๐Ÿ”’ Lives vs livelihoods – banker Martin Kingston crystal clear on SA’s Covid-19 lockdown dilemma

The Covid-19 storm has not yet landed on SA shores. The lockdown created to prepare for the peak of the virus is not without its price, and no one knows how huge that tag is going to be. And while many are calling for the lockdown to end, neither local or international scientists and politicians can predict what the possible devastation could be if the lockdown is prematurely lifted. Banker Martin Kingston of Business for South Africa is firm that Covid-19 must not be reduced to an argument whether lives should be saved or livelihoods protected. – Vanessa Marks

It’s welcome to Martin Kingston (CEO of Rothschild & Co) who I’m glad you were with us earlier because you could hear what one industry is going through and it doesn’t appear as though it’s a heck of a lot that’s required to get this industry going again. Were it not for Mary Slack and her daughter coming in with R100m to keep it going for a while, it might have been the end of the road for horse racing in South Africa. From where you are sitting, what do you say to people in an industry like horse racing and other industries?ย 

We’ve had that conversation with lots of sectors and lots of individual companies both nationally and within regions. It’s not unique to horse racing. The first thing was we needed to prepare the country for the scourge of Covid-19. The reality is although people are infected and people are dying it hasn’t really begun. This storm has yet to really land on our shores. We know that we’re going to see a surge or a spike probably in August or September. That’s many months away. We needed to make sure that our first line of defence, our health defences were in place and that’s not just the individuals and the PPE but it’s the hospitals, whether they’re existing hospitals or field hospitals as well. We’ve taken the five weeks that we’ve had to be able to put those systems in place, but at the same time we have in effected the economic activity radically and our view is South Africa needs to return the economy to full productivity as quickly as possible because we can ill afford to have a conversation about lives of people who have existing conditions who can’t get access to health support, versus livelihoods, as more and more people become either unemployed or unable to support themselves and their broader families.

Martin Kingston

So we think that with the necessary health and safety protocols, we should be returning people to work. But we need to stop and pause for a moment. The reality is that effectively dealing with the contagion requires first and foremost to have an effective containment strategy – that’s lockdown – but it has to be accompanied with appropriate procedures in terms of screening, testing, tracking and tracing because only with those procedures are we able to establish with some level of empirical data the spread of the infection and the velocity of the spread. Now we don’t have that information at the moment I think there’s been much written over the last few days about it and we need to radically accelerate that.

Because we don’t have that information, it means that actually the lockdown without that information can’t be appropriately applied and we can’t move through the levels. As you know we are advocating a very accelerated transition to level 2 and beyond, because that’s the only way we can return the economy, as damaged as it was, to full productivity as quickly as it can and we can limit the impact on society at large.

I just want to point that out. It is very easy for us to talk about health and safety protocols but actually it depends upon the sector. Take the mining industry for example, it has extremely advanced protocols. They already had protocols in place for the high levels of HIV. They have their own hospitals and care for communities affected, so the mining sector is well prepared for that. There are many other sectors that are not prepared at all to put in place significant health and safety protocols. The second aspect is transport to and from work, particularly public transportation which is a major vortex for contagion can be controlled. We haven’t yet as a society got our mind around that.

I would also point out that this is a societal problem. When we see on the TV the number of people that are out and about, even if all they are doing is collecting their social grants, they are not social distancing, they are not wearing masks and they are not observing any of the protocols. We know that we have a problem that is theoretically out of control unless we can encourage responsible behaviour on behalf of all citizens.

Yes, we can see it on TV, YouTube and WhatsApp channels. I had a video sent to me last week from a leading businessman in an East London of Lusikisiki and it is as though it were month end all come at once, the absolute crush of people and he said it’s exactly the same in most of the Eastern Cape towns, people are not really paying attention to the protocols. I have two articles in front of me from The Sunday Times Business Times yesterday. The one is from the chief executive of Business Leadership South Africa, Busisiwe Mavuso, who was very outspoken in what she said about the country having to go back to level two at a rate of knots and then Hillary Joffe’s piece which was a similar call. Martin, your calculation is that the economy could contract by enough this year, that using the current rate of economic growth, it would take 10 years to recover. Lets hope there is a different approach to the economy and restructuring etc. But that’s an enormous price to be paying for lockdown. What can you do to perhaps help to get things moving in the right direction?

Alec there’s no doubt that we are going to be facing a very severe contraction in the course of 2020 and probably leading into 2021. I don’t believe that there is a consensus view. We share National Treasury’s concerns that the longer the lockdown, the more protracted and the deeper the contraction. Effectively we’re in a depression. We’re not in a recession we were already in a recession. To climb out of a depression is going to take us at least three to five years, and we hope that that’s the outer limit not the inner limit of the timeframe. By the way we can’t afford three to five years let alone 10 years with the associated ramifications, in particular unemployment, poverty and inequality. All of those metrics go in the wrong direction. So a horrendous scenario for South Africa.

Therefore we have to reimagine what our economy should look like on an inclusive integrated basis, where it’s sustainable and we have a radical lift out of the depths to which we will undoubtedly see. The lockdown aggravates that situation. On the one hand it minimises the risk from a healthcare perspective. Assuming everybody is observing the protocols you and I were just talking about, which they are not, but it causes sustainable and potentially long lasting damage to the economy as currently configured. We may want a differently shaped and constructed economy coming out of Covid-19.

The truth is that if we’re only going to see the surge or the spike in August or September, and that’s on the premise that there is only one surge, we now know that it may be that there may only be by next year that we’re in a beyond Covid stage and we have treatments that can be rolled out on an effective basis coupled with herd immunity. We have to reconcile ourselves to the reality that we’re looking at a long-term problem, in other words not several months but potentially this year and beyond. And therefore we need to accelerate out of it both during the contagion pandemic phase and beyond that.

Now my own view and I think it’s Business for South Africa’s view, is that the government is completely aligned with us on this. There is no difference of opinion as to the need to return the economy to full productivity as quickly as possible and therefore to transition through the levels as quickly as possible but doing it in a responsible manner. In other words we cannot open up the economy and exacerbate the risk. That’s government’s biggest single concern. It’s not just a business issue. It’s also societal issue. Like we’ve seen, Lusikisiki has nothing to do with business, it’s a societal problem – the challenges that we have got in terms of our public transportation system, our townships and informal settlements. Those are national issues that we need to address. If business can come to that party and play a role, then we need to do so and indeed we’re in that discussion both as business and with government. But as I said it’s a broader societal issue.

Okay, I get that. There are however people, like the only South African scientist to have won a Nobel Prize, who says that the information we’ve been given is exaggerated. Professor Michael Levitt has gone very publicly on record to say that the decisions that have been taken not just here but all over the world were based on incorrect information and increasingly that information is now being shown that it is not as ruthless a killer as initially anticipated. We get stuff coming out of Italy now to say that the numbers there have been heavily exaggerated by comorbidity etc. What happens if in five years’ time or even three years’ time the young people turn around and they say hang on a minute you guys completely screwed this up. We don’t like this system of government and we might do things very differently. Those are the questions that the normal citizens have and are saying hang on guys are you actually looking at all the data on and on a real time basis or are decisions being made on data which now is is quite clearly to have shown to be exaggerated.

So Alec you put your finger on the biggest issue. None of us, not even Nobel Prize winners by the way, are experts on convict 90. That’s become absolutely apparent. We have got governments around the world not just in South Africa whether it’s the US or the UK or Europe or Asia who are all trying to work out what an appropriate intervention strategy is. If anybody on the show watched Boris Johnson yesterday I would say we’re a long way ahead of the UK in terms of trying to get our minds around how best to unlock the economy. There is no solution and clearly overreaction is a major risk that we all need to consider. That’s a political decision. Politicians who’ve been elected by the populace at large have to take these decisions. All we can do is provide appropriate input into that decision making process which is what we are trying to do, and then we need to abide by those decisions. I for one am extremely concerned that there may be an overreaction, that we may be cutting off our nose to spite our face. As I said we’re going to get into a lives for lives or lives for livelihoods argument. We cannot afford to have that discussion.

What we need to ensure is that we ratchet up all our defences at the same time and we don’t turn off the economic tap at the expense of everything else. We do think it was necessary to ensure that we had lines of defence in place. We now have those lines of defence in place. Are we where we need to be in terms of screening and testing and tracking and tracing? Absolutely not. Are we appropriately containing movement? Certainly not. We need to revisit those on a dynamic basis. There is no point in assuming that because we thought that an approach was correct three months or two months ago. We need to revisit that on an ongoing basis and adjust it to circumstances and as more information becomes available. We need to be flexible and dynamic in our response.

My own assessment is that government is in fact listening to all of these inputs, as are the rest of us who are involved in these discussions. I don’t believe that there’s any one person who’s got the answer right now. But it’s a heavy responsibility. When we look at National Treasury projections which under a worst case scenario, we see seven million more people being added to the list of the unemployed. Moving narrow unemployment at 50%, not youth unemployment, narrow unemployment, which means we’re probably talking about youth unemployment in excess of 70% . Those statistics as a country we cannot live with. We’ve got to engage with the subject matter right now and take decisions accordingly based upon the best information available to us at the time.

So where is the president? Why aren’t we seeing him on television every night or even every week?

Well I think we do see the president on television every day. It’s just that he doesn’t address the nation every day. So the strategy that has been adopted in South Africa is not where Donald Trump, Boris Johnson doesn’t do it on a daily basis, Donald Trump addresses the nation on a daily basis. If you look in the UK there are a variety of ministers including the Minister for Health who addresses the nation on a daily basis. That’s exactly what is happening here. He needs to be very visible. He’s very visible is absolutely in the frontline engaged in this with all stakeholders on a daily basis. I don’t think that we can expect him to do more.

What is critical is that we have a higher level of visibility as to the direction of travel and it is frustrating for all of us because none of us know whether there is light at the end of the tunnel. No I think it’s fair to say that there is light at the end of the tunnel. We know there is. We just don’t know when it’s going to be there. We don’t know how steep the gradient is to get to the end of the tunnel. We don’t know how long it’s going to take us and we don’t know how many people frankly are going to become sick and die and how damaged the economy is going to be over that period of time. So that uncertainty is I think bothering and frustrating all of us, but I don’t believe the government is in a better position to be able to prophesy that than you are. Frankly Alec none of us have that solution. What we do know is that it’s going to be with us for the foreseeable future, both the pandemic and the after effects.

I certainly wouldn’t be one trying to do any kind of prophecy on this thing. The more I talk to people the more I see exactly what you’re saying is that we really don’t know what we don’t even know yet. What did you make of the actuaries from Panda who maintain that 29 times more people will die as a result of the economic contraction than of Covid itself?

I think we must be very careful that we don’t rely upon a single study and draw conclusions accordingly. The point we’re making is the lives and livelihoods point. We agree that there is a tradeoff between making sure that our focus is exclusively on Covid-19 and a balance formed on unemployment and abject poverty and access to basic provisions. I think this is a highly nuanced conversation that we’re having, not only as a country but as a world. But certainly we need to take account of those inputs in our evaluations.