A year of Covid-19 in SA: Cost to economy has been enormous
Today, March 5, marks the anniversary of the first confirmed Covid-19 case in South Africa. When the pandemic took hold of the country, it crippled the economy.
There were job losses, businesses closed down and the country sunk deeper into debt.
President Cyril Ramaphosa declared a state of disaster to curb the spread of the virus. Strict lockdown regulations were implemented, which meant the economy came to a standstill.
Only the sectors deemed as essential - for example, agriculture, healthcare, and food retailers - were operational.
The biggest cost from the pandemic though has been the loss of life. To date, more than 50 000 South Africans have died - among them scores of frontline health workers.
The virus also highlighted the divide between the rich and the poor. With the latter now relying more on the State for assistance, South Africa’s debt woes increased substantially.
Speaking to Business Report Online, STANLIB’s Chief Economist Kevin Lings said the country missed out on 8 % of economic growth due to Covid-19.
“The most pain has been felt by the lower and middle-class income earners. This led to income inequality.”
He said even before the virus hit, the economy was suffering. “The numbers were not good to start with, all those numbers have become a lot less now.”
According to Statistic SA, a majority of businesses spread across various industries in South Africa reported a turnover that was lower than their normal range in April 2020.
The report came at the height of the pandemic.
The findings were of a survey conducted on the economic impact of the coronavirus in South Africa, results varied per industry.
“94.4% of businesses within the mining and quarrying industry, for example, said they saw their turnover decline, whereas companies active in real estate and other business services were more likely to report a turnover that was within the normal range,” said the report.
After the outbreak of the coronavirus pandemic in the country, the government announced R500 billion for a health response, the money also helped to alleviate social and economic distress.
In addition to loans the government sought, it also had to shift its spending priorities around as announced in the 2020-21 budget.
As if the government was not already in a tight financial position, its already limited resources were further drained by corruption.
The country was also hit with a personal protective equipment (PPE) corruption scandal. The Special Investigating Unit found that some contracts were awarded unjustly - most notably in Gauteng, where the president’s spokesperson was suspended because her husband’s company was implicated.
During a summit in 2019, President Ramaphosa said corruption cost SA close to R1 trillion.
Next week’s 2020 Gross Domestic Product announcement will shine the light on how much the Covid-19 pandemic continues to cost the economy.
BUSINESS REPORT ONLINE