SA needs to prepare for the worst before storm breaks

It is an agonising wait for SA as Covid-19 slowly seeps into the local population. The country’s epidemic curve rose quite steeply in the third week of March, then slowed shortly before the lockdown began. Hopes among some have even risen that SA may be fortunate enough not to be hit too hard or experience the crisis levels seen in the US, Iran and Europe.

SA’s success at containing the imported epidemic has been phenomenal, which accounts for the change in the curve towards the end of March. But health minister Zweli Mkhize has warned that the pattern of the epidemic is changing and the virus has begun to reach the densely populated areas. The numbers so far are low, which it must be assumed is partly to do with the limited testing done so far but also that the virus has not yet gripped.

The reality is that even if the lockdown is wildly successful and the curve is moderated, this virus is such that if it does not get us now it will get us later. Its infectiousness and the absence of human immunity means SA can only delay — not prevent — the outbreak taking hold. This is especially the case as we move into winter. As Mkhize says, it is too early to get comfortable. We can hope for the best, but must plan for the worst.

Leaving aside questions of monetary policy for now, there are three essentials the Treasury must plan for: the procurement of personalprotective equipment; measures to support incomes and the poor; and measures to backstop businesses and keep them going through the crisis.

As the world scrambles for scarce resources, the government hopes its special relationships with China, Cuba and Russia will stand it in good stead in the competition. The Treasury has eased procurement regulations and money has flowed to provinces to buy protective equipment.

While it is the provincial departments of health that are responsible for the procurement, it is clear from watching the crisis in the US unfold that much more coordination between provinces in procuring such equipment will be needed. The capacity of provincial health departments is in most cases weak and the epidemic is clearly more advanced in Gauteng than anywhere else.

By last Friday, equipment was in short supply as many frontline workers protested against the government’s failure to provide them with masks and gloves. The National Education, Health and Allied Workers’ Union (Nehawu), which tried in vain to get the health department’s attention, has lodged court papers, insisting officials and the executive engage with worker representatives. The department is confident that this week will be better than the last, with consignments expected at the weekend. But this will be a continuing battle that requires the government to be on a war footing. As the experiences of New York, northern Italy, Spain and the UK attest, personal protection equipment is the cornerstone of fighting the epidemic.

Second, we need to plan for social welfare and income support. While the lockdown is important to save lives, it will worsen SA’s crisis of poverty and unemployment. Under pressure on debt levels, the Treasury has been slow to commit to a plan of action. In the end though it will have little option but to act, to avert starvation and maintain social order.

Work being done for the presidency is mulling over the options. Among these are proposals to administer the Covid-19 Unemployment Insurance Fund (UIF) benefit through the SA Revenue Service (Sars) rather than through the UIF; the idea of raising a Covid-19 bond; and poverty and food relief, either through topping up existing social grants or the introduction of a new grant aimed at the poorest decile in society.

This week will be critical for decision-making on all of these things if they are to be rolled out by the end of April.

Millions face the prospect of beginning the new month having earned nothing the month before.

Third, there is the much bigger problem of the economy and how to stop businesses going under during the lockdown. While there is some help for small businesses in the Oppenheimer and Rupert loan schemes, and the department of small business, a bigger plan is required for the government to backstop businesses. This would involve the government standing behind new loans made by firms on a large scale, by providing a government guarantee.

It is stating the obvious to say this is not a good time for SA to borrow more. But this is the black swan event of a generation. We have no choice but to act.

MILLIONS FACE THE PROSPECT OF BEGINNING THE NEW MONTH HAVING EARNED NOTHING THE MONTH BEFORE