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South African business leaders lauded the government’s plan to substantially ease a nationwide lockdown that’s crippled the economy, even as the number of the coronavirus cases grows exponentially.

An additional 8 million people will be allowed to return to work when the national disease-alert level drops one notch from June 1, President Cyril Ramaphosa announced on Sunday night. His administration abandoned previous plans to maintain more stringent restrictions in several cities and towns hardest hit by the disease, but cautioned it’s still an option.

Like other African nations including Nigeria and Ghana, South Africa is relaxing its rules when cases are still on an upward trajectory — a third of its 22,583 infections were diagnosed in the past week alone. But with job losses and business closures skyrocketing and the central bank anticipating a 7% economic contraction this year, Ramaphosa acknowledged that maintaining the lockdown had become unsustainable.

“We believe that the decision announced by the president is best for the country given where we find ourselves now,” Sipho Pityana, the president of lobby group Business Unity South Africa, said in a statement. “It is time for many of us to return to work, but to do so in as safe way as possible.”

Rational Analysis

Africa’s most-industrialized economy went into lockdown on March 27, with only grocers, pharmacies and suppliers of essential services allowed to keep operating. The rules were relaxed May 1, but many businesses have remained partially or completely shut.

While the government had previously been accused of taking arbitrary decisions, its response now appears to be based on a rational analysis of the available options to protect the economy and fight the pandemic, said Busi Mavuso, chief executive officer of lobby group Business Leadership South Africa.

Ramaphosa has “shown great leadership in resetting the course of government’s response when it has become clear that it is needed,” she said in her weekly newsletter. “The shift to level three next week is important and welcome. It will allow more of the economy to reopen and for people to earn a living.”

Under the new rules, limited alcohol sales for home use will be allowed to resume, while a night-time curfew and a restriction on when people can exercise will be dropped. Tobacco sales will remain banned because of the health risks associated with smoking. Eat-in restaurants, bars, sporting venues, places of worship and conference centers will also be barred from reopening.

Alcohol Sales

Wine and spirits maker Distell Group Holdings Ltd. expressed concern that only a limited number of alcohol outlets will be allowed to resume trading and that curtailing their opening hours times could result in overcrowding.

The industry is in talks with government about allowing smaller bars and counter-service outlets to be converted into alcohol collection points to increase ease of access, and wants normal trading hours to resume, Richard Rushton, the company’s chief executive officer, said in an interview.

While the reopening of the economy is welcome, the announcement was six weeks overdue, said John Steenhuisen, the acting leader of the main opposition Democratic Alliance.

“There was no rational justification to extend the hard lockdown beyond the initial three weeks, and this extension has now caused irreparable damage to our economy,” he said. “The resulting hardship and suffering –- and ultimately, the premature deaths of South African citizens due to this” could have been avoided, he said.

Bloomberg | Michael Cohen |

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