*IMPORTANT: This article is based on an extract from a draft government document.

Risk-Adjusted Strategy For Economic Activity

Though the national lockdown has shown early evidence on how it has successfully helped to flatten the curve and limit the spread of Covid-19, there are numerous risks if the lockdown is lifted too quickly or without any strategy.

Below is an excerpt given by government discussing evidence from the 1918 Spanish Influenza with regards to long-run economic consequences:

“On the one hand, NPIs constrain social interactions while they are in place, and thus necessarily depress any type of economic activity that relies on such interactions. On the other hand, because the pandemic itself has severe economic consequences, by reducing the severity of the pandemic, NPIs can mitigate the most severe economic disruptions. While an interruption of economic activity may be inevitable, this interruption can be shorter-lived and less extensive with NPIs in place that solve coordination problems.”

Thus, government wants to implement an Alert System that can adapt to different levels of severity depending on the period:

  • If lockdown regulations are amended to allow some economic activity to resume, it is possible that the infection rate will accelerate and that the virus will resurge. In this scenario, it would be necessary to quickly revert to more stringent restrictions in order to arrest further transmission
  • An “alert system” with four to five levels would allow for flexibility and responsiveness and would reduce the need to amend regulations in future
  • At each level restrictions would be more or less severe, and sectors and companies would know what activity is permitted depending on the level imposed at any time
  • Government would be able to switch between levels with far greater speed and could use mass communications platforms (such as an SMS notification system) to signal this to the public
  • Different levels could be imposed in specific provinces and areas based on the risk of transmission
  • NB: A gradual transition between alert levels can be implemented where necessary
  • Detailed health protocols should be imposed at all levels of alert

President Ramaphosa has introduced level 4 with effect from 1 st May 2020.

Cecil Kilpin | CA(SA) - Accounting & Auditing Specialists >> April 2020 Newsletter


Criteria For Return To Activity

To see whether a sector will gradually resume activity or not, 3 criteria must be checked:

  1. Risk of transmission (including the ease of implementing mitigation measures)
  2. Expected impact on the sector of continued lockdown (including prior vulnerability)
  3. Value of the sector to the economy (e.g. contribution to GDP, multiplier effects, export earnings)
Cecil Kilpin | CA(SA) - Accounting & Auditing Specialists >> April 2020 Newsletter

NB: The criteria themselves are ranked subject to their priority.

Sectors where there is a low risk of transmission, or where it can be easily mitigated, that will also suffer the most from continued lockdown and that contributes a high value to the economy, will be prioritized.

  1. Economic Value at Risk:
    • Sectoral contribution to GDP
    • Employment
    • Export earnings (fx)
    • Prevalence of SMEs and informal sector
    • Linkages to the rest of the economy
    • Is it an enabling industry?
  2. Transmission Risks:
    • Nature of work
    • Profile of workforce
    • Geographic location of workforce
    • Practical mitigation measures
    • Feasibility of mitigation measures
  3. Economic Stress:
    • Not presently operating
    • Facing imminent retrenchment
    • Facing imminent firm closures
    • Facing permanent and irreversible damage
    • Jobs at stake

Industries that return to work first should:

  1. Have acceptably low transmission risk (or be able to attain this through mitigation measures); and
  2. Be of critical value to the economy; or
  3. Be under severe near-term economic stress


Post-Lockdown: General Exclusions

Post the national lockdown, there will be a few restrictions that will stay in place regardless of the level
of alert in any given period:

  • Sit-in restaurants and hotels
  • Bars and shebeens
  • Conference and convention centres
  • Entertainment venues, including cinemas, theatres, and concerts
  • Sporting events
  • Religious, cultural and social gatherings
  • No gatherings of more than 10 people outside of a workplace will be permitted
  • Passengers on all modes of transport must wear a cloth mask to be allowed entry into the vehicle. Hand sanitisers must be made available, and all passengers must sanitise their hands before entering. Public transport vehicles must be sanitised on a daily basis
Cecil Kilpin | CA(SA) - Accounting & Auditing Specialists >> April 2020 Newsletter

The following rules will be imposed across all sectors and alert levels:

  • Industries are encouraged to adopt a work-from-home strategy where possible, and all staff who can work remotely must be allowed to do so
  • Workers above the age of 60, as well as workers with comorbidities identified by the Department of Health should be offered a work-from-home option or allowed to remain on leave with full pay
  • There should be workplace protocols in place that would include disease surveillance and prevention of the spread of infection
  • All employers to screen staff on a daily basis for symptoms of COVID-19, including a symptom check as well as temperature assessment
  • All employees to use a cloth mask especially where social distancing is not possible
  • Work environment to have sanitisers available or hand washing facilities with soap
  • Stringent social distancing measures should be implemented in the workplace

Before any sector resumes activity, the following conditions must be in place:

  • In addition to generally applicable health and safety protocols, each sector must agree upon a COVID-19 prevention and mitigation plan with the Minister of Employment and Labour, the Minister of Health and any other Minister relevant to the sector
  • Individual businesses or workplaces must have COVID-19 risk assessments and plans in place, and must conduct worker education on COVID-19 and protection measures:
    • Identification and protection of vulnerable employees
    • Safe transport of employees
    • Screening of employees on entering the workplace
    • Prevention of viral spread in the workplace:
    • Cleaning of surfaces and shared equipment
    • Good ventilation
    • Managing sick employees
  • Monitoring systems must be in place to (1) ensure compliance with safety protocols and (2) identify infections among employees

If you have any confusion on what will be excluded post the national lockdown, please feel free to contact us.


Alert System: Levels 1-5

Below is a table of the 5 different levels from the Alert System and what restrictions would be implemented depending on the severity level:

Cecil Kilpin | CA(SA) - Accounting & Auditing Specialists >> April 2020 Newsletter


Sincerely,

Cecil Kilpin | CA(SA) - Accounting & Auditing Specialists >>Newsletter Greeting