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June 10, 2020

SOUTH AFRICA: ‘Lawfare’ and other exit challenges

BY Anne Frühauf

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( 5 mins)
  • Although ongoing legal battles over government regulations are unlikely to scupper South Africa’s lockdown exit, they compound an already highly uncertain operating environment for business.
  • The already complicated reopening process coincides with a marked rise in infection rates.
  • Companies face major scrutiny over their level of preparedness, particularly the mining sector.

Court cases

Since South Africa’s pandemic risk level was reduced to “3” as of 1 June, the majority of economic sectors have been able to ramp up activity, with an estimated 8mn workers returning to their workplaces. However, various legal challenges against lockdown regulations highlight the level of contestation and threaten to undermine the government’s exit strategy.

On 2 June, the North Gauteng High Court found that the majority of Level 3 and Level 4 regulations were “unconstitutional and irrational.” Co-operative Governance and Traditional Affairs Minister Nkosazana Dlamini-Zuma lodged an urgent appeal against the judgment on 8 June. A government victory is considered plausible, though the judgement is only expected next week. If President Cyril Ramaphosa’s administration were to lose, it would be forced to review its entire Level 3 and 4 regulations within 14 days. Also under way this week is the court case challenging the rationality of the continued ban on the sale of tobacco products, which has contributed to the gaping hole in revenue collection and fueled illicit trade.

Although the court cases are unlikely to scupper the broader exit process, they add to uncertainty surrounding the exit process. This adds to the challenges facing the private sector, which is struggling with the micromanagement approach taken by Ramaphosa’s incongruous cabinet, which is listing all permitted activity specifically (thus frequently creating absurd gaps around what can and cannot be manufactured or sold). In an ideal world, business would like a broader approach under which the government would only regulate what is not allowed.

Infection trends

As the exit ramps up, the Ramaphosa administration is bracing for a rapid increase in Covid-19 cases. This week, these have surpassed the 50,000 mark, with 52,991 cases and 1,162 deaths recorded as of 9 June. In his most recent weekly newsletter, Ramaphosa noted that more than half of all cases since the start of the outbreak were recorded in the last two weeks.

While South Africa has been praised for its active case finding strategy and its drive to increase testing (the number of daily tests has exceeded 20,000 per day since late May), Ramaphosa has recognized that testing and tracing are falling short of targets. A key challenge is that the National Health Laboratory Service (NHLS) has been unable to keep up with demand for testing, owing to a shortage of test kits and reagents, which has led to tests being rationed in the Western Cape, South Africa’s worst affected province.

Concerns over the lack of PPE, and sanitation and hygiene are also intensifying, particularly at schools (which reopened for grades 7-12 on 8 June). Public hospitals are coming under particular scrutiny for falling short of health and safety protocols. Not only may they emerge as breeding grounds for the virus as a result, but the lack of PPE could also fuel conflict with healthcare workers.

Scrutiny of companies

As the lockdown exit accelerates, scrutiny is rapidly shifting towards private sector preparedness. According to Labour and Employment Minister Thulas Nxesi, of 72 workplaces inspected on 25 May, 44 were not compliant with Covid-19 health and safety measures. Over a longer period – from 30 March to 30 May – 1,724 out of 3,844 workplaces inspected reportedly failed to comply, with prohibition notices issued in 332 cases. Of particular concern is the mining sector, where 572 workers have now tested positive, fueling fears that the industry could become a new Covid-19 epicenter.

Nxesi’s latest directive on Covid-19 and health and safety in the workplace scraps the requirement that employees diagnosed with the disease can only return to work after testing negative, provided that they have self-isolated for 14 days and undergone a medical evaluation. The rationale is that the change will alleviate pressure on the NHLS, though the National Institute of Occupational Health (NIOH) has justified it by saying that people can test positive long after they stop being infectious. Whether companies should have to carry out mass workforce testing is also being questioned, given that the infection picture can change from one day to the next.

Following heavy lobbying from business, there are further tentative (albeit limited) signs that the regulatory push may be shifting towards some burden sharing between employers and employees. For example, Nxesi has scrapped a requirement that employers wash and iron all cloth masks provided to workers, shifting the onus onto employees. Nevertheless, labor scored a significant concession in the new regulations in that they permit employees to refuse to work in an environment that poses an “imminent and serious risk” of exposure, which cannot be penalized. This reinforces the extent of scrutiny, reputational risk, potential labor disputes business could be facing in relation to their level of pandemic preparedness.

 

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