Governments are well-versed in trying to balance the needs of disparate groups of people and industries. But coronavirus has shifted that into overdrive.
For some countries, it will be like advancing from draughts/checkers to chess – while others face the daunting leap straight to 3D chess, with South Africa one of the most obvious examples.
Battered by a recession and a ratings downgrade to junk by Moody’s, the country really did not need any more bad news.
President Cyril Ramaphosa has been criticised in the past for not being decisive, says Jeanette Marais, chief executive of Momentum Investments and deputy chief executive of Momentum Metropolitan.
But, when it came to coronavirus, “he reacted quickly and firmly, which has brought great comfort to the nation”.
“The government is using information from countries that are ahead of the curve to base its actions and plans on,” she said.
The international feedback has been very positive and she says the general feeling is that “our government has done the right this to implement strict lockdown rules”.
What was imposed?
The restrictions have been described as some of the most severe in the world.
From 27 March, most people were only permitted to leave their home to seek medical care, buy groceries, visit the pharmacy, access banking services, get petrol or collect a social grant.
The sale of alcohol and tobacco was banned, along with most other non-food items.
Those found to be breaking the rule face imprisonment of up to one month or a fine.
The initial lockdown was for 21 days and was extended on 15 April for another two weeks.
From 1 May, some businesses were allowed to reopen, with a third of their employees permitted to return to work.
While alcohol is still on the no-go list, people are now able to buy cigarettes.
Phenomenal results
While it is the most affected country in Africa; as of 5 May, the number of confirmed deaths due to covid-19 in South Africa stands at 138.
This is staggering.
A population of over 57 million people has recorded 138 lives lost.
Compare that with the UK, which has nearly 67 million people and over 29,000 deaths.
Despite the apparent success of the South African strategy compared with most other countries, Marais is keen to stress that her homeland “is not like Europe”.
“Look at the big divide between rich and poor. It is easier for people who are wealthy to stick to the rule and still have a good lifestyle.”
An unintended consequence of shutting down the country to protect the elderly and immuno-compromised has meant young people have been made vulnerable and are exposed to long-term economic strain.
“People in poorer communities have no money to buy food, as they live day-to-day, they live close to one another and their children do not have access to the internet or online schooling.”
That is why “we need to urgently get our economy going again”, Marais adds.
But this is where the chess game really starts. Which pieces can be moved into place without undoing all of the progress achieved during such a strict lockdown?
What next?
“I do think that it is very important to balance the effects of the virus and the impact the lockdown has on the economy,” she says.
And Marais believes that big companies, such as Momentum, can play a huge role to guide and assist the government with ideas on how to keep the economy afloat.
“An example is to allow businesses to operate differently, ensuring they adhere to safety measures, but to be economically viable.
“It is better for a business to get some income than nothing. A restaurant that can no longer open as usual could, instead, provide takeaway meals where customers place orders and pick up food at the given time. Contact with other people can be limited in a similar way that grocery stores currently do.”
She adds: “While it may be unfair on the laggards, the government should encourage those embracing the digital economy, as this tends to facilitate social distancing and encourage a modernisation of our economy as a consequence.”
Industry action
Away from the nationwide impact of coronavirus, Marais and the team at Momentum have been looking to support financial advisers, “as we know that we cannot give personal attention to each client” without them.
“We have recognised that at times like these we need to increase the frequency of our communication. It is not always necessary to impart knowledge, but simply to provide the assurance that the team is monitoring the market and investments are in safe hands.
“We have worked closely with advisers to find ways in which to introduce flexible payment methods across our different product lines, to assist them and their clients to keep up their policy and investment payments while under financial pressure.”
She says that advisers, “now more than ever, have a very important role to play”.
“They are the compass to guide their clients and ensure they make the right decisions, avoiding the kneejerk reaction that the anxiety and uncertainty may cause.”
Pulling investments now “would be the worst action to take, as losses are crystalised”.
“Advisers have to encourage their clients to stay invested and ride out the storm.”
