Cape Town is beginning to reckon with the economic impact of the lockdown due to COVID-19, said one city official.
“The massive amount of uncertainty that we had to endure since February or March 2020 not only in terms of health shock but in terms of the impact on our businesses and society, the economic shock, disruptions to essential city services, to increased vulnerability at the household level, disruptions to the systemic elements of the city governance, as well as multiple shocks and stress that were related, indirectly related to the pandemic,” said Craig Kesson, executive director of corporate services .
Kesson was speaking during the Dullah Omar Institute, webinar themed ‘The impact of Covid-19 on South Africa’s Metros’ on Tuesday.
“The full extent of this shock is still unfolding, but the implications on the finance stream include shifting in the property market, reduced commercial activity and trade, tourism sector slow down, increased unemployment, increased poverty and dependence on state grants, humanitarian relief and exacerbated inequality.”
“Broader societal suppression methods to the pandemic, including travel restrictions, lockdown and other social distancing requirements has translated into an economic shock. This shock has been further amplified by the credit rating downgrade of the country and the city,” said Kesson.
Impact on revenue collection
On 23 March 2020, President Cyril Ramaphosa announced a national lockdown to curb the spread of COVID-19.
Kesson’s critique of the lockdown reflects that of the province’s ruling party. The Democratic Alliance has consistently opposed the lockdown measures, saying it could strangle the economy. In July, the Constitutional Court dismissed the DA’s case to challenge the lockdown.
In Cape Town, the the lockdown also led to reduced revenue collection, said Kesson. Monthly municipal invoices were not being printed nor posted during the level 4 and 5 restrictions of the lockdown last year.
“The COVID-19 lockdown had a negative impact on the payments received due to the following: The city customer interaction centres or cash offices had to close, the monthly municipal invoices were billed, but were not printed nor posted, because the South African Post Office was closed during lockdown level 4 and 5,” said Kesson.
“Staff were not functioning to full capacity as they were not allowed to report for duty at their respective offices and actual water and electricity reading did not take place and the debt management procedures and action were not carried out. The impact of the above was evident in the collection ratio results in April 2020 which declined to a monthly ratio of a mere 77,51% and 12 months moving average of 95,36%,” said Kesson.
Before the lockdown, the city’s monthly average collection ratio were 97,44% from July 2019 to March 2020, he added.
Despite the challenges brought on by COVID-19, Kesson said that the City of Cape Town’s response to the pandemic will continue to be “dynamic.”
“And what this meant to us was that we had to think about how we frame a strategic response to the pandemic in a dynamic context in a situation where the effects were always changing, trying to adjudicate and respond to competing pressures, whilst playing our part to work to minimise the loss of lives,” said Kesson.
The reduced infection rate, along with strict safety protocols will help economic recovery, he added. Still, the city would still need to be frugal.
The city would need to continue to make deep financial cuts to non-core or non-essential functions, fund activities through means, including shifts in budget priorities and increase draw-down on investments and borrowings. All whilst making sure that the budget remains credited and funded,” said Kesson. – Health-e News