DealMakers - Q1 2020

Please Mr President, don’t put the cart before the horse

by Kerri Wilson and Natalie Harten

On 15 March 2020, in response to the global COVID-19 pandemic, the South African government declared a national state of disaster, in terms of section 27(2) of the Disaster Management Act, 2002 (the Act), and implemented a phase 1 alert level 5 lockdown of the country. 

On 20 April 2020, President Ramaphosa addressed the nation on additional economic and social relief measures that would form part of the Government’s response to the COVID-19 pandemic. These additional measures, representing phases two and three of the Government’s response to the COVID-19 pandemic, include (i) an extraordinary budget to “stabilise the economy, address the extreme decline in supply and demand and protect jobs” and relieve hunger and social distress, and (ii) a gradual and/or phased re-opening of the economy. 

In his 23 April 2020 address, President Ramaphosa announced that the economy would enter lockdown alert level 4 as from 1 May 2020, as part of its lockdown “load shedding” plan.

 

In determining which sectors would be allowed to resume activity at each alert level, the National Command Council were required to consider the following criteria in respect of each sector:

Kerri Wilson
Natalie Harten


•    the risk of transmission in that sector;
•    the expected impact of continued lockdown on the sector;
•    the economic contribution of the sector to the economy; and
•    the effect on livelihoods.


We understand that alert level 4 allows for some activity to resume, subject to extreme precautions to limit community transmission and outbreaks, and provides, among other things, for - 


•    certain businesses to resume operations under specific conditions;
•    the public to stay home, except for essential personal movement, doing essential work, and work in sectors allowed; and
•    the expansion of a range of goods that may be sold to incorporate certain additional categories.

The aim and purpose of the lockdown Regulations issued in terms of the Act (as amended) (the Regulations) is to prevent an escalation of COVID-19 and/or to alleviate, contain and minimise the effects of COVID-19 within South Africa. By enforcing the Regulations, the State has, as it is entitled to do by virtue of the fact that the South African Government declared a national state of disaster, limited certain individuals’ rights under the Bill of Rights set out in Chapter 2 (the Bill of Rights) of the Constitution of the Republic of South Africa, 1996 (the Constitution), namely the right to freedom of movement and residence (s21). Section 21 of the Bill of Rights states that every citizen of the Republic of South Africa (the Republic) has the right to freedom of movement, the right to leave the Republic and the right to enter, remain in and to reside anywhere in the Republic.

In addition to the limitation on individuals’ rights, many businesses have found themselves in a precarious position because they are not able to trade freely, or at all, during various phases of the lockdown. Only those products defined in the Regulations as “essential” can be sold and/or distributed which has resulted in certain businesses in the retail and e-commerce sectors having to limit their operations to fit within the narrow scope of the Regulations, but many more “non-essential” businesses having to pause their operations or close their doors, further injuring our already-crippled economy, and sparking widespread criticism of the government’s handling of the pandemic. 

The rights in the Bill of Rights may be limited in terms of section 36 of the Constitution which states that rights may only be limited in terms of the law of general application (i.e. it applies equally to all citizens) and to the extent that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom, taking into account all relevant factors, including -
(a)     the nature of the right; 
(b)     the importance of the purpose of the limitation; 
(c)     the nature and extent of the limitation; 
(d)     the relation between the limitation and its purpose; and 
(e)     less restrictive means to achieve the purpose.

Accordingly, during these strange times, the legislature must walk a fine line when passing legislation limiting the rights of the citizens of the Republic. However, when faced with balancing the economic and physical well-being of the Republic, the decision makers will need to consider whether the definition of “essential goods” and “essential services” ought to be extended in order to cover a wider range of goods and or services, in order to afford more businesses the opportunity to resume or broaden operations.

 

It appears that, in determining what is essential or not, the cart has been put before the horse, so to speak. The aim of the Regulations is to “prevent an escalation of the disaster or to alleviate, contain and minimise the effects of the disaster”. 

We understand that the rationale for enforcing a nationwide lockdown is to curb the spread of the virus through human contact. Accordingly, the question that should be asked to determine whether a specific service or product should be allowed is whether or not the particular activity, such as the manufacture or distribution of a product, or the provision a service, can be done in a manner that does not negligently or greatly increase the risk of the spread of COVID-19. If the answer to this question is “yes”, then the product and/or service should be allowed. 

If the answer to the above question is “no”, as that particular activity (manufacturing and/or distributing the product or carrying out the service) could greatly increase the risk of the spread of COVID-19, then decision-makers must determine whether the product and/or service is beneficial enough to the economy that it should still be allowed during the lockdown, notwithstanding the risks associated with same on condition that such risks could be mitigated.

As an example – if someone is making jewellery at home and selling the finalised product through an online platform, and thereafter ensuring delivery of same to a customer by a courier company or employee with minimal human contact, and in circumstances where adequate protective measures have been put in place, including social distancing, the wearing of masks and use of alcohol-based hand sanitising products, there should be no reason why such products and or services should be prohibited. There is no reason that such an industry should not operate and contribute to the Republic’s economy during this time.

We can only hope that the policy-makers focus on the horse going forward. The question is not whether the goods or services are “essential” but rather whether, by limiting the aforementioned rights, the spread of COVID-19 is kept to a minimum while balancing the urgent need for our economy to operate.  

Wilson is a Director and Harten a Senior Associate at Falcon & Hume.