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Coronavirus: South Africa’s Ramaphosa mounts economic relief efforts

In depth
This article is part of the dossier: Corona Chronicles: 6 April – 10 April

By Xolisa Phillip, in Johannesburg
Posted on Friday, 10 April 2020 10:55

Virus Outbreak South Africa
A South African police officer, right, check a man's papers, as a community activist holds a seized can of hair spray fraudulently sold as hand sanitizer in the densely populated Alexandra township of Johannesburg Monday April 6, 2020. (AP Photo/Jerome Delay)

President Cyril Ramaphosa has extended South Africa’s lockdown by another two weeks, he told the nation during a televised address Thursday evening.

“We cannot relax. We cannot be complacent,” said Ramaphosa, adding, “… if we end the lockdown too abruptly, we risk an uncontrollable resurgence of the disease.”

With nearly 2,000 confirmed cases of COVID-19 ( at the time of this publication), South Africa has been the hardest hit state on the continent. Since the lockdown, however, the rate of new infections is at 4% a day.

The country has documented 19 coronavirus-related deaths, making it the highest mortality rate in Africa. The South African lockdown began at midnight on 26 March.

READ MORE: South Africa in lockdown as Coronavirus cases spike

Executive pay cuts to help workers

In the next three months, President Ramaphosa and the executive members of his administration will take a one-third cut to their salaries, with the proceeds going to the Solidarity Fund.

“We are calling on other public officebearers and executives of large companies to make a similar gesture and to increase the reach of this national effort,” said the president.

Retailer Woolworths has already answered this call without prompting. The Woolworths board, group CEO and senior executive team members will forego up to 30% of their salaries “in recognition of the challenges circumstances,” the company told the market this week.

“The savings arising from this will be used to provide additional financial support to staff who find themselves in extreme hardship as a result of the current crisis,” the company said.

Tiger Brands CEO Noel Doyle told The Africa Report on Thursday evening his company was mulling a similar move.

“We’ve seen other companies where executives have taken salary sacrifices to contribute to workers in their business, who have either lost their jobs or gone on unpaid leave.

“If we get to a position where our workers end up losing out on a paycheque because of this [COVID-19], it would not be right for us to continue to earn at our current levels. You can expect to see us coming to the party,” said Doyle.

READ MORE: Kenyan government agree to pay cuts, curfew imposed as coronavirus cases grow

Force majeure appeal

During his address, President Ramaphosa acknowledged that the South African economy would take a knock as a result of the extended lockdown.

Despite the current tough times, he appealed to large corporates not to invoke force majeures and instead honour current supply and rental agreements.

“Such practice [force majeure] has a domino effect … We must do all we can to ensure the underlying economy continues to function,” the president said.

Ramaphosa and his cabinet have come up with a package of economic relief measures, including a provision of payments from the Unemployment Insurance Fund (UIF) to employees who are unable to go to work.

In total, the UIF has set aside R40bn for this undertaking.

To date, the fund has paid out R356m to South Africans.

Furthermore, the South African government has reprioritised R1.2bn “to provide relief to smallholder farmers and to contribute to the security of food supply.”

READ MORE: Africa needs more health data to improve response to health crises

Unified African response to crisis

In his capacity as chair of the African Union (AU), Ramaphosa has also been liaising with his counterparts in the region about a “co-ordinated continental effort to combat the coronavirus and support our people and our economies,” he revealed.

In its latest Africa Pulse report, the World Bank has forecast that the continent will enter a recession for the first time in 25 years.

Economic powerhouses South Africa, Nigeria and Angola are expected to fair the worst, with their GDPs projected to drop substantially in 2020.

The World Bank released the Africa Pulse report on Thursday. It anticipates that Africa will incur between $37bn-$79bn in production losses as a result of the COVID-19 crisis.

“The immediate measures are important. But … there will be need for … debt relief from bilateral creditors to secure the resources urgently needed to fight COVID-19 and to help manage or maintain macroeconomic stability in the region,” said economist Cesar Calderon, the lead author of the report.

For its part, the World Bank has set aside $160bn in financial support “to help countries protect the poor and vulnerable, support businesses and bolster economic recovery.”

In the meantime, Ramaphosa and his colleagues on the continent have established an AU COVID-19 Relief Fund.

“We have reached out to world leaders, even as they struggle with the pandemic in their countries, to assist the continent with essential medical supplies and to support a comprehensive stimulus package for Africa,” said Ramaphosa .

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