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Measures to Mitigate the Economic Impact of COVID-19 Outlined

March 25, 2020

The Presidency

During the announcement by president Ramaphosa on the enforcement of a nationwide lockdown to combat the Coronavirus, a number of measures to mitigate the economic impact of the pandemic were outlined.

The presidency has released the statement delivered by president Ramaphosa on 23 March 2020 on the escalation of measures to combat the Coronavirus.

The president announced that, in response to the challenges posed by COVID-19, the National Coronavirus Command Council has decided to enforce a nationwide lockdown for 21 days with effect from midnight on Thursday 26 March until midnight on Thursday 16 April.

The statement points out that the number of confirmed cases in South Africa has increased six-fold in just eight days from 61 cases to 402 cases and government expects this number to continue to rise.

Therefore, “immediate, swift and extraordinary action is required if we are to prevent a human catastrophe of enormous proportions in our country”.

The president voiced concern that a rapid rise in infections “will stretch our health services beyond what we can manage and many people will not be able to access the care they need”.

Everything must consequently be done to reduce the overall number of infections and to delay the spread of infection over a longer period by flattening the curve of infections.

“While this measure will have a considerable impact on people’s livelihoods, on the life of our society and on our economy, the human cost of delaying this action would be far, far greater.”

Other measures not highlighted previously include that those involved in the production, distribution and supply of food and basic goods, essential banking services, the maintenance of power, water and telecommunications services, laboratory services, and the provision of medical and hygiene products will also be exempted from the lockdown; a full list of essential personnel is to be published; provision will be made for essential transport services to continue, including transport for essential staff and for patients who need to be managed elsewhere; the South African National Defence Force to be deployed to support the South African Police Service in ensuring that the measures are implemented and introduction of a public health management programme to increase screening, testing, contact tracing and medical management.

Measures to mitigate the economic impact of the pandemic include:

• the setting up of the Solidarity Fund which South African businesses, organisations and individuals, and members of the international community, can contribute to;
• the development of a safety net to support the informal sector;
• employees that contract the virus at the workplace to be paid via the Compensation Fund;
• the exemption of commercial banks from provisions of the Competition Act to enable them to develop common approaches to debt relief and other necessary measures;
• if necessary, the use of reserves within the UIF system to extend support to workers in small and medium enterprises and other vulnerable firms who are faced with loss of income and whose companies are unable to provide support;
• the South African Revenue Service to speed up the payment of employment tax incentive reimbursements from twice a year to monthly to get cash into the hands of compliant employers as soon as possible;
• tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their pay-as-you-earn liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months and
• the Industrial Development Corporation has put a package together with the trade and industry department of more than R3 billion for industrial funding.

The president also assured South Africans that the “banking system will remain open, the JSE will continue to function, the national payment system will continue to operate and the Reserve Bank and the commercial banks will ensure that bank notes and coins remain available”.