A few months into the Coronavirus (COVID-19) crisis, and it feels like the global economy has hit a brick wall. Much of the world has entered into lockdown to break the chain of virus transmission. We know that such drastic action does work as eventually new cases begins to diminish.
While these developments give hope, let us acknowledge the basic facts. Firstly, we know that this virus is extremely infectious. Secondly, the symptoms can be very severe and has been shown to have a high death rate and some patients require highly specialised medical care, while in others, it can be asymptomatic. Thirdly, we have no proven drugs for treatment, no vaccine and we are still a very long way off from the so-called herd immunity.
This means that there are no shortcuts to establish medical protocols to deal with the crisis, meaning that proven, safe and effective drug and vaccine development will take time. The gold standard of randomised controlled trials is the only way we can be sure, with a high degree of certainty, that whichever drugs or vaccines are produced, do indeed work in the way the manufacturers claim. A true, lasting and safe treatment will have to be subject to the gold standard in order to be universally accepted. This leaves us with the likely scenario of continued infections and deaths all the way through 2020.
While many developed countries have made great strides in flattening the curve of transmission, we should be mindful of many less developed countries who may struggle. If developed countries with access to capital and well-developed health care systems have struggled, we should be rightfully fearful of the prospects for poorer countries, who often have dense population living with diseases such as Human Immunodeficiency Virus (HIV) and Tuberculosis (TB) that weaken the immune system. This could lead to a “Perfect Storm” scenario ultimately overwhelming the health care system and leading to unnecessary deaths.
So, in the absence of near-term medical interventions, we are better off maintaining the social distancing measures to varying degrees. However, slowing the epidemic down in this way by definition means slowing the economy down and we will have to give serious thought to finding an optimal balance of economic activity while still maintaining a distancing strategy.
We have already been warned by experts that a too-soon relaxation of distancing may risk further infection waves. Such a plan needs to be built on a robust medical foundation of serological testing— the widespread testing of individuals for the presence of antibodies produced by the body in response to infection. Importantly though, these realities mean for the foreseeable future we will need to forget about returning to normality.
So, we will need to see similar bold and unprecedented actions in the economic front. This is a time to collectively re-imagine our economy and work to re-build resilience. A phased relaxation of lockdown regulations will be required, and we should allow workers who are able to work from home to continue doing that. Secondly, broken supply chains on a global scale will soon mean disruptions and if ever there needed to be incentives given for local companies to move up the value chain, it is now. Thirdly, we postulate that an incentivised delivery-based economy can be a successful short term measure.
This would allow many businesses (outside of the already open essential goods like groceries and pharmaceuticals) to re-open but could only trade on a delivery basis. In-store sales would continue to be banned. A delivery-economy is already successfully built into many current business models, but in seeking a balance between re-starting an economy and balancing health risks, it needs to be incentivised and massively scaled.
Government could announce these phased moves together with incentives for delivery workers, especially if it creates new employment. While prioritising a lockdown is essential, we are not in a fiscal position to provide a backstop for every business, and service-oriented businesses will still struggle and will require ongoing financial support.
Such a programme of phased relaxation would need to be accompanied by a rigorous testing programme. Monitoring of movement on a national scale also becomes imperative as part of managing this transition. Finding ways to increase economic activity while still restricting vectors of virus transmission may require some innovative thinking. Naturally, such monitoring means some questions will be asked about privacy, but there are ways to address the major concerns.
There is a way forward for South Africa to tackle these challenges but living in the hope of a miracle drug should not be the foundation of our strategy. We have, thanks to early government intervention, delayed the onset of an extreme health crisis, but in averting a potential economic crisis, a similarly well thought out innovative plan must also be implemented without delay. It is time for our leaders across all sectors to be leaders and lead us to a better future.
Authors : Arno Lawrenz, Global Investment Strategist, Ashburton Investments
Dr Ashley Pretorius, Chief Scientific Officer*
Dr Jared Mackenzie, Medical Scientist*
Note: *The authors write in their personal capacity.