The Brenthurst Foundation
Strengthening Africa's
economic performance

Identifying one quick win for the government

Running the ANC collective appears a constant tussle between reason and unreason. Nowhere is this trade-off more apparent than when it comes to decisions about allowing international tourism to resume. Yet it is precisely in this area that the government can achieve a quick win

Ray Hartley

Research Director, The Brenthurst Foundation

Greg Mills

Director, The Brenthurst Foundation

News · Published 22 June 2020

Share:

President Cyril Ramaphosa has admitted that mistakes have been made in his government’s effort to curb the spread ofCoronavirus.

This is unsurprising. He heads a government divided on ideology and patchy in its capability.

The consequences of the pandemic are also uncertain, as the contrasting opinions of experts illustrate. Little wonder the President has described the virus ‘as one of the greatest threats to global health in over 100 years’. Hyperbole, perhaps given the scale of death from various wars (over 100 million) and the Spanish flu (50 million) in the last century or so.

But it’s certainly the greatest threat the ANC government has had to face down.

The pandemic has thrown into sharp relief the trade-offs that must be made between actions to get the economy going and limiting the loss of life and illness, where the ANC has vacillated, caught between the urge for statist control and redistribution and the knowledge that this money has to come from somewhere.

The President has also however committed to make amends.

He concedes that ‘The disease, and the measures we have taken to fight it, have caused massive disruption in the lives of our people, bringing our economy to a standstill and threatening the livelihoods of millions.’

What we do know, amidst much uncertainty, is that our economy is on the ropes. According to the National Treasury’s latest estimate, it will decline by 7.1% this year. Manufacturing is particularly hard hit, as is the SMME sector, where ‘current revenues only represent 59% of the pre-lockdown level.’

Coming after a decade of low growth, now ‘substantial fiscal measures are required to ensure stability and avoid a debt crisis’ says the Treasury, which proposes a three-phase response: essentially, preserve, recover and reform. At its core, this requires improving our export competitiveness through turning around low productivity and high government spending on wages, which has squeezed out‘goods and services spend’.

South Africa’s share of global exports has fallen by nearly 40% in the last 30 years, to just 0.5%.

This is not going to make the job of leading a divided collective easy, where some members have been fascinated by the health benefits (or not) of T-shirts and open-toed sandals, others about proselytizing on cigarettes and alcohol, and where there is a suspicion about the global economy which translates into a mindlessly costly mercantilism.

Running the collective appears a constant tussle between reason and unreason.

Nowhere is this trade-off more apparent than when it comes to decisions about allowing international tourism to resume. Yet its precisely in this area that the government can achieve a quick win to preserve some activity, set us on the path to recovery and gain a bigger share of exports -- since tourism is essentially an ‘export’ earner.

To do so, government will have to be among the first to move in opening up and putting in place the correct protocols. There is no reason why they should not be able to do either.

It is now common cause that the rapid global spread of the pandemic was enabled by international air travel. Travelers from Europe were amongst the first to bring the disease to South Africa just as travelers from Wuhan in China spread the disease to many global cities.

But a lot has changed since this initial round of infections.

For one thing, we know a lot more about Covid-19, how it is spread and who is most vulnerable.

The South African government clearly believes it is now possible to travel safely by air, or it would not have allowed domestic flights for ‘business’ purposes to resume.

If this is the case, why not allow – initially under strict controls – international tourist travel to resume with extensive safety measures in place?

At the heart of this decision would be concern about rescuing a major South African industry that is in a catastrophic state due to the pandemic – tourism.

Like this? Subscribe for free to receive the latest.

Around 100 million jobs have been lost globally in this sector since the lockdown, illustrating how much the global economy depends on incessant travel.

In South Africa, the tourism sector is a massive multiplier for the economy. It employs (or did before the pandemic) some 1.5 million people. It is a crucial foreign exchange earner. It is critical to other massive employers such as restaurants.

According to the World Travel & Tourism Council, tourism contributed no less than R425.8 billion to the economy in 2018. This amounted to 8.6% of all economic activity and made SA the continent’s leader in this sector.

The combination of bush and beach along with its warm people and sunny weather gives South Africa a massive competitive advantage.

Tourism is the perfect labour-absorber for South Africa’s jobs-poor and education-poor economy as it is labour-intensive and job requirements do not include advanced technical skills or, in most cases, tertiary study.

A failure to get tourism going again could thus destroy an industry that is vital to GDP, but also to foreign exchange earnings, employment creation and – indirectly – selling the country to potential investors as a great place to work, operate and live.

As the government stumbles its way out of the crisis, the danger is that other regions in Africa and elsewhere deal with Covid faster than we do.Clients holding vouchers require options to use them, especially during the mid-August to September booking window, crucial to the southern hemisphere’s hot Christmas break.

Globally it seems that those countries that recover quickly will be those that develop asystem of interlocking safe zones, or travel bubbles. The better the record at managing the pandemic, and having a plan for tourists, the more likely the chance of attracting international visitors. The alternative is a race to the bottom in pricing and subsidies to fill hotel and planes and compete for the shrinking tourist buck.

As these competitors for visitors begin to open up to travel, it would be tragic if South Africa allowed them months in which to soak up forward bookings and make future reopening more difficult.

The risks will have to be managed, not ignored. And neither is it time for policy experimentation, or ideological gesturing, of opening up first to the BRICS countries, not least since they are among the worst afflicted.

One economist put it succinctly: ‘Open up too quickly and you could be back in the doodoo again.’ That wouldn’t be good, especially since our airline industry is still recovering from the last Dudu it found itself in. That particular affliction was of the Myeni variety.

Opening up has its dangers, but these should not be overstated now that there are clear measures which can be taken to mitigate the spread of the virus that we are now familiar with. It will surely involve inconveniences, just as 9/11 introduced a range of new measures that we have learnt to live with. Some things will change forever, just as thepandemic has caused us to change our patterns of behaviour and interaction. Business communications, for one, have been leapfrogged into the future.

When this initial spread occurred, there was little testing, very few people wearing masks and a low rate of use of sanitizers and other cleaning methods for surfaces.

Other countries have already taken decisive action to keep airlines alive and aviation going, even in the midst of high levels of Covid transmission. This has been enabled by smart protocols around the use of masks and disinfectant, queue management and temperature monitoring, and careful tracing. This has been relatively easy to implement in an industry where safety and security is already at a high standard.

It cannot be that travel by taxi and bus does not carry the same risk as travel by aircraft. Leadership requires that we back our ability to manage the crisis, rather than run away from its difficult decisions.

Air flights are about far more than just tourists. It’s about facilitating freight too, and the flow of business-people – and the capital and skills they ply which results in all the things that make economies trade, grow and create jobs.

The public narrative on international flights has been ghostly. None of the acronym soup bodies charged with promoting SA tourism have apparently been able to convince the ANC collective to change its mind. Then again, changing the minds of government requires sustained superhuman effort it seems, more than sporadic cosy political connections.

As a result, we remain locked down and effectively locked out as the world opens up.

Make a tough decision, Mr President, and start to get us out of this rut.

This article first appeared in the Daily Maverick

Topics:

SAA

Share this article:


Previous:
Why we must open air travel - Dr Greg Mills on CapeTalk


Next up:
Will you have to fill Eskom’s R30bn Covid hole?

The Brenthurst Foundation

Strengthening Africa's
economic performance

Quick links

Contact us →

Meet our team →

See our expertise →

Connect with us:


Subscribe →

Copyright © 2020 The Brenthurst Foundation · Website by Entle