‘Open economy or face disaster’

The economy needs to reopen fully if SA is to avoid a jobs bloodbath of two-million jobs losses in 2020.

This is the view of Efficient Group chief economist Dawie Roodt, who said he believed the lockdown should be lifted as soon as possible to save businesses and, ultimately, jobs.

Roodt was speaking at the Nelson Mandela Bay Business Chamber annual general meeting, which was hosted on a digital platform on Wednesday afternoon.

He said he would not argue against the lockdown measures,  but he believed there would be an increase in poverty, crime and unemployment.

“Wealth corresponds with everything that is good — health, education and infrastructure.

“Bad things correlate with poverty, crime and unemployment.

“And I am afraid the measures that have been put in place to contain the virus will have a dramatic and huge effect on the economy,” Roodt said.

He estimated  the national economy would contract by at least 10%,  while some economists estimate a 20% contraction.

“If that happens, many thousands of businesses will close down. That will mean more than tw- million people likely to lose their jobs in 2020.

“This is not only affecting private businesses but the state revenue is likely to be R300bn less because of the slowdown in economic activities.”

He said he was initially in support of the lockdown, but his approach would have been the opposite on how it had been implemented.

“I would have done exactly the same.

“We did not know much about the virus and we did not understand the economy, but we have learnt a lot and I think we should have opened up the economy completely except for certain areas, instead of closing everything except for certain areas.

“Let us protect the vulnerable and enforce those social distancing regulations but we have to open up the economy as soon as possible.”

Roodt said his advice was for people to know and understand the industry they were in, identify the risks in that industry and work on managing those risks.

“Remain cash-flow positive, it is your responsibility as a business to make sure you can open your doors again.

“Some people will lose jobs but it is better to keep business open so you can re-employ people later again,” Roodt said.

Business chamber president Dr Andrew Muir said everything had fundamentally changed, and as a business community they  needed to reset their priorities.

He said that up until now the chamber’s focus had been on dealing with the immediate Covid-19 crisis, but this needed to  shift towards the economic crisis.

“This virus has caused a major revolution and has completely changed the world as we know it, causing human behaviour to be permanently altered.”

Muir anticipates the economic repercussions for the Bay economy will be severe because the businesses have become completely  different from what they were a couple of weeks ago.

“This, in turn, has created the ideal opportunity for us to create a clean slate and start over. To reset our businesses, we will need to reimagine, reinvent and restore, so as to ensure our long-term survival,” Muir said.

He said some sectors would fall away, new ones would emerge,and  others would need to reinvent themselves.

The meeting was also an opportunity to welcome additions to the chamber’s board of directors: Dave Coffey, Hannes de Waal, Quinton Uren and Jacques Vermuelen.