009 FSA News-01

20 March – President has already responded to requests from FSA and business

South Africa is already experiencing the immediate economic impacts of the State of Disaster implemented due to COVID-19. These include falling demand for air travel (domestic and international), tourism and interruption in international trade. With South Africa’s economic challenges including amongst others, high and rising government debt, electricity supply constraints and high unemployment, COVID-19 can intensify an economic slowdown amidst an already fragile economic outlook.

As reported yesterday, President Cyril Ramaphosa committed to implement State-led interventions, in both fiscal and monetary easing and stimulus to protect businesses and jobs. It is positive to note that the President has already responded to meeting requests by FSA and business in this regard.

Government has offered its first measure of relief in response to the looming COVID-19 crisis, by announcing it will use the Unemployment Insurance Fund (UIF) to ease the burden on employees and employers. This has been made possible by the UIF’s expected surplus of about R3.6bn over the next three years. It also has investments of around R180bn, which after liabilities amount to R160bn

In addition to the above, the South African Reserve Bank (SARB) announced a cut the of the repo rate by 100 basis points. The repo rate has decreased to 5.25% per annum, with effect from 20 March 2020. The repo rate change will channel through to the prime interest rate, providing some support to a struggling economy.

The impact of COVID-19 could vary across the forestry value chain. The impact will probably be greater in export-dependent products as we might experience a lower demand from markets. This will be exacerbated by the low international pulp prices experienced from mid-2019. The President however, supported FSA’s appeals to keep key ports and rail infrastructure open, for imports and exports, to lessen the impact of already weakened demand in some foreign markets. Even though ports and rail remain open, the Industry need to consider possible disruptions on the supply and availability of chemicals and other inputs. Some of the FSA structures are keeping an eye on these developments and responding where possible. TIPWG has already added products to the Approved Pesticide List (APL) to be used as alternative to currently used chemicals for traces belt preparation that are not available due to limited imports.

FSA will continue to monitor the impacts of COVID-19 on our sector and keep members informed of developments.

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