Risk-adjusted strategy for economic activity

What we know now

There is early evidence that the full national lockdown imposed since 26 March 2020 has successfully limited
the spread of the coronavirus. However, there are serious risks associated with lifting lockdown restrictions too
soon, or in an unsystematic and disorderly manner.
Risk-adjusted strategy for economic activity
The balance between “lives” and “livelihoods”

Evidence from the Spanish Influenza pandemic of 1918 shows that the long-run economic consequences for
cities experiencing a rapid infection rate and high cumulative infections were significantly worse than those for
cities enduring temporary restrictions on economic activity.

"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." (p. 17)
Risk-adjusted strategy for economic activity
An alert system with levels of restriction

Restrictions on economic activity need to be adapted to epidemiological trends, and may need to be relaxed
and tightened in different periods. An alert system should be created with clearly defined levels of restriction
that can be imposed by the National Command Council as necessary.
• 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.
 Risk-adjusted strategy for economic activity
An alert system with levels of restriction

Level 1 Low virus spread, high health system readiness

Ongoing feedback
loop informs Level 2 Moderate virus spread, with high readiness
decision to remain
at a particular
Moderate virus spread, with moderate
level, relax Level 3
readiness
restrictions further,
or return to a Moderate to high virus spread, with low to
higher level of Level 4
moderate readiness
restriction.
Level 5 High virus spread, and/or low readiness
Risk-adjusted strategy for economic activity
An alert system with levels of restriction

ILLUSTRATIVE
Different levels of alert can be declared
in specific provinces and districts based
on epidemiological trends and the risk
of infection.
Risk-adjusted strategy for economic activity
Criteria for return to activity

To determine which sectors should be allowed gradually to resume activity, three criteria should be used:

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)

Sectors that have a low risk of transmission (or where this risk can easily be mitigated), that would suffer most
acutely from a continued lockdown in terms of retrenchments, company failures, or loss of productive capacity
and international market share, and that have a high value to the economy should be prioritised.
These criteria should themselves be subject to an ordinal ranking of priority. Thus, sectors with a high risk of
transmission should not be allowed to resume activity until this risk is reduced, regardless of the potential impact
on their sector or their value to the economy. Among those sectors with a low or manageable risk of
transmission, considerations of impact and value can be used to attribute priority.
Low transmission risk AND severe impact OR high value
 Risk-adjusted strategy for economic activity
Criteria for return to activity

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 3. Economic stress

• Nature of work • Not presently operating
• Profile of workforce Main • Facing imminent retrenchment
• Geographic location of workforce • Facing imminent firm closures
• Practical mitigation measures considerations
• Facing permanent and irreversible damage
• Feasibility of mitigation measures • 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
 Risk-adjusted strategy for economic activity
Economic value of sector

1. GDP output at basic prices.

StatsSA, Supply and Use
Table, 2017. 2. StatsSA,
Quarterly Labour Force Survey,
2017. 3. IFC, 2018. The
Unseen Sector: A Report on
the MSME Opportunity in
South Africa. PPGI Industry
Survey. 4. . StatsSA, Supply and
Use Table, 2017. 5. Self reported
data from PPGI industry
survey. 6. ILO. Accessed from:
https://www.bangkokpost.com/w
orld/1819629/s-africa-still-
hobbled-by-abusive-legacy-of-
domestic-work
 Risk-adjusted strategy for economic activity
Expected impact of continued lockdown
0 – 20% 61 – 80% Proportion of the pre-crisis industry
Proportion of payroll that is likely to be Proportion of large firms in your Proportion of SMEs in your industry
21 – 40% w orkforce that is likely to be
81 – 100% paid at the end of May (%) industry that are likely to close (%) that are likely to close (%)
retrenched (%)
41 – 60%
Agriculture and food supply 75 25 15 35
Automotive 85 5 0 5
Banking 85 5 0 0
Chemicals 85 15 15 45
Construction 15 25 15 35
Creative - arts, music 5 15 5 65
Creative - film 45 55 0 5
Defence industry / Aerospace 55 35 15 25
Fibre optic 65 35 0 45
Fleet management 75 0 0 0
Forestry 75 25 5 25
Gas and oil 85 5 0 5
Global Business Services 55 25 15 25
ICT and digital 75 15 5 25
Long term Insurance 85 5 0 25
Manufacturing 85 5 0 15
Mining 5 15 5 45
Oceans 5 5 0 15
Online Retail 55 35 15 25
Pharmaceutical 85 15 5 15
Professional services 85 5 0 15
Renew able energy 45 25 5 35
Retail (clothing) 55 25 25 55
Retail (Food) 85 5 0 15
Retail (takeaw ays) 65 15 25 35
Short term insurance 85 5 0 5
Source: Self reported data from PPGI
industry survey, Genesis Analytics 2020 Tourism 5 55 25 75
Transport (Aviation) 35 45 45 65
Risk-adjusted strategy for economic activity
Risk of transmission: matrix rationale
Risk matrix for businesses

General Guiding Criteria High Medium Low Explanatory notes

1. Nature of business requires dense Exclusion

public congregation of customers Certain non-essential congregation
activities (mass gathering in
1.1 General density of interaction cinemas, stadium events, large
(inside and outside workspace) <2 m2 per person 2-6 m2 per person >6 m2 per person functions) per se excluded

Low risk province &

High risk province OR
High risk province & rural area &
2. Geography of workplace(s) urban/metro area OR
urban/metro area within provincial
crossing borders
boundaries

All workers who can continue to work

3. Employees can work remotely Less than 30% 30-60% 60-100%
remotely must do so

For % of the workforce who cannot work remotely:

<30% use public
60%+ use public 30-60% use public
transport AND
4. Travel risk of employees transport OR 20%+ transport OR 10-20%
<10% crossing
crossing borders crossing borders
borders
Most vulnerable population groups
Isolation for pensioners and immuno-compromised
should not enter the workspace at all
5. Ability to separate vulnerable
(both employee and customer).
employees / customers > 50 years (especially
30 – 50 years <30 years old Instead, treated separately and/or
Male)
remotely
6. Resources & capacity to implement Cannot implement all All those relevant, but All those relevant,
See general measures (where?)
risk mitigation measures at work mitigation measures not immediately immediately
Risk-adjusted strategy for economic activity
Risk of transmission

Agriculture,
food, Coke oven & Hotels and
beverages & petroleum Financial restaurants-
tobacco Automotive Chemicals refineries Construction Electricity intermediation Fishing Forestry tourism
% of empl oyees can work
2 2 2 2 2 2 0 1 2 2
remotely

% of workforce that is older than

2 0 2 2 0 0 1 1 2 2
50

% of workforce i n geographies
wi th high tra nsmission (GP, KZN, 0 0 2 1 0 0 1 2 0 2
WC)

Abi l ity to enforce s ocial distancing

0 0 2 0 1 0 0 1 0 2
of 2m a t work

Abi l ity to provide masks to

1 0 0 2 1 0 0 1 0 2
empl oyees

Abi l ity to s creen all employees 2 0 2 2 1 0 0 1 0 2

Abi l ity to isolate all i ll employees 0 0 0 2 1 0 0 1 0 2

% of empl oyees who use public

0 1 1 2 1 2 1 2 1 2
tra ns port

% of empl oyees who must cross

0 0 0 0 2 2 0 1 0 2
provi ncial border to start work

SCORE 7 3 11 13 9 6 3 11 5 18
Risk-adjusted strategy for economic activity
Risk of transmission
Hotels and Other Post and Post and
Other
restaurants- Insurance-long- Insurance- manufacturing- Pharmaceutical telecommuni telecommunica Professional
Mining manufacturing-
retail term short term defence s cation-fibre tion-ICT and services
manufacturing
takeaways industry optic Digital

% of empl oyees can work

2 1 1 2 2 2 2 0 0 0
remotely

% of workforce that is older than

2 2 2 1 1 2 1 0 0 0
50

% of workforce i n geographies
wi th high tra nsmission (GP, KZN, 2 1 0 0 2 1 2 1 1 1
WC)

Abi l ity to enforce s ocial distancing

2 0 0 0 0 2 0 2 0 0
of 2m a t work

Abi l ity to provide masks to

2 0 2 0 0 2 1 0 1 0
empl oyees

Abi l ity to s creen all employees 2 0 2 0 1 2 2 0 2 0

Abi l ity to isolate all i ll employees 2 0 0 0 0 0 0 0 0 0

% of empl oyees who use public

2 0 1 2 0 2 1 0 0 0
tra ns port

% of empl oyees who must cross

2 0 0 2 0 0 1 2 1 1
provi ncial border to start work

SCORE 18 4 8 7 6 11 10 5 5 2
Risk-adjusted strategy for economic activity
Risk of transmission
Radio,
Professional Recreational,
television, Transport - Wholesale &
services - Real estate cultural and Transport - Wholesale & Wholesale &
communication fleet retail - Online
Global Business activities sporting Aviation retail - Clothing retail - Food
equipment and management Food delivery
Services activities
apparatus

% of empl oyees can work

1 2 1 2 1 2 2 2 2
remotely

% of workforce that is older than

0 1 2 2 2 2 1 1 0
50

% of workforce i n geographies
wi th high tra nsmission (GP, KZN, 2 1 1 2 0 2 1 1 0
WC)

Abi l ity to enforce s ocial distancing

0 2 0 2 2 2 0 0 1
of 2m a t work

Abi l ity to provide masks to

0 1 0 2 1 2 0 0 1
empl oyees

Abi l ity to s creen all employees 0 1 2 2 2 2 2 2 1

Abi l ity to isolate all i ll employees 0 1 2 2 1 2 2 2 1

% of empl oyees who use public

2 1 1 2 1 2 2 2 2
tra ns port

% of empl oyees who must cross

1 0 1 2 0 2 0 0 0
provi ncial border to start work

SCORE 6 10 10 18 10 18 10 10 8
Risk-adjusted strategy for economic activity
Risk of transmission
Transport - Aviation 18
Recreational, cultural and sporting activities 18
Hotels and restaurants_retail takeaways 18
Hotels and restaurants_tourism 18
Coke oven & petroleum refineries 13
Other manufacturing manufacturing 11
Fishing 11
Chemicals 11
Wholesale & retail - Food 10
Wholesale & retail - Clothing 10
Transport - fleet management 10
Real estate activities 10
Radio, television, communication equipment and apparatus 10
Pharmaceuticals 10
Construction 9
Wholesale & retail - Online Food delivery 8
Insurance-short term 8
Mining 7
Agriculture, food, beverages & tobacco 7
Professional services - Global Business Services 6
Other manufacturing-defence industry 6
Electricity 6
Post and telecommunication-ICT and Digital 5
Post and telecommunication-fibre optic 5
Forestry 5
Insurance-longterm 4
Financial intermediation 3
Automotive 3
Professional services - Professional Services 2
0 2 4 6 8 10 12 14 16 18 20
 Risk-adjusted strategy for economic activity
Considerations for first phase of easing restrictions

Consideration Description
Low transmission risk Economic activity can resume with low transmission risk
or
Economic activity can resume under conditions whereby transmission risks can be
effectively managed
Regulated and organised Precedent of good compliance and enforcement of regulations in sector
and/or
Industry bodies / unions / lead firms can support coordination of sector response
Localised / low movement Economic activity can resume with no/minimal movement across provincial borders
of people and between rural and urban areas, and movement is limited to low risk geographies

Enabling of other sectors or Resumption of economic activity is crucial for the effective functioning of a sector that
essential services produces, distributes or sells goods / services designated as essential or other sectors
prioritised for opening
Risk-adjusted strategy for economic activity
Post-lockdown: General exclusions

The following restrictions will remain in place after the national lockdown, and regardless of the level of
alert at any given time:

• 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.
Risk-adjusted strategy for economic activity
Rules applicable across all levels

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.

The Department of Health will issue a comprehensive guidance note stipulating health and safety
practices for returning to work.
Risk-adjusted strategy for economic activity
Additional rules pertaining to sectors and firms

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:
o Identification and protection of vulnerable employees
o Safe transport of employees
o Screening of employees on entering the workplace
o Prevention of viral spread in the workplace:
o Cleaning of surfaces and shared equipment
o Good ventilation
o Managing sick employees
• Monitoring systems must be in place to (1) ensure compliance with safety protocols and (2) identify
infections among employees
Risk-adjusted strategy for economic activity
Governance framework

• Levels of alert (1-5) will be determined by the National Command Council at each meeting, upon a
recommendation from the Minister of Health and the Minister of Trade and Industry. A single national alert
level may be determined, or an alert level may be determined for each province.
• The highest burden of the disease is currently concentrated in Gauteng, Western Cape, KwaZulu-Natal and
Eastern Cape. The remaining provinces have a limited number of cases.
• Within the provinces the infection is concentrated largely in the metro areas.
• Given the disproportionate distribution of infections there is an opportunity to have a differentiated approach
to the lockdown based on the geographic distribution.
• The initial plan is to determine alert levels at a provincial level based on the number of cases in each province.
• Premiers may thereafter determine an alert level for specific districts, with the approval of the Minister of
Health. Those districts with lower risk levels could in this way embark on increased levels of economic activity.
• Individual Ministers, upon consultation with and approval from the Minister of Health, may provide for
exceptions and additional directions in sectors within their domain.
• A working committee should be established comprising officials from the Department of Health and the
Department of Trade and Industry to consider changes to the sector restrictions as they are required.
 Risk-adjusted strategy for economic activity
Governance framework

The framework should remain responsive to

epidemiological trends as well as to problems and areas
of ambiguity as they emerge. It is likely that specific sub-
sectors will require exemptions and/or additional
Epidemiological trends, including advice
of the NICD and the Ministerial Advisory directions which cannot be foreseen. An adaptive
Committee, inform determination of governance structure is therefore required.
alert level at each stage

Premiers may recommend additional

district-level alert levels, which must be
approved by the Minister of Health
Working committee comprising officials
National Command Council determines from Department of Health and
level of alert for each province, on Department of Trade and Industry
recommendation from the Minister of considers public submissions to refer for
Health and the Minister of Trade, decision, and makes recommendations
Industry and Competition Ministers may issue additional as necessary
directions to grant exemptions and
clarify ambiguities in the sectors and
sub-sectors allowed to operate at each
alert level, and the conditions under
which they may operate
Risk-adjusted strategy for economic activity
Alert system: Level 5

Sectors permitted Transport restrictions Movement restrictions

Bus services, taxi services,

No inter-provincial
e-hailing and private motor
Level 5: High virus movement of people,
vehicles may operate at
spread, and/or low except for transportation of
Only essential services restricted times, with
health system goods and exceptional
limitations on vehicle
readiness circumstances (e.g.
capacity and stringent
funerals)
hygiene requirements
Risk-adjusted strategy for economic activity
Alert system: Level 4
Sectors permitted Transport restrictions Movement restrictions
All essential services, plus:
Food retail stores already permitted to
be open permitted may sell full line of
products within existing stock
All agriculture (horticulture, export
agriculture including wool and wine,
floriculture and horticulture, and Bus services, taxi services, e- No inter-provincial
related processing) hailing and private motor movement of people,
Level 4: Moderate to
Forestry, pulp and paper vehicles may operate at all except for
high virus spread,
Mining (open cast mines at 100% times of the day, with transportation of goods
with moderate
capacity, all other mines at 50%) limitations on vehicle and exceptional
readiness
All financial and professional services capacity and stringent circumstances (e.g.
Global business services for export hygiene requirements funerals)
markets
Postal and telecommunications
services
Fibre optic and IT services
Formal waste recycling (glass, plastic,
paper and metal)
 Risk-adjusted strategy for economic activity
Alert system: Level 3
Sectors permitted Transport restrictions Movement restrictions
Licensing and permitting services, deeds offices
and other government services designated by
the Minister of Public Service and
Administration
Take-away restaurants and online food delivery
Bus services, taxi services, e-hailing and
Liquor retail within restricted hours
private motor vehicles may operate at all
Clothing retail
times of the day, with limitations on vehicle
Hardware stores
capacity and stringent hygiene
Stationery, personal electronics and office
requirements No inter-provincial
equipment production and retail
Level 3: Moderate virus movement of people, except
Books and educational products
spread, with moderate Limited passenger rail restored, with for transportation of goods
E-commerce and delivery services
readiness stringent hygiene conditions in place and exceptional
Clothing and textiles manufacturing (at 50%
circumstances (e.g. funerals)
capacity)
Limited domestic air travel, with a
Automotive manufacturing
restriction on the number of flights per day
Chemicals
and authorisation based on the reason for
Bottling
travel
Cement and steel
Machinery and equipment
Global Business Services
SANRAL construction and maintenance
Transnet at 100%
 Risk-adjusted strategy for economic activity
Alert system: Level 2

Sectors permitted Transport restrictions Movement restrictions

Construction
All other retail
All other manufacturing
Mining (all mines at 100%
Level 2: Moderate capacity) Movement between
Domestic air travel restored
virus spread, with All government services provinces at Level 1 and 2
Car rental services restored
high readiness Installation, repairs and restrictions
maintenance
Domestic work and cleaning
services
Informal waste-pickers
 Risk-adjusted strategy for economic activity
Alert system: Level 1

Sectors permitted Transport restrictions Movement restrictions

Level 1: Low virus All modes of transport, with Interprovincial movement

spread, high health All sectors stringent hygiene conditions allowed, with restrictions on
system readiness in place international travel
Proposal for phased economic recovery
Recommendations

• A system of “alert levels” should be adopted, and further work done to determine which sectors (and under
what conditions) may operate at each level. The Department of Trade and Industry and the Department of
Health should collaborate to develop this system.
• To make the determination of which sectors should be allowed to resume activity at each level of alert, three
criteria should be considered:
o Risk of transmission (including the ease of implementing mitigation measures)
o Expected impact on the sector of continued lockdown (including prior vulnerability)
o Value of the sector to the economy (e.g. contribution to GDP, multiplier effects, export earnings)
• A decision about whether to institute a lower alert level should be made by the National Command Council
based on evidence gathered during this week about the spread of the virus.
Thank you