The following article represents our view as at 26 April 2020 and with the information available at the time of writing. GA&A reserves its right to change our view in accordance with any further announcements, regulations, or information released by the relevant government departments.
In his address given on the evening of 23 April, President Cyril Ramaphosa announced the risk-adjusted approach to easing lockdown restrictions in the form of the introduction of “five coronavirus levels”. This announcement was followed a couple of days later by Ministers Nkosazana Dlamini Zuma and Ebrahim Patel offering further detail to the 5 levels. This article seeks to offer practical advice on how to interpret the various levels and apply them in your businesses or lives.
The classification of sectors as set out in the Draft Framework for Sectors follows the Standard Industrial Classifications (SIC) as published by Statistics South Africa. This means that businesses may fall into more than one sector in the Framework. It is also essential to consider the Draft Framework for Sectors in its entirety. It is not sufficient to view any level in isolation, as a clearer and more accurate view can only be formed by comparing the movement from one level to another. For example, according to Level 4 restrictions, under point R. Personal Movement, point 4 stipulates that [p]eople can exercise under strict public health conditions, subject to directions, which will exclude organised activities, recreational facilities, and gyms. This may cause you to wonder whether that means that members of the public may now go for jogs in the streets around their homes. However, if you then consider that the words [w]alking, jogging and cycling permitted appear in green under point R.10 in Level 3, it is safe to assume that jogging in the streets under Level 4 is not permitted.
Now consider the fictitious Joe Bloggs Pump Company, a business that manufactures two kinds of pumps. Type A pumps are used in essential service mines. These pumps are used to pump groundwater water out of the shafts and are therefore critical to the continuous operations of the mines. Type B pumps are used in automotive manufacturing to pump fuel into the engine. Essential mining is permitted under Level 5 restrictions, but automotive manufacturing is not. Under Level 5 restrictions, Joe Bloggs Pump Company has been operating at 80% of employment to supply essential service mines with their pumps, vital for the mines operations. Now, with a move to Level 4 restrictions, essential mining, as well as other, non-essential mining, is permitted and so is automotive manufacturing (scaling up in phases to 50% employment). This means that when moving from Level 5 to Level 4, the company would be able to continue to supply Type A pumps to the mines, using the essential employees required to perform that task. It may also start to produce Type B pumps for the automotive industry. If 80% of the company’s employees are essential to supplying pumps to the mines, then 80% of the employees may continue to be used in Level 4, with additional employees being used to start to manufacture Type B pumps.