemployment and destitution – this was a relief. So, too, his emphasis that, as the health crisis receded, South Africa would need to focus on the daunting task of resuscitating the economy.

‘The task before us,’ the president said, ‘is to apply the same energies with which we have battled this pandemic to the economic recovery effort.’

Just so. When it came to dealing with the public health crisis, the government responded resolutely. Even acknowledging that it gave in to special pleading on such matters as religious services and taxi travel, the malfeasance in procurement, and that observers will be debating whether the actions were optimally effective, it was certainly prepared to act and to accept the damage it incurred. It shut most of the economy down and cracked down hard on the disobedient among us. Police minister Bheki Cele recently said that close to 300 000 people had been arrested for violating lockdown regulations.

The country is expecting a GDP contraction of some 7.2% this year (that is the Treasury’s estimate, and may prove optimistic), and it has been estimated by the recent Coronavirus Rapid Mobile Survey that the country has lost 3 million jobs. The impact of all this on the lives of millions of people will be dire. If ever there was a moment that called for ‘energy’, this is it.

But whether a level of resolve and enthusiasm will be brought to bear on South Africa’s economic circumstances is an open question.

South Africa was hardly an economic success story when the pandemic hit. The depressing situation in which it finds itself was exacerbated by the pandemic, not created by it. Rather, we entered it with the accumulated retardation of years, and in some respects decades, of misguided policies and misgovernance.

South Africa will not achieve the growth that it needs to put it on a more promising economic trajectory unless private business is brought on board, and its contributions valued and incentivised. This has been a chronic failing. Dr Mark Mobius, then of Franklin Templeton Investments, memorably expressed this some years back when he said: ‘They’ve got to make South Africa a much more attractive place for investment… I’m not only talking about foreign investment. I’m talking about local investment.’

Yet South Africa is frequently anything but accommodating to business – often as a direct result of choices made by government. These include onerous racial empowerment demands, restrictive labour market policies and cloying red tape that consumes entrepreneurs’ time and resources and disincentivises business growth. Over the past year, this has been joined by the threat of property seizures through expropriation without compensation – which is not only a uniquely hostile gesture towards investment, but sets a concerning precedent in meddling with the Bill of Rights. To this must be added inefficient and politicised state apparatus, along with corruption and mismanaged state-owned enterprises, the former being tragically on display in the scandal around COVID-19 procurement.

As the small business think tank SBP commented in 2012, ‘South Africa is in the paradoxical position of being both overregulated and undergoverned’.

The government itself has recognised this, at least to some extent, and promised ‘reform’ to address it. In London last year, the president admitted the urgency of doing so, conceding that time was short.

Yet what we have seen is a determination to hold the course that has brought the country to this point. South Africa is to be steered to a ‘state-led’ recovery – although nothing suggests that the state is in any condition to play this role. Indeed, the venality associated with procurement in recent months should raise serious concerns about what will come from a large (state-led) infrastructure build.

The outlook is therefore one of continuity rather than change; there is little energy on the government’s part for the latter. The lockdown may be on the way out, but the country remains – as the IRR has previously argued – in a policy lockdown.

Ultimately, we may look back on this as more devastating than the pandemic and the measures taken to combat it.

Terence Corrigan is a project manager at the IRR, a liberal think tank that promotes economic and political freedom. Go to https://irr.org.za/