tralac is monitoring trade-related policy responses to COVID-19

From midnight on Thursday, 26 March 2020, South Africa is in lockdown for 21 days. This announcement was made by President Cyril Ramaphosa in his second address to the nation on COVID-19, on 23 March.[1]

He first addressed the nation on COVID-19 on 15 March, declaring a national state of disaster in terms of the Disaster Management Act.[2] He announced that government is taking ‘urgent and drastic measures to manage the disease, protect the people of our country and reduce the impact of the virus on our society and on our economy.’

In his second address, the President announced a national lockdown for 21 days and outlined more stringent interventions in a comprehensive plan to limit transmission of the virus and to mitigate its economic and social impact. Given South Africa’s very specific economic and social situation, this is not only imperative but also complex and very difficult to manage and implement.

South Africa is particularly vulnerable to this pandemic given its levels of poverty, unemployment and vulnerable employment, as well as the incidence of HIV and tuberculosis (TB). The state of public service institutions raises particular concerns, regarding the capacity to implement the measures announced by the President. Capacity in many government and related institutions has been eroded, especially during the years of state capture. Many state hospitals and primary health care facilities have not been able to cope with the delivery of health care services for a long time. Alongside the state health care institutions, is a private health care sector that offers services comparable to many developed countries. This is a time where cooperation and support across public-private sectors, especially but not only in health care, is absolutely essential. It is true that during times of crisis, extraordinary responses and resourcefulness emerge – we definitely need this now. There are of course already many encouraging and heart-warming responses and initiatives, many from those who themselves are very vulnerable across the economy and society. The COVID-19 pandemic makes the role of those in the private sector and civil society, who can help, particularly important at this time to support efforts by government. Collective action and compliance by all, with measures and restrictions introduced, is essential.

The Minister of Trade, Industry and Competition (MITC), Ebrahim Patel, has provided details of the measures to be implemented to support industry, especially small businesses, and trade.[3] Trade-related measures will impact not only South Africa but also of course our trading partners and especially our neighbours in Africa. South Africa’s logistics, freight forwarding, wholesale and retail distribution services play an extremely important role in the food and essential goods supply chain in southern Africa and further into many other African countries.

List prices for goods essential to the containment of the virus have been introduced by National Treasury as well as flexibilities, to ease certain provisions in the Public Finance Management Act, to speed up procurement processes. Competition law provisions pertaining to cooperation and some concerted practices are suspended, so that cooperation across supply chains, in wholesale, retail and financial services, for example, can facilitate greater efficiencies and access to food, medical supplies and other essential products.

A list of 22 critical products and categories has been drawn up. This includes food products (such as rice, maize meal, milk, canned vegetables and meat), personal care products (including toilet paper, baby formula and nappies), hygiene products (such as disinfectant, hand sanitiser, and cleaning agents), as well as medical supplies (such as surgical masks and gloves). The National Consumer and Competition Commission is to monitor closely to ensure that these products will not be subject to unjustified price increases.

The President announced the closure of 35 of South Africa’s 53 land border posts in his first address to the nation on COVID-19 on 15 March.[4] These are borders posts with our neighbours in the Southern African Customs Union (SACU) and Mozambique. They are not the most important border posts for trade with our neighbours, but are where people cross, mostly to work in South Africa. Minister Patel has emphasised that measures to control the movement of persons will not affect trade in goods with our neighbours. The President announced that measures of ‘surveillance, screening and testing’ at air, sea and land ports of entry will be strengthened. How will they be implemented? They will be very important to ensure the health and safety of customs, immigration, police, veterinary and other officials who manage border posts. Truck drivers and others providing transport and logistics services to make trade possible are also particularly vulnerable.

A very important question to ask is: what happens to informal cross-border trade? We do know that most informal cross-border traders are women, who will now face myriad additional challenges to provide for their families and to care for those who do contract the virus. And what about those who are coming into South Africa – not at border posts – but through what is known to be a very porous border?

The Industrial Development Corporation (IDC), which provides finance and support for industrial development, has announced that it is allocating more than ZAR3 billion to support vulnerable firms. It has also launched a ZAR500 million facility for trade finance to import essential medical products. No other trade measures, such as import tariff reductions on personal protective equipment (PPE) or rebates on inputs required to produce PPE or other essential products, or export restrictions or permit requirements, have yet been announced.[5]

Enterprises essential to the production and distribution of food, basic goods and medical supplies will remain open, and employees responsible for essential functions are exempted from the provisions to be home-bound. Essential staff include those looking after the ill and elderly; those in essential security services; those in human resources, to ensure that wage and salary payments are managed; transportation/delivery of food, medical supplies and other essential goods, including to countries in the Southern African Development Community (SADC); media and broadcasting; and of course government officials, Members of Parliament, Provincial Legislatures, and Municipal Councils who are required to support implementation of COVID-19 related measures. Grocery stores, supermarkets, pharmacies, petrol stations and spaza shops will remain open, and are to ensure safe practices – using sanitisers, cleaning surfaces and practising ‘social distancing’.[6]

Gwede Mantashe, Minister of Mineral Resources and Energy, has indicated that mines will continue producing coal to keep Eskom generating electricity during lockdown. There are of course no guarantees that there will not be loadshedding during lockdown, given the state of South Africa’s energy infrastructure. The impact of loadshedding on South Africa’s capacity to supply essential health care and other services, to produce essential goods, and on households during this time will be very severe. But then, there are many households that do not have access to electricity any way. Just another reason why sorting out South Africa’s energy sector is so important. It is perhaps the most important industrial development intervention that government can implement, but this pandemic is a reminder that reliable, competitively-priced energy is also a fundamental development issue. This pandemic does provide an opportunity for a serious assessment of policy priorities and of the role of government. Let’s take note of the important lessons that COVID-19 brings.

We’ve already seen that global cooperation and support are absolutely essential at this time. It is not only developing and least-developed countries that need assistance from others. The current experience of Italy and Spain, for example, is a very stark reminder that developed countries also need assistance. We cannot ignore the fact that we are inter-connected as communities, as societies, as regions, as the African continent, and of course globally.

For all of us, both now and post-COVID-19, a fundamental recalibration of purpose, values, community and the nature of collective action is required. COVID-19 is a reminder that many 21st century challenges, including climate change, transcend national borders. While national responses are necessary, they are not sufficient. Hopefully COVID-19 will help us to reinvent multilateralism.

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[1] http://www.thepresidency.gov.za/speeches/statement-president-cyril-ramaphosa-escalation-measures-combat-covid-19-epidemic%2C-union

[2]  pdf Disaster Management Act, 2002: Schedule of Regulations related to COVID-19 - 18 March 2020 (442 KB)

[3] https://www.tralac.org/news/article/14466-media-briefing-on-covid-19-remarks-by-minister-of-trade-industry-and-competition-ebrahim-patel.html

[4] http://www.thepresidency.gov.za/press-statements/statement-president-cyril-ramaphosa-measures-combat-covid-19-epidemic

[5] See a related tralacBlog by Talkmore Chidede: https://www.tralac.org/blog/article/14451-covid19-related-export-control-measures-has-south-africa-adopted-the-same-yet.html

[6] The term ‘social distancing’, which we are using at this time, should perhaps be replaced with ‘physical distancing’. Detailed regulations on the management of lockdown have been published in the Government Gazette – available here:  pdf Final lockdown regulations (781 KB)