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Commentary on economic research: What is happening to South Africa's economy?

By Rayne Handley

Published Date: 2020/08

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INTRODUCTION

 

There is undoubtedly a difficult environment for the development and implementation of sound policy. Nevertheless, many policies put in place by the South African government/committees have compromised businesses, upended commerce, caused job losses, and negatively impacted lives of South Africans without having any scientific backing to engender health or aid in reducing the spread of the Coronavirus.

Selling hot food should never have been banned. All companies should be allowed to operate under strict health and hygiene directives. Allowing taxi’s to run at full capacity but restricting outdoor sports, makes little sense. A recent study by (Walbeek, Filby, & van der Zee, 2020) found that “82% of respondents indicated that, pre-lockdown, they never shared individual cigarette sticks with other people. This percentage has decreased to 74% during the lockdown. The percentage of respondents indicating that they regularly shared individual cigarettes (more than 50% of cigarettes smoked) has increased from 1.7% pre-lockdown to 8.9% during the lockdown. This is an increase of 430%.”

The policies put in place have not always engendered health, have not always been backed by science, have not always been to an international norm. The failing policy has resulted in a loss of trust in governance and a disregard for COVID-19 policy through this pandemic and potentially a loss of faith in the governance and rule of law generally.

Had the police force focused on ensuring compliance from businesses, restaurants, places of worship, transport and the like as opposed to finding citizens and enforcing a night-time curfew the government could have achieved a “flattening of the curve” without the destruction of jobs and economic activity.

EMPLOYMENT

The stated 18% decline in employment between February and April 2020 appears to GRMI to be hugely understated. GRMI supports the findings of Jain, Budlender, Zizzamia, and Bassier (2020) who purport a 40% reduction in employment. What is interesting to note is that those who have been laid off are able to access UIF payouts, however, there have been many instances where UIF has been denied to those who are furloughed given that they are not technically unemployed. The UIF scheme has been less than perfect and is now subject to a number of corruption investigations. In addition, the Solidarity Fund received Billions of Rand in pledges from businesses, families and individuals - but there seems to be little evidence of where that money has now gone? There have been encouraging signs by the main banks in SA to lend SMEs money, with the SARB guaranteeing some of these loans, but the questions remain, how many of these loans will default? 

How many SME owners will have to sign surety and then, of those, how many will default because the lockdown remains? And therefore are we potentially heading into another financial crisis? There is no doubt that the longer the lockdown and restrictions are in place, the worse it is going to be for everyone.

It could have easily been predicted that minorities and most disadvantaged echelons of South African society would be affected people of colour, the poor, women, the disabled, the very people that need the most help. As one very prominent minister said to TV camera crews recently “we will be judged by how we treat our most vulnerable in society”, and yes, she is correct, but sadly it is they that her government’s policies are hurting the most.

GRMI predicts that between May and July 2021 around 80% of the South African population may not be formally employed, or under-employed. We can hope that support, relief, and aid will be available to these individuals and hopefully, and if foreign aid is made available, that it actually gets to the people that need it the most because the informal economy can assist in bringing income into some of these households.

HUNGER

What is fascinating (disgustingly so) is the hunger findings that 47% of respondents in the NIDS-CRAM (2020) study reported that their household ran out of money to buy food in April 2020 up 26 percentage points from 2019.

The fact that most of the households reporting hunger have children in them is a grave cause for concern while the high number of children being shielded from hunger through the starvation of their guardians is both heart-wrenching and relieving, in equal measure.

GRMI believes that assistance beyond grants is required to alleviate the current and future hunger of South Africans. South Africans need employment - whether formal or informal - in order to pull themselves away from the abomination of hunger.

Current COVID-19 policy in South Africa is not helping to achieve this. As employment numbers deteriorate so more and more households will be gripped by hunger.

HEALTH

Reliable health and healthcare surveys in South Africa are far and few between. The NIDS-CRAM data set on health is a highly advantageous insight into what is really going on from a healthcare perspective.

The large drop in ART visits and TB tests is alarming in a country where HIV and TB are major healthcare concerns.

Despite the global pandemic, the fact that 23% reported they were unable to access medication in the past four weeks (keeping in mind data was collected at the back-end of June) is appalling, however, it is reassuring to see most respondents with chronic illness were able to access medical attention when needed. With the peak infections now taking place at the end of July, it will be interesting to see what the next wave of data collection by the NIDS-CRAM team indicates.

The fact that affluent South Africans have exaggerated infection risk perceptions, is no surprise. Rich South African’s tend to perceive HIV and TB as health concerns for poor South Africans. The highly infectious nature of COVID-19 with little 100% foolproof preventative measures is sure to rattle a few nerves.

HEALTH

The suggested policy actions for health are a great start for the immediate term but in the long run, South Africa needs to be able to educate and ensure all South Africans have access to health care - there shouldn’t be waiting times and backlogs, transport for life-saving medication should not be an issue exclusively for poor South Africans.

Some in the medical profession has been quoted as saying that there will be further health crises in SA as people have (a) stopped going to their GP’s for perceived minor issues, which can lead to bigger problems later on and (b) many have stopped paying into their medical schemes as they can no longer afford it.

CLOSING REMARKS

The findings of the first wave certainly provide insightful findings into the impact of COVID-19 and the corresponding regulations have had on South Africans.

The findings of the future waves will be a must-read. What would be interesting to explore would be perceptions of COVID-19 regulations over and above the risk perceptions.

The government budget is in no position to aid those who have been left destitute due to the COVID-19 pandemic or the corresponding policies. We can only hope that information, proper messaging, and better policy will provide some reprieve.

There is still a huge need for trusted and rigorous research to explore the impact and perceptions around the COVID-19 pandemic and the policies the government is putting in place.

●Will the higher unemployment rate lead to higher crime?

●What will politics look like after the next elections?

●Will the state relinquish power from their  “Council”  after the pandemic?

●How is the education of our youth gouging to be affected by school closures?

GRM Intelligence hopes to continue to unearth potential answers to these pertinent questions.

LIST OF REFERENCES

●  Jain, R., Budlender, J., Zizzamia, R., & Bassier, I., 2020. The labour market and poverty impacts of COVID-19 in South Africa. [Online]. Available: https://www.csae.ox.ac.uk/materials/papers/csae-wps-2020-14.pdf [Accessed 22/07/2020].

●Spaull et al. 2020. NIDS-CRAM Wave 1 Synthesis Report: Overview and Findings. [Online]. Available: https://cramsurvey.org/wp-content/uploads/2020/07/Spaull-et-al.-NIDS-CRAM-Wave-1-Synthesis-Report-Overview-and-Findings-1.pdf [Accessed 22/07/2020].

●Van Walbeek, C., Filby, S., & van der Zee, K., 2020. Smoking and quitting behaviour in lockdown South Africa: Results from a second survey. Research Unit on the Economics of Excisable Products. University of Cape Town. [Online]. Available: http://www.reep.uct.ac.za/sites/default/files/image_tool/images/405 /News/REEP2ndreport.pdf [Accessed 27 July 2020].