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LOCKDOWN Issue 2020
G U E ST CO LU M N
Crucial co-operation against a COMMON ENEMY The impact of Covid-19 on the economy will be severe, writes Nigel Ward, President of the Durban Chamber of Commerce And Industry, and reopening the economy will take some doing
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irstly, the Durban Chamber of Commerce and Industry applauds President Cyril Ramaphosa, his cabinet and the government for the manner in which they have dealt with this unprecedented crisis and the bold steps taken to combat the Covid-19 pandemic. All leaders, in both the private and public sector, have acknowledged that dealing with the Covid-19 outbreak has been an unenviable task, and we have to recognise the leadership and difficult decisions that have been taken in order to secure the country’s socio-economic future. The proactive action taken has gone a long way in preventing the crippling impact that large scale loss of life would have had on our society and economy, and the socio-economic strain it would have put on
critical infrastructure in the healthcare sector. IMPACT OF COVID-19 The effects of the pandemic on the national economy will be unavoidably severe. Insights from the Organisation for Economic Co-operation and Development (OECD) outlined that as the disease spreads across the world, global gross domestic product (GDP) growth could plummet this year to as low as 1,5%, almost half the 2,9% forecasted prior to the outbreak. South Africa is highly dependent on the global market in terms of trade of goods and services; hence, we believe these losses will indeed find their way into South Africa’s bottom line. In fact, Minister of Finance, Tito Mboweni, has indicated that he expects the South African economy to contract as much as 6,4% with the budget deficit swelling to more than 10% of GDP.
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The Durban Chamber is particularly concerned about the socio-economic impacts of the Covid-19 pandemic and the lockdown which has led to significant losses for KZN’s provincial economy. Several critical sectors have been impacted as a result of
An extended lockdown will impact both our manufacturing and transport/ logistics sectors adversely, as these sectors are interdependent the Covid-19 pandemic. Tourism: The pandemic has brought many businesses in the tourism sector to a complete halt, translating into huge losses in terms of revenue, coinciding, as it does, with a traditionally busy Easter season. This
threatens job security on a large scale. Travel bans and the cancellation of events have contributed to further losses for allied businesses. Manufacturing, Transport And Logistics: Given the inherent complexity of regional and global supply and value chains, an extended lockdown will impact both our manufacturing and transport/logistics sectors adversely, as these sectors are interdependent. These losses will weaken our local economy further. Manufacturing and the transport sector contribute significantly to Durban’s GDP. A recent article published by the World Economic Forum outlined that the emergence of Covid-19 is accelerating the change of global value delivery models with unprecedented consequences for both manufacturers and supply chains. Small Business: SMMEs, spaza shops and informal businesses will be the worst affected given that many are reliant on monthly income to sustain operations, with no access to additional capital to ride out the current outbreak. Notwithstanding the economic stimulus package put together by the government, this tough social reality will bring more pressure to bear on the national purse. Currently, the Durban Chamber is not aware of any businesses shutting down as a direct result of Covid-19 yet, but the possibilities remain high. A number of our members in the eventing and hospitality sectors have already begun restructuring processes and jobs have already been shed, and we expect many more to be lost in 2020. According to The Durban
