An apparent lack of co-ordination at cabinet level and no decisive, urgent leadership on restarting the economy are leading to irreparable harm, says Neal Froneman, CEO of the world’s largest supplier of platinum group metals.
The head of Sibanye-Stillwater, known for voicing strong views that others are too cautious to make public, said
the promising start from President Cyril Ramaphosa in dealing with the coronavirus pandemic in SA by locking down the economy was lost in political and positional jockeying among his ministers.
"It’s incumbent on the government to do the right things. They’re doing more damage now by keeping businesses at level 4 than they are doing good by preventing Covid-19," Froneman said in an interview with Business Day.
"They’ve got to get the balance right. They’re destroying the economy. We need real, clear, decisive actions from the government," he said.
SA went into lockdown on March 27, with almost the entire economy brought to a halt apart from essential services. On April 18 certain sectors were allowed to ease back into limited production, but there are weekly changes to regulations that have baffled and confused the country with their sometimes arbitrary and random nature.
On May 1, the country went from total lockdown under level 5 to level 4, which slightly eased restrictions, allowing about a million people back to work under strict health and safety conditions.
Economic stagnation
But at the heart of the problem is the overall stagnation of the economy, which has not been allowed to return in any meaningful way, prompting warnings from actuaries, ratings agencies, business and union leaders, and opposition political parties that the consequences will be
deeply damaging.
Froneman added his voice to the growing dissent and unhappiness about the way the crisis is being managed.
"What’s gone wrong is there’s a lack of alignment in cabinet. What we have now is a lack of leadership again.
"We had great leadership a few weeks ago. I realised we had a leader as president, but where is he now? This is the problem. As soon as there’s a lack of alignment, he’s not able to lead," he said.
"We are going to have a lack of alignment around economic measures and what’s needed for the economy. I anticipate it’s going to get worse," he said.
Asked if the economy had reached tipping point, where there could be no recovery even if restrictions were lifted, Froneman was equally as bleak in his view. "I think we’ve gone past that tipping point. You can’t go through an underperforming economy pre-Covid, then go through a downgrade, then this Covid lockdown, and now there’s this indecision on restarting the economy," he said.
"It’s very bleak. We need to kick-start our economy. We have divided leadership. We are facing an incredible recession and we’re caught like rabbits in the headlights."
Business groupings were hard at work creating awareness around the consequences, developing models and plans
to restart the economy and provide solutions.
"What more can business do if there’s no political will to address the single biggest issue, which is not Covid but our economy?"
Sibanye is the world’s largest supplier of platinum group metals, which are largely used in industrial applications, and one of SA’s major gold producers, making it one of the biggest private sector employers.
It did not have to reopen its underground shafts in line with the easing of restrictions on mining, Froneman said.
"If it wasn’t for the social issues, we wouldn’t have reopened our mines.
"We took on risks by opening them for people, to give them salaries and allow them to survive. It would have possibly cost us less to keep our mines closed until we were able to fully open," he said.
Underground mines are allowed to operate at 50% of capacity, but this means they cannot generate enough revenue to cover the large fixed costs of running them.
"Our minister, Gwede Mantashe, stuck his neck out for us to get us back to work earlier than the rest of the economy. I’m very appreciative.
"We got the benefit because of our experience in managing a lot of people, so we could bring thousands back to work safely," Froneman said.
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