South Africa takes painful first steps towards reopening battered economy

JOHANNESBURG (Reuters) – South Africa took its first shaky steps towards rolling back one of the world’s strictest COVID-19 lockdowns on Friday as it sought to strike a delicate balance between containing the disease and reviving its battered economy.

FILE PHOTO: South African President Cyril Ramaphosa visits the coronavirus disease (COVID-19) treatment facilities at the NASREC Expo Centre in Johannesburg, South Africa April 24, 2020. Jerome Delay/Pool via REUTERS

President Cyril Ramaphosa ordered most citizens to remain indoors and shuttered all but essential businesses five weeks ago as part of a response to the pandemic that has won praise from the World Health Organization.

South Africa has recorded 5,647 cases of the disease and 103 deaths out of a population of 58 million.

With its economy already in a recession before the pandemic, however, and unemployment rampant, the government has been under intense pressure to ease restrictions.

But reopening the economy is proving to be harder than closing it down.

Returning to work, Sizo Henna, owner of the upmarket Blaque Bistro in Johannesburg, knows he is facing a new reality.

“Every time I walked in, there were customers waiting and sitting outside,” the 36-year-old said, reflecting on better times.

His 50-seat boutique restaurant will remain empty for now and prepare food for delivery only in compliance with the authorities’ phased-in easing of restrictions.

He has tied up with Uber’s (UBER.N) food delivery service Uber Eats and hired two drivers of his own. Still, the future worries him.

“Honest truth is it is very difficult to sleep with this problem we have,” he said.

Ramaphosa announced last week that, from May 1, South Africa would implement a flexible system allowing restrictions to be eased or reintroduced based on the disease’s progression.

Final details of the plan were not released until Wednesday however, breeding confusion. And many businesses permitted to operate under the first phase of easing are still weighing whether it is worth doing so.

McDonald’s (MCD.N) South Africa is reopening a limited number of restaurants. Famous Brands (FBRJ.J) said it would trial delivery-only service at its Steers, Wimpy, Debonairs Pizza, Fishaways and Mugg & Bean restaurant chains.

But Nando’s, South Africa’s iconic spicy chicken chain, said late on Thursday it would remain closed during the first phase of lockdown easing.

“Opening for delivery only will lose Nando’s and our franchise partners more money than being closed,” says Nando’s South Africa CEO Mike Cathie.

The new rules allow industries including mining, steel production and clothing retail to gradually ramp up to 50% employment while other forms of manufacturing are limited to 30%.

The aim is to stem the disease’s spread while allowing companies to survive.

But workers in South Africa’s important mining sector are reluctant to return underground, fearing measures are not yet in place to protect them from infection.

And manufacturing executives worry the regulations will undermine the efficiency and scale they require to turn a profit.

“Re-opening to any degree comes with a big uptick in costs,” said Ken Manners, chief executive of SP Metal Forgings, a supplier to South Africa’s auto industry, which itself expects demand to drop by 12% to 15% this year.

Crucially, most of the South African economy, including all but a fraction of retail activity, still must wait for further signs the disease has been contained before they get back to work.

Industry organisations worry many businesses can’t hold out much longer.

“I get calls daily from workers pleading for assistance and members who have lost their businesses and houses,” said Johann Baard, executive director of the South African Apparel Association.

Additional reporting by Sisipho Skweyiya; Editing by Joe Bavier and Chizu Nomiyama

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