Citizen Reporter
3 minute read
26 Apr 2020
8:51 am

The coronavirus pandemic presents an opportunity to correct the wrongs of Codesa

Citizen Reporter

Covid-19’s impact and subsequent aftermath will require a shift from an economic standpoint.

Hawkers sell outside Palm Springs Mall south of Johannesburg, 15 April 2020. City of Johannesburg issued permits to informal food traders following the amendment of Covid-19 lockdown regulations. Picture; Nigel Sibanda

From a South African perspective, there has been but a single life-changing socio-economic crisis in the past century that has had the kind of legacy which the coronavirus is believed will have, and that is the taunting legacy of apartheid.

With this in mind, Covid-19’s impact and subsequent aftermath will require a shift – a rebalancing of sorts, particularly from an economic standpoint.

The devastation brought on by the coronavirus outbreak is nothing short of a global tragedy on human lives. Emerging markets and economies such as our own have endured the brunt of asymmetrical pressure on our respective economies, leaving us no option but to explore practical measures to reset our economy.

The first and arguably most crucial step in effectively resetting our economy is to get people back into economic activity. Resuming economic activity, in the context of a public health system capable of detecting and responding to new cases, something the South African government must be lauded for, is crucial in restarting our economy.

Although considered a leading emerging economy on the African continent, globally we are a developing country and, realistically, we face the same socio-economic challenges as other emerging markets in our region. This position means we need to ensure that we are not left behind when the global economy recovers.

The South African government’s unprecedented R500 billion Covid-19 economic stimulus package to mitigate the desolation of the pandemic is similar to stimulus packages already effected by developed countries such as the United States, Germany and the United Kingdom.

President’s Cyril Ramaphosa’s interventions, specifically the R100 billion that will be set aside to protect and create jobs and the planned R70 billion in tax relief measures will garner the necessary preservation of entrepreneurs.

However, I believe that more strategic tactics in leveraging these interventions to make the SMME sector the bedrock of the South African economy are more pertinent. If there is one thing this pandemic has exposed, it is the basic need to transform our economy from a labour-focused one to being SMME oriented.

As a labour-intense economy, days of non-activity, limited capacity and production have further cornered what was already an imprisoned economy in recession.

The constraints on key sectors such as mining, textile, and manufacturing by the coronavirus pandemic has meant that our economy was never positioned to adequately adapt to the complete or partial shutdown.

This setting makes an economy structured on the proliferation of SMMEs that are catalysed to absorb and create employment at a similar scale to the major sectors of this country a mandate that we should undertake as a country. If we can build our SMMEs to operate at this level of operational capacity and build the sector to be a substantial GDP contributor, then we could genuinely be on a recovery path towards creating a level playing field for businesses in a post-pandemic world.

Even though no one has been spared from the carnage of the coronavirus pandemic, the reality is it’s been the small to medium-sized business in specific industries that have demonstrated the agility to continue operating within the regulations of the lockdown, even by means of implementing frameworks such as digitising their services or having their employees work from home.

In contrast, the larger labour-intense sectors have been hit the hardest, with no doubt of pending retrenchments looming to further deepen economic woes. Entrepreneurship at large scale and exceptional growth of our SMME sector is only one way of accomplishing a resilient economy.

The way we choose to emerge from the economic devastation of the coronavirus presents an opportunity for us to address the mistakes of the Codesa negotiations, which focused so much on political mechanisms of transitioning political leadership while neglecting the radical economic transformation needed by our people, then and now.

Zungu is chief executive of Pacinamix

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